Author Topic: Federalism and the economy  (Read 1652 times)

adroth

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Federalism and the economy
« on: August 12, 2018, 01:26:54 PM »
Finance chief seeks dialogue on 'ambiguous' draft federal charter
ABS-CBN News

Posted at Aug 10 2018 10:53 AM | Updated as of Aug 11 2018 05:12 PM

http://news.abs-cbn.com/business/08/10/18/finance-chief-seeks-dialogue-on-ambiguous-draft-federal-charter

MANILA (UPDATE) - Finance Secretary Carlos Dominguez on Friday called for further dialogue on federalism to discuss "ambiguous" provisions that could have "dire, irreversible economic consequences."

Dominguez earlier told lawmakers that he was "absolutely" against the proposed federal charter from a Palace-backed committee due to unclear provisions on revenue and expenditure assignments.

"As we pointed out earlier, we never stated that we are against federalism," Dominguez said in a statement.

"Rather, with respect to the fiscal provisions of the proposed Constitution, there are ambiguous provisions on revenue assignment and there are no provisions on expenditure assignment," he said.

There should be a discussion on the consultative committee's draft constitution "so that it is clear and unambiguous," he said.

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Interest rates ‘will go to hell’ under federalism – Dominguez
Published August 9, 2018, 7:33 AM
By Chino Leyco

https://news.mb.com.ph/2018/08/09/interest-rates-will-go-to-hell-under-federalism-dominguez/

The Duterte administration’s chief economic manager warned that the Philippines’ interest rates will skyrocket once the shift to a federal form of government is drastically adopted without taking into account its fiscal risks.

At a Senate hearing on Wednesday, Finance Secretary Carlos G. Dominguez III said that the country’s current investment grade credit rating status along with its stable interest rate environment “will go to hell” under the draft federal Constitution.

Dominguez admitted that he is still unconvinced that changing the current form of government is for best of the economy, noting he got confused when he read the draft of the proposed federal Constitution.

“I did meet with former Senate President Aquilino Pimentel and some members of the commission, and I asked them who’s going to pay for the national debt?

Who’s going to pay for the military?” Dominguez told the hearing.

But when Dominguez saw the draft federal Constitution, the finance chief found that it was silent on the national government’s multi-trillion pesos debt.

“We’re very confused by the draft,” Dominguez admitted.

Under proposed federal system, the regions will also get 50 percent share from all national income sources collected by the Bureau of Internal Revenue (BIR) and Bureau of Customs.

The 50:50 revenue sharing is detrimental to the national government, Dominguez warned.

Asked by Senator Ralph Recto about the estimated impact of the proposed revenue sharing scheme on the government’s fiscal position, Dominguez said “it’s a very large [budget] deficit.”

Recto further asked Dominguez about its effect on the country’s credit ratings and interest rates, Dominguez said it is “tremendous, it will go to hell… everybody pays higher interest rates, 600 basis points [increase].”

Dominguez also said that the proposed change in the constitution will derail the Duterte administration’s ambitious infrastructure program.

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« Last Edit: August 12, 2018, 01:42:35 PM by adroth »

adroth

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Re: Federalism and the economy
« Reply #1 on: September 02, 2018, 11:12:29 AM »
Economic managers seek clarity on proposed federal charter
By PTV News - CD - August 30, 2018

https://www.ptvnews.ph/economic-managers-seek-clarity-proposed-federal-charter/

MANILA — Clarity. This is what economic managers are seeking from the draft Federal Constitution.

Finance Secretary Carlos Dominguez III said this is what he said during the meeting between members of the Economic Development Cluster and some members of the Consultative Committee that ended Thursday night.

“Basically, we said, you know we need more clarity that’s all. The document that was produced lacks clarity on these specific issues and we outlined a lot of questions,” he told reporters in a briefing.

He was referring to the draft Federal Constitution made by the Charter Change Consultative Committee formed to study the proposed change in government.

The Department of Finance (DOF) Secretary explained they are not against Federalism but stressed the need to be clear on financial aspects which necessarily accompany the proposed shift.

During the meeting, officials of the National Economic and Development Authority (NEDA) presented two scenarios on how the shift in government will increase government expenses.

Documents obtained by journalists show that total expenditures may increase by as much as PHP243.502 billion.

This will surely exceed the budget gap to three percent of gross domestic product (GDP), Dominguez said. “But again that is an estimate because we don’t know what is in their mind about the split of expenses,” he said.

For his part, Department of Budget and Management (DBM) Secretary Benjamin Diokno, in an interview by reporters, said there is really a need for scenario building to check on expenses.

He countered allegations that federalism will result to higher spending, citing that this depends on your programs and budgeting.

He said the government can control its deficit but this will impact on the programs. “To me that’s the overriding constraints — fiscal responsibility,” he said.

Diokno said a change in the 1987 Constitution is really needed because it is already outdated but stressed that need for this to be carefully studied. (Joann Villanueva/PNA)