Federal gov’t needs P240B more annually to operate, warns Pernia

Socioeconomic Planning secretary Ernesto Pernia

MANILA – A federal Philippines will need an additional P240 billion annually to operate the new form of government and could double the size of the budget deficit compared to the economy, Socioeconomic Planning secretary Ernesto Pernia said.

The country will also need to spend more to construct new buildings and buy new equipment and vehicles for offices that will be created under the federal government, Pernia said.

The additional expenditures could push the budget deficit as a ratio of the gross domestic product to 7.1 to 7.2 percent from the current 3 percent, Pernia said, citing finance department data.

“The economic team, we are not opposed to federalism per se. We just have reservations about shifting to federalism quickly,” Pernia told ANC.

The National Economic Development Authority proposed a 15-year transition period, longer than the 12-year window proposed by President Rodrigo Duterte’s consultative committee that drafted the federal constitution.

“Federalism may well be the holy grail that we have been searching for, but to get to the holy grail, we need a lot of preparation, a lot of searching and finding a way for reaching there,” he said.

Asked how credit ratings agencies might take a larger deficit, Pernia said: “They will have to make inference or a conclusion based on what they see.”

The economic team met with the consultative committee this week, he said. (ABS-CBN News)

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