MANILA - The National Food Authority Council (NFA) is studying the possibility of the national government assuming the P160 billion debt of the state-grains procurement agency, according to Presidential Assistant for Food Security and Agriculture Modernization Francis Pangilinan.
Pangilinan said the accumulated debt of the NFA may be itemized under the debt service allocation of the 2016 national budget.
“We are looking at how we are going to pare down the debt by way of cutting costs, reducing losses and reviewing policies on buying high and selling low, although that will continue at this stage,” Pangilinan told reporters on the sidelines of the launch of Greenergy Holdings’ new agritourism park in Rosario, Batangas.
“We’re looking also at the national government absorbing the P160 billion debt. This can be done through the GAA (General Appropriations Act) but before we do that, we’d like to make sure that for a period of one year, maybe June next year, we can lower the overall cost and expenditures of NFA,” he added.
NFA accumulated debt from various local financial institutions like Land Bank of the Philippines and Development Bank of the Philippines purportedly because of the provision of support price for palay (unhusked rice) to small farmers.
Pangilinan said that as the council deliberates on the feasibility of debt assumption by the national government, reforms would have to be instituted so debts would not recur.
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“What we want to do is, while the national government will absorb the debt, we have to put in place reforms so that the debt does not recur. We have to look at stocks damaged by calamities. We have to look at issues of management to make sure that losses are lessened,” he said.
“This debt would still rise because of the rice importation that we are doing so we need to conduct house cleaning,” he added.
Pangilinan said the NFA Council approved during a meeting held last month the restructuring of some of the NFA’s debts, enabling the government to save P1.2 billion in debt servicing as terms are extended and interest rates are lowered.
The government is increasing the importation of rice this year to have sufficient buffer stock during the lean season and to drive down rising prices purportedly caused by unscrupulous rice trading practices.
The government early this year imported 800,000 metric tons (MT) from Vietnam and is holding a tender for the importation of 500,000 MT more this year to drive down rising rice prices.
The NFA Council has also approved the importation of a maximum of 500,000 MT more should the need arise.
Pangilinan pointed out, however, that increased importation is only a “stop gap measure mean to address the tightening of supply.
“This is not a strategic policy. We are still looking at rice self-sufficiency. That goal is still there,” he said.