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Business Organizations asked Congress to carefully study effects of federalism

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The recent expression of reservation from Duterte’s economic managers, Finance Secretary Carlos Dominguez III and Socioeconomic Planning Secretary Ernesto Pernia, and later on National Defense Secretary Secretary Delfin Lorenzana on the ambiguity of federalism and its adverse effect prompted various business organizations to ask the Congress to carefully evaluate the negative effects of the shift to federal government.

In a joint statement released on Sunday, August 12, the seven business groups said it is asking Congress to weigh the costs and risks involved in the proposed shift to a federal system of government.

“We, too, believe in the need to adhere to the  public finance principle ‘funds follow function.Accordingly, we echo the concerns of fiscal and economic experts about the ambiguous provisions on the division of revenue and expenditure responsibilities between the proposed federal government and its federated regions,” the groups said.

The seven groups which signed the joint statement are Philippine Chamber of Commerce & Industry, Inc., Financial Executives Institute of the Philippines, Philippine Exporters Confederation, Inc., Management Association of the Philippines, Makati Business Club and Cebu Business Club.

They expressed their concern over the alarming cost to the would-be multi-level government under a federal system.“The Preliminary estimates range from P72 billion of the Philippine Institute for Development Studies to P130 billion of the National Economic Development Authority”, the groups said.

The groups estimated the fiscal deficit to reach around 6.7 percent of the gross domestic product. They said the figure is “way beyond the sustainable 3 percent target of the fiscal managers,” which, they added, is a prudential limit also observed by the European Union for its member countries.

“We worry about the dire consequences that such fiscal imbalance could have on the economy and the flagship Build Build Build program of the current administration,” the groups went on.

The business organizations made the appeal after economic managers in the Department of Finance, Department of Budget and Management, National Economic and Development Authority, Bangko Sentral ng Pilipinas and researchers of PIDS openly shared their analysis and aired their concerns to the public. The groups praised these economic managers for their efforts.

“We support and join their call for a more detailed analysis of the fiscal impact of federalism to serve as basis for the deliberations in Congress,” they said.

“We encourage full, open, and dispassionate dialogues on  this proposed shift in form of government,  keeping in mind its long-term  impacts on future generations of Filipinos.”Thebusiness groups vowed to work with the political and economic leaders to bring sustained and inclusive economic growth in the country.

Last Thursday, Fr. Ranhilio Aquino, Dean of San Beda Graduate School of Law, said that if Duterte favors federalism, he should sack the two economic managers over negative statements about the shift to federalism.

However, Dominguez just takes Aquino’s suggestion as a grain of salt. He said, “We respect the opinion of Father Aquino, but we believe that such attitude would not enrich the level of discourse on the proposed Constitution.”

For Presidential spokesperson Harry Roque, he is very prudent in dealing with the controversy by saying“views the differences of opinion on federalism as part of the continuing discourse among members of the Presidents official family.”

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