Pernia says PH economy may not be ready for federalism

As the administration pushes for a federal shift of government system through Charter change (Cha-cha), the country’s top economic manager said that the Philippines still needs to prepare its economy for federalism.

Ernesto Pernia, chief of the National Economic and Development Authority (NEDA), said in an interview with One News’ “The Chiefs” on Monday, July 16, that the country’s economic growth may be disrupted if the government shifts to a federal system in rush.

“Federalism may 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 for the economy to be ready for federalism,” he said in the interview.

He explained that other countries took years to change their government systems so the Philippines should not rush it.

“It’s unlikely that the regions will be ready and our concern, my concern is that we are moving now to connect the region, 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 added.

Furthermore, the NEDA head said that another concern is how federalism may affect the country’s balance sheet.

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

Pernia said, “That’s really going to wreak havoc in terms of our fiscal situation and we will certainly experience a downgrading in our ratings,” as the Development Budget Coordination Committee set a deficit cap for the country’s gross domestic product (GDP) at 3.2 percent for 2019.

‘Burden for economy’

Meanwhile, Senator Ana Theresia “Risa” Hontiveros questioned if the shift to federalism was discussed by the government’s economists.

“I am worried that his (President Rodrigo Roa Duterte) federalist vision is not even economically viable and practical in the first place. Instead of redistributing wealth and dispersing economic development to the regions, President Duterte’s federalism might only make the regions poorer and their economies weaker,” she said in a statement on Tuesday.

“Did the government take this into consideration in the drafting of the Federal Charter? Were the country’s economic managers consulted? Has the economic cost of federalism been studied alongside the impact of inflation and the current state of the economy?” Hontiveros added.