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Federal shift seen disrupting growth

One of President Rodrigo Duterte’s top economic managers on Tuesday warned that the rush to implement federalism may set back the country’s economic progress and leave most of the regions even further behind.

In an interview with The Chiefs, a public affairs talk show, Economic Planning Secretary Ernesto Pernia said it would take years before most of the country’s regions are ready for federalism. In the meantime, Pernia said, these regions would only lag behind.

Moreover, Pernia worried that the shift to federalism now would disrupt the country’s economic growth.

“It’s unlikely that the regions will be ready and our concern, my concern is that we are moving now to connect the regions, to bring the lagging regions into the mainstream economy and that momentum of infrastructure improvement in the regions is going to be disrupted so it’s not going to be good for federalism,” Pernia said.

Pernia said it would take five or more years before the regions are in a position to adopt federalism.

In fact, Pernia said, the Cabinet’s economic team was even worried that rushing into federalism would cause many regions to lag even further behind.

At this point, only five of the proposed 18 federated regions have the political and economic infrastructure that would allow them to adopt federalism, Pernia said, naming four of these five as the National Capital Region, Cebu, Central Luzon, and Southern Tagalog.

Duterte has been pushing for federalism as a way to spur economic growth in the provinces, and to distribute wealth and power, which have centered on Metro Manila.

Pernia said another key concern would be how federalism may shred the country’s balance sheet.

“The expenditure will be immense,” Pernia said, as he estimates that fiscal deficit may balloon to “6 percent or more.”

The inter-agency Development Budget Coordination Committee deficit cap for next year is set at 3.2 percent of the country’s gross domestic product.

“That’s really going to wreak havoc in terms of our fiscal situation and we will certainly experience a downgrading in our ratings,” Pernia said.

Asked if the President has been made aware of these concerns, Pernia said he was. However, Pernia was not clear whether the President’s economic managers had been as vocal with their concerns.

“We are thinking about these concerns, too. It’s a presidential decision,” Pernia said.

Duterte is expected to endorse to Congress in his July 23 state of the nation address the draft charter for a federal government put up by the 22-member consultative committee chaired by former chief justice Reynato Puno.

Opposition Party-list Rep. Tom Villarin cited Pernia’s concerns, noting they ran counter to the political push for federalism. “Such dissonance in policy leads this country to chaos,” Villarin said.

Topics: President Rodrigo Duterte , federalism , Ernesto Pernia , Reynato Puno
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