'Equalization fund' for 'poor' provinces eyed under PH federal gov't

Vivienne Gulla, ABS-CBN News

Posted at Aug 04 2016 05:50 PM

MANILA – An ''equalization fund'' can be made under the federal government being advocated by the Duterte administration in order to address concerns that poorer provinces will be left out in the proposed setup, Senate President Aquilino ''Koko'' Pimentel III said.

While some businessmen are optimistic about the economic benefits of the federal form of government, they expressed concern for poor provinces who may be lumped together in one state and left behind in the federal system, because these are highly dependent on the national government's support.

Pimentel proposed that federal states get to use 80% of their revenues and remit only 20% to the central government.

He said the equalization fund administered by the federal government will be made available to troubled states.

Resources for this equalization fund will come from the central government and the more developed states.

Under the proposal of former Senator Aquilino ''Nene'' Pimentel Jr., the new form of government will have 11 federal states - four in Luzon, four in Visayas, and three in Mindanao. Metro Manila will be converted into a federal administrative region.

The lumping of the provinces and cities into states in the elder Pimentel's proposal is based on their geographical contiguity.


The elder Pimentel also proposed the creation of a loan commission, similar to the International Monetary Fund and the World Bank, which will have the financial requirements of the federal state to provide assistance where it is needed.

Ateneo School of Government Dean Ronald Mendoza, meanwhile, said assistance from the federal government should encourage fiscal independence among poor states over time.

The state, for instance, can give grants if the state can match the amount of the cash grant with their own resources or it can reward good policies and practices with grants.

Mendoza said that according to their research, states farthest from the capital tend to be poorer and may face a bigger challenge of catching up with other states in terms of development.

Pimentel and Mendoza recognize that because of the Philippines' uniqueness in terms of development path, culture and other circumstances, it should only pick the good features of federalism from different model countries and customize them into something that is suitable for the Philippines.


Pimentel said the current highly centralized unitary system of government in the country has hampered development in a lot of areas, despite the steady increase in the country's gross domestic product under the previous administration.

Pimentel said federalism may not be a cure to all the problems of society, but it is the only way to bring about equitable development throughout the country.

He explained, this form of government recognizes the diversity that exists among its people, which is appropriate for an archipelagic country like the Philippines.

He also clarified that under a federal system, there will still be one constitution, one flag, one foreign policy, and one central government, with one federal public composed of states and local governments under it.

The proposed federal system will also have one president, one vice president and 6 senators per state. It will have a single armed forces and a single judicial system, subject to modifications in the Bangsamoro and tribal jurisdictions to accommodate customs and traditions.