Economic managers to set unified stand on federalism

Economic managers are expected to come up with a unified position on the proposed shift to a federal form of government in their meeting this week, according to an official of the National Economic and Development Authority.

NEDA undersecretary for planning and policy Rosemarie Edillon said the administration’s economic cluster is convening on Wednesday to discuss, among other matters, fiscal and economic assumptions based on the draft federal charter prepared by the consultative committee (Concom) reviewing the 1987 Constitution.

This will be the first time that the economic cluster that includes NEDA, Department of Finance (DOF) and Department of Budget and Management (DBM) will be meeting after the draft charter was released.

Economic managers have raised concerns over the proposed shift to a federal form of government. Among the issues raised was that it would be too costly and thus disruptive to the growth momentum of the economy.

Socioeconomic Planning Secretary Ernesto Pernia warned that the shift to a federal system could cost the administration additional expenses amounting to as much as P131 billion in the first year of transition.

Finance Secretary Carlos Dominguez III also said the country’s credit ratings might be downgraded as rating agencies had earlier expressed concern over federalism that would create uncertainties in the country’s political landscape.

He said an unmanaged fiscal deficit could also derail the administration’s ambitious “Build, Build, Build” program.

Economic managers also pointed out that some regions are not prepared to make such a transition.