MALACAÑANG yesterday allayed concerns that implementing federalism could wreck the country’s fiscal health and spell disaster for regions ill-prepared for the shift from the unitary type of government.
“The shift to federalism, we reiterate, would have no adverse effect on the Philippine economy,” presidential spokesperson Harry Roque Jr. said.
Roque issued the statement after clarifying with Socioeconomic Planning Secretary Ernesto Pernia his reservations about the federalism initiative.
Pernia, in a television interview aired on Monday, said it was “unlikely that the regions will be ready” for federalism and warned the “momentum of infrastructure improvement in the regions is going to be disrupted.”
He also said that financing a federal setup may raise the fiscal deficit to six percent of the country’s gross domestic product, nearly double the target deficit cap of 3.2 percent for 2019 by the inter-agency Development Budget Coordination Committee.
“That’s really going to wreak havoc in terms of our fiscal situation and we will certainly experience a downgrading in our ratings,” said Pernia, who heads the National Economic and Development Authority.
Roque, however, said the national budget would remain the same as identified projects would be devolved and transferred to the internal revenue allotment of local government units.
“These projects include maintenance of barangay roads and bridges, water supply services, barangay health centers and daycare centers, solid waste disposal system of municipalities, among others,” he said.
“The role of the national government would be to continue to implement Build, Build, Build projects and would hence be concentrated on policymaking,” Roque added.
President Rodrigo Duterte has been pushing for a shift to a federal form of government as a means to address national economic and power imbalances.
Duterte has said that he would quit his post as early as next year once the proposed federal charter is ratified by the public, insisting that the current unitary system of government has failed the people by keeping resources and power centralized.
The President is expected to endorse to Congress next week the draft federal charter made by the Consultative Committee headed by former Chief Justice Reynato Puno.