NEDA proposes phased, 15-year federalism shift

by Ian Nicolas Cigaral (philstar.com) – Aug 31, 2018

MANILA, Philippines — The country’s socioeconomic planners have proposed a phased shift to a federal form of government that will span 15 years to avoid disruptions to the economy’s growth momentum.

In hundreds of hours of speeches, President Rodrigo Duterte has boldly declared the Philippines must overhaul the 1987 Constitution and shift to a federal system of government to address the country’s widening wealth gap and empower regional governments.

The president last month approved the draft federal constitution crafted by a consultative committee, which proposed that federated regions be given a share of not less than 50 percent of all national taxes.

But the charter reviewers have been at odds with Duterte’s economic managers, who have warned that rushing into federalism could “wreak havoc” on the country’s balance sheet.

In a presentation at the Cabinet-level Economic Development Cluster meeting on Wednesday, National Economic and Development Authority Undersecretary Rosemarie Edillon detailed a proposed “transition roadmap” for the federalism shift.
The first phase involves spatial analysis of federated regions and their socioeconomic profiles, accounting of government workforce and functions, and mapping of existing laws, regulations and policies. This process could take a year, NEDA said.

The second phase, or five years of laying the foundation for federalism, will focus on preparing the regions and rationalizing government structures and functions. During this period, a transitional period charter should be adopted and the federal transition commission must be established.

The transitional government can be activated in the third phase, NEDA said, adding it could span three years. Meanwhile, the operationalization of five pilot federated regions based on “readiness and willingness” will be done in the fourth phase for five years.

During the last phase, the transition government should be deactivated along with the ratification of the amended constitution. The regional development councils may serve as interim regional governments.

“We need a forward-looking strategy to strengthen the capacities of the bureaucracy at both the regional and local levels to take on central office functions,” Edillon said, adding that the ConCom will review NEDA’s comments.

Last month, international debt watcher Moody’s Investors Service cautioned that federalism could present downside risks to the country’s institutional and fiscal profile.

Initial estimates show that the cost of running the proposed federal government would potentially add P156.6 billion to P243.5 billion to the whole government budget.

According to Edillon, there are funds and spending mismatch in the proposed federalism charter, adding that estimates show the split in spending between the federal government and federated regions is not 50:50, but 60:40.

“The mismatch in funds and spending, especially for the federal government, will impede the delivery of goods and services under its jurisdiction,” the socioeconomic planner said.