Finance Secretary Carlos Dominguez III expressed apprehension Tuesday on the provisions in the draft federal constitution, saying it could lead to fiscal nightmare if not sorted out properly.
During the briefing on the 2019 proposed national budget, Senator Sherwin Gatchalian asked the economic managers about their view on the proposed shift to federalism.
Dominguez said there is no official position from the economic managers but, personally, he was glad that it is being discussed now because he found the draft wanting.
“No official position but let me express my thoughts on it. I’m happy that it is being discussed now because the original draft, from the fiscal point of view, leaves much to be desired,” he said.
He said during the meeting with some members of the Consultative Committee, he asked them several questions such as who is going to pay for the national debt, for the military, for the Department of Foreign Affairs and the Central Bank.
“If it needs additional capital who is going to put it up?” he asked.
The Finance chief said he was told that the federal states will share for the expenses but when he read the draft constitution, he did not see the provision there.
“There are a lot of issues that need to be worked out and it is good that it is being discussed publicly right now because that’s just one of the issues that we see from the fiscal point of view,” Dominguez said.
“If Ernie (Pernia of the National Economic and Development Authority) is right, if we don’t manage this correctly, this can end up to be a fiscal nightmare. So, I think the legislature, in its wisdom, can sort those issues out,” he said.
He was referring to the earlier statement of Pernia that financing a federal government setup may raise the fiscal deficit to 6 percent of the country's gross domestic product.
“That’s really going to wreak havoc in terms of our fiscal situation and we will certainly experience a downgrading in our ratings,” said Pernia on One News Channel.
The Consultative Committee and Malacañang have earlier dismissed the assessment of Pernia, saying that it was misplaced and that the transition to federalism will “lead to greater and a more balanced growth over the medium- and long-term after the system is put in place.”
Gatchalian invited the economic managers to the hearing of his committee on the economic aspect of federalism.
“I think we need to talk about the economic impact of federalism and we want to invite the economic managers to talk about it point by point, on how federalism can impact our economy and fiscal position,” he said.
Dominguez accepted the invitation.
“We will be ready to meet with you and your committee on that,” he said. — RSJ, GMA News