Palace contradicts gov’t chief economist over federalism effect on economy

July 18, 2018

Contrary to the warning of the government's chief economist to be cautious on the shift to federalism, Malacanang said on Wednesday this has no adverse effect on the economy. In a statement, Presidential Spokesperson Harry Roque said the Palace spoke to Socioeconomic Planning Secretary Ernesto Pernia regarding his statement that the Duterte administration should be cautious on its move for federalism. Pernia, also director general of the National Economic and Development Authority, in an interview with “The Chiefs” on One News channel, has warned any misstep, shift to federalism could cause havoc on the government’s finances and disrupt infrastructure projects. “We have already discussed and clarified the matter with National Economic and Development Authority Director-General and Secretary Ernesto Pernia,” Roque said. “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,” he added. 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, Roque said. “It was only a matter of clarifying that federal form of government does not require a bigger budget which might result in a higher deficit,” he explained. Roque said the role of the national government would be to continue to implement Build, Build, Build projects and “would hence be concentrated on policy making.” Pernia has said regions would unlikely be ready for a federal form of government and the momentum of infrastructure improvement in the region would be disrupted. President Rodrigo Duterte will submit to Congress the draft new constitution, which the 22-man consultative committee has prepared. The proposed new charter provides for the shift of government from unitary to federal. Celerina Monte/DMS