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Palace: Federal shift won’t affect economy

Malacañang said yesterday that the proposed shift to a federal government would not have a negative effect on the economy despite the concerns of an economic manager of President Duterte.

Presidential spokesperson Harry Roque said that they have already clarified the matter with National Economic and Development Authority Director-General and Secretary Ernesto Pernia, who had said that the regions are not yet ready for this system.

“The shift to federalism, we reiterate, would have no adverse effect on the Philippine economy,” Roque said.

“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.

Roque explained that these projects include maintenance of barangay roads and bridges, water supply services, barangay health centers and daycare centers, and solid waste and disposal system of municipalities, among others.

He said that the role of the national government would be to continue to implement “Build, Build, Build” projects and concentrate on policy-making.

In an interview aired over One News, Pernia warned of the ill effects of shifting to federalism on the economy.

“Expenditure will be immense if we go to federalism, and we estimate that the fiscal deficit to the Gross Domestic Product ratio can easily jump to maybe six percent or more, and that’s really going to wreak havoc in terms of our fiscal situation,” Pernia said.

He said that the government cannot just rush to shifting to federalism and said that they would first have to “do our homework” in terms of preparing well for the country. (Argyll Cyrus B. Geducos)