BSP: Study carefully economic provisions of proposed federalism

FILE: BSP Governor Nestor A. Espenilla, Jr. at the launch of financial literacy program for schools, in partnership with the DepEd Philippines and BDO Foundation. (Photo: Bangko Sentral ng Pilipinas/Facebook)

MANILA — Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. supported calls for a more comprehensive study of the proposed federal constitution to ensure that recent economic gains are sustained, should the shift in the form of government happen.

In a forum Friday, the BSP chief said there is really a need to study and determine how revenues will be allocated and who will manage expenditures.

Grey areas between the federal government and state governments as far as spending for projects are concerned, might result in finger-pointing should their implementation be stalled, he noted. This confusion might negatively impact on the government’s fiscal position and increase budget deficit, he said.

Espenilla said monetary officials are worried about this because there is no clarity on how the government will pay its debt. “A suggestion to print more money to pay the debt might be raised and this will impact on inflation,” he said in Filipino.

The central bank chief said economic-related issues should be clarified, not just the political ones. “We have to make sure that our financial house is in order because of our new constitution. I’m not saying we shouldn’t do it but we have to study carefully how we will manage it,” he said.

“And we have to answer those hard questions so that we will be able to look ahead to a future that is financially sustainable,” he added.

Earlier, Finance Secretary Carlos Dominguez III called for a dialogue on federalism to thresh out provisions on allocations of expenditures that is unclear under the draft Constitution, which later on “could result in dire, irreversible economic consequences.”

“We welcome a discussion on the draft so that it is clear and unambiguous. We do not want the revenue assignment and the expenditure assignment to be misunderstood, as what happened in the recent case involving the Internal Revenue Allotment (of the local government units),” Dominguez said in a statement.