EKONOMISTA

is their share of the local government units (LGUs) in the revenues of their respective provinces, cities or municipalities, will be redirected to the LGUs instead, at least for the beginning stages. Eventually, each of the 18 states that will be created will become self-sufficient.

Sec. Pernia says that Federalism will “wreak havoc” on our economy. Rising inflation rates, depreciation of the currency and higher interest rates, not to mention the high government spending on infrastructure projects due to the Build! Build! Build! Program, is already pushing our economy to its limits. Digong even describes the economy to be in the doldrums. The NEDA chief mentions about hyperinflation as a possible consequence of Digong’s well-thought off political agenda. Hyperinflation is simply defined as very high inflation.

The government will definitely spend a lot when the country shifts to Federalism, where new government agencies and entities are needed to be established, like 4 courts, 18 legislative assemblies, 6 constitutional commissions. These will need funding. Also, before all these happens, a plebiscite is necessary which, again, should be funded. This will result to a rapid increase in the money supply in the economy as there is a need for fiscal (BIR) and monetary (BSP) authorities to suffice the government spending. BIR would have to think of new ways to boost government funds. This means that taxes will increase AGAIN. The BSP, on the other hand, will print new money. When these happen, prices of goods and services will rapidly rise as well, far exceeding the present levels of inflation.

There are many advantages of Federalism, but at present, the disadvantages outweigh them. I am not saying that I don’t want Federalism. What I am saying is that this is not the right time. The administration should take more time and not rush this agenda. You should prioritize the welfare of the whole country before any of your (selfish) agenda.