Malacañang: Federalism will not damage economy

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Metro Manila (CNN Philippines, July 18) — Malacañang said the shift to federalism will not negatively affect the economy.

In a media briefing Wednesday, Presidential Spokesperson Harry Roque said Malacañang had already spoken to Socioeconomic Planning Secretary Ernesto Pernia on the push for a federal system of government. This came after reports that Pernia said that the government should be cautious because some regions might not be ready for the transition.

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

The spokesperson said that the federal form of government will not require a larger national budget, which could result in a larger deficit-to-gross domestic product (GDP) ratio. A deficit happens when the government spends more than it earns.

The Department of Finance estimates the 2017 deficit-to-GDP ratio to fall between 2.6 to 2.8 percent.

"Our budget would remain the same, as identified national projects would be devolved and transferred to the internal revenue allotment (IRA) of local government units," Roque explained.

In turn, local government units are expected to implement projects such as the maintenance of barangay roads and bridges, barangay health centers, municipal solid waste disposal systems, and water supply services.

With the federal form of government being less centralized, Roque said the national government can focus on policy-making.

"The role of the national government would be to continue to implement Build, Build, Build projects and would hence be concentrated on policy making," he said.