By Jose Bimbo F. Santos, July 16 2018; Business World (One News)


Image Credit to ABS-CBN News

STATE economic managers are lukewarm to implementing federalism in the Philippines since many regions may be ill-prepared to stand on their own feet, the chief socioeconomic planner said.

Such a system could wreck the country’s fiscal health, leading to a deterioration in its investment-grade credit rating, and may blunt the infrastructure drive.

Socioeconomic Planning Secretary Ernesto M. Pernia said in a taped interview with The Chiefs, a public affairs talk show on Cignal TV’s One News that will be aired Monday 8:30 pm after the primetime newscast The Big Story, that President Rodrigo R. Duterte’s economic team believes not all regions in the Philippines are ready for federal form of government.

“Federalism my be good for the economy and for the people but we really have to do our homework first in terms of preparing well for the country to be ready for federalism,” Pernia said.

Mr. Duterte is expected to formally endorse to Congress in his July 23 State Of the Nation Address the draft charter for a federal government crafted by the 22-member consultative committee chaired by former chief justice Reynato Puno.

Mr. Pernia said “it’s unlikely that the regions will be ready” for a federal form of government and that moves to spend over P8 trillion on infrastructure till 2022, when Mr. Duterte ends his six-year term, could lose steam.

“The momentum of infrastructure improvement in the regions is going to be disrupted,” Mr. Pernia said.

BusinessWorld columnist Andrew Masigan echoed Mr. Pernia’s point during the episode, noting that “[s]ome regions don’t have the infrastructure to be self-sufficient.”

“They don’t have the farm-to-market roads, they don’t the institutions to be self-sufficient.”

Mr. Pernia said another concern is that a federal system could weigh on the state’s balance sheet.

“The expenditure will be immense,” Mr. Pernia said, estimating that the fiscal deficit may balloon to “six percent or more.”

The inter-agency Development Budget Coordination Committee has set the deficit cap for next year at 3.2% 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,” Mr. Pernia said.

Asked if the president has been made aware of these concerns, Mr. Pernia was ambivalent, saying: “We are thinking about these concerns, too. It’s a presidential decision.”

The first-quarter Social Weather Survey of the Social Weather Stations conducted March 23-27 showed that only about one in four Filipinos knows about the federal system of government, while 75% of those surveyed said they got to know about federalism only because of the survey. The survey showed that 37% agreed with the federal system of government, 29% disagreed and 34% were undecided.