Gov't to shoulder NFA's rice import expenses in 2008 (26 September 2007)

MANILA, Philippines -- The National government next year will shoulder the 50-percent tariff imposed on all rice shipments to be ordered by the cash-strapped National Food Authority, to help curb the agency's losses.

"According to the finance department, the NFA will be given a tax expenditure subsidy, enough to cover its total rice import tariffs," said NFA Administrator Jessup P. Navarro.

He explained that the supposed tariff to be slapped on rice imports would be appropriated in the government budget.

In effect, the NFA will have to pay the tariffs on the imports using available funds under the Tax Expenditure Fund, which is part of the annual budget.

Navarro added that the plan was approved in principle during a recent meeting of the country's economic managers.

If this was implemented this year, Navarro said the move would translate to some P14 billion in savings.

For 2007, the NFA has imported some 1.6 million metric tons of rice, mostly from Vietnam. The last batch of rice imports of 260,000 metric tons is set to arrive by October at the latest.

Navarro, however, did not disclose the planned rice importation volume for next year.

He said the full subsidy will cut down the agency's losses. The NFA is still waiting for a sovereign guarantee from the government.

According to Agriculture Secretary Arthur C. Yap, he expects to receive the guarantee within the week. At present, the agriculture department is fast-tracking the financial restructuring of its long-term loans worth P16.5 billion.

The NFA in May received the Philippine central bank's permission to refinance its debts.
Yap earlier said they are expecting to generate some P25 billion from the sale of zero-coupon bonds and use part of the proceeds to retire the loan.

The rest of the proceeds, he said, would be invested in warehouses, drying facilities and on the planned national grains highway.

The loans were originally structured and financed in 2003 using zero-coupon bonds. The bonds are currently used as collateral for NFA's debts.

Aside from the bond sale, Yap had cited plans of selling a third of NFA's 300 warehouses nationwide and maximizing the use of the 120-hectare Food Terminal Inc. property in Taguig City.