NEDA proposes five-phase transition for federalism

By Karl Angelo N. Vidal, Reporter
THE National Economic and Development Authority has proposed a five-phase transition to a federal form of government to avoid disruption to the economy’s growth momentum.
In a presentation at a Cabinet-level Economic Development Cluster (EDC) meeting on Wednesday, NEDA Undersecretary for Policy and Planning Rosemarie G. Edillon laid out the agency’s five-pronged proposed transition roadmap spanning 15 years which has been earlier submitted to the Constitutional Review Committee.
In the proposed transition, the first phase should be focused on conducting a spatial analysis of federated regions and their socioeconomic profiles, accounting of government workforce and functions as well as mapping of existing laws and policies.
This phase, or the first year of the transition, can be accompanied by an extensive review and amendment of provisions of the current 1987 Constitution “that have limited the country’s opportunities to achieve inclusive growth and development.”
The government structures and functions must be rationalized in the second phase. The five-year period should include an extensive review or amendment of the Local Government Code and the Administrative Code.
“During this period, a transitional period charter should be adopted and the federal transition commission must be established,” the socioeconomic planning agency said.
The transitional government can be activated in the third phase. At this stage, the government will be “prepared for genuine devolution.”
In the fourth phase, the operationalization of five federated regions based on readiness and willingness must be piloted for five years.
The transition government should be deactivated along with the ratification of the amended constitution in the last phase of the transition. 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,” Ms. Edillon was quoted as saying in the statement.
Economic managers earlier warned that the proposed changes could cause the fiscal deficit to balloon beyond the prescribed three percent-to-gross domestic product ratio.
Global debt watcher Moody’s Investors Services last month flagged the planned shift to a federal form of government as a risk to the credit rating of the Philippines which stands at Baa2, a notch above the minimum investment grade with a “stable” outlook.
At the EDC meeting on Wednesday, Ms. Edillon had cautioned that the proposed changes to the Constitution could add 1.0-1.6 percentage points to the three percent-of-GDP fiscal deficit ceiling.
“In terms of the split, they said it’s a 50-50 split in terms of the revenues. But when we looked at the share in spending, it can actually go up to 80-20 if you consider debt payments,” she told reporters after the meeting.
Ms. Edillon said the government faces P156.6-243.50 billion in additional expenses — including personnel services and maintenance and operating expenses — in the first year of implementation of the new charter. She added that this does not include the cost of “around P10 billion to establish the new offices” in federated regions.
CONCOM QUESTIONS ASSUMPTIONS
For their part, members of the Consultative Committee on charter change questioned economic managers’ assumptions on the cost of shifting to a federal system.
“What are the assumptions (for the computation)?” Professor Edmund S. Tayao said in Filipino during a press briefing at Malacañang Palace on Friday. “If you look at the DoF computation, may nilagay pa silang IRA (Internal Revenue Allotment) ng federated region, eh may revenue share na yon. Pangalawa, may sinasabing kailangan mo nang offices, eh meron ka nang existing offices.” (If you look at the DoF computation, they even factored in the IRA for the federated region, which already has a revenue share. Secondly, they said you need offices, [when] there are already existing offices.)
Department of Interior and Local Government (DILG) Assistant Secretary Jonathan Malaya, for his part, said, “Either it’s P20, P243 or P320 billion, I think we can afford it. Why? I’ve been in government for so long. In the last budget hearing that I attended, the entire returned, unutilized budget of the government, which all of the government agencies returned to DBM (Department of Budget and Management) because it was not utilized, is P600 billion,” Mr. Malaya said.
“The assumptions they made, we feel are mistaken because it bloated the cost. The solution here is more technical discussions between the ConCom commissioners and the (DoF) and the NEDA, para lahat tayo, hindi paiba-iba ng figures (so that all of us won’t have conflicting figures),” Mr. Malaya also aid.
“It’s the ConCom that should be listened to because it’s them that prepared the draft federal Constitution and the NEDA and the DoF are simply commenting on the draft,” he added.
According to Mr. Malaya, an InterAgency Committee has been convened, which includes the Office of the President, ConCom, DILG, DoF and other government agencies. He said the Committee is tasked to consolidate all comments, which will be incorporated to the draft Federal Constitution. — with Charmaine A. Tadalan