Palace disputes Pernia: Federalism won't hurt the economy

MANILA, Philippines — Malacañang on Wednesday disputed a claim made by the government’s chief economist that the push for federalism might dent the country’s bullish growth story.

In hundreds of hours of speeches, President Rodrigo Duterte has declared the Philippines must overhaul the 1987 Constitution and shift to a federal system of government to address the country's widening wealth gap and empower regional governments.

But in a recent interview with “The Chiefs” on One News channel, Socioeconomic Planning Secretary Ernesto Pernia said that while federalism could unlock economic benefits, it could also spell disaster for some regions not prepared for such a transition.

Pernia also cited possible damage a shift to federalism could inflict on the country’s balance sheet, noting the deficit-to-GDP ratio may easily rise to six percent.

READ: NEDA chief calls for caution on federalism 

In a statement, presidential spokesman Harry Roque said the Palace has “already discussed and clarified the matter” with Pernia.

“The shift to federalism, we reiterate, would have no adverse effect on the Philippine economy. Our budget would remain the same, as identified national projects would be devolved and transferred to the internal revenue allotment of local government units,” Roque said.

“The role of the national government would be to continue to implement Build, Build, Build projects and would hence be concentrated on policymaking,” he added.

Two other economists raised an almost similar warning. University of Asia and the Pacific economists Bernardo Villegas and Victor Abola believe the proposed shift to a federal form of government is not only expensive but also unnecessary.

“I think it will be a disaster. It’s not necessary and is counterproductive. Imagine all the duplication of expenses in all the levels. And the completely arbitrary way they are putting together provinces for these so-called federal states,” Villegas said.

“It does not may any sense at all. And we already have the local government code which actually enables mayors and governors to act as federal states,” he added. — Ian Nicolas Cigaral with The STAR/Czeriza Valencia

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