The government's expenses in subsidizing the operations of state-owned, controlled corporations (GOCCs) and government financial institutions (GFIs) dropped by 7 percent in the first-half this year.

Data from the Bureau of Treasury showed that the government spent P7.47 billion in subsidies from January to June this year, lower by P490 million compared with the P6.98 billion in the same period last year.

Of the total state subsidies, major non-financial government firms received P3.96 billion, while other state corporations enjoyed P3.5 billion.

At end-June, state-owned firms that enjoyed hefty subsidies were cash-strapped National Food Authority with P2.1 billion, followed by the National Housing Authority with P1.87 billion and National Transmission Corporation with P1.02 billion.

The DoF has been attempting to reduce subsidies in favor of equity infusions because higher subsidies run counter to its goal of making these firms self-reliant and less dependent on financial assistance from the government.

In June alone, the government spent P183 million in subsidies, significantly lower compared with P1.94 billion in the same month in 2009.

During the month, bulk of the state subsidies were given to Bases Conversion Development Authority with P92 million and National Livelihood Development Corporation with P65 million.

For 2010, the Department of Finance has programmed P14.1 billion in subsidies, or 19 percent lower compared with the P17.4 billion in the previous year.

For years, the departments of budget and finance have been releasing subsidies to GOCCs and GFIs despite the fiscal deficit position. These subsidies are released to corporations with depleted capitalization.

Under the law, the Department of Budget and Management is mandated to release equity, subsidy and net lending to GOCCs and GFIs.

The DoF has been closely monitoring problematic GOCCs including grains-agency NFA, HGC, National Electrification Administration, National Development Company, Philippine National Railways and the Land Rail Transportation Authority.

In 2009, subsidies to GOCCs and GFIs dropped 23 percent last year to P17.44 billion from P21.1 billion in the previous year. NFA, NHA, the Local Water Utilities Administration and Philippine National Railways were the state-owned firms that enjoyed hefty subsidies from the national government.

State subsidies to GFIs last year reached P900 million, while GOCCs received P16.55 billion from the national government.