‘Political unrest’ may delay key reforms, says ING Bank
The “renewed focus” on political noise ahead of the midterm elections could risk delaying the passage of financial market-friendly reforms in the Philippines, ING Bank said.
The Dutch financial giant said “political unrest” emanating from the recent arrest of former president Rodrigo Duterte and the impeachment of his daughter, Vice President Sara Duterte, could hog the legislative bandwidth away from policymaking.
Among the key reforms that were at risk of being delayed were the proposed cut to the tax on stock transactions to 0.1 percent from 0.6 percent, and the planned overhaul of the local mining tax system.
“From a policy perspective, there’s a possibility that the implementation of certain reforms that were recently passed gets delayed,” Deepali Bhargava, regional head of research for Asia-Pacific at ING, said in a commentary.
“These bills were seen to be financial market-friendly but could be delayed with the renewed focus on politics,” Bhargava added.
Last week, Duterte was arrested upon his arrival to Manila from Hong Kong before being put on a chartered flight to The Hague in the Netherlands to face trial in the International Criminal Court (ICC) for alleged crimes against humanity.
Shortly after the plane took off, President Marcos had said in a news conference that bringing his predecessor to The Hague would allow “the former president to face charges of crimes against humanity in relation to his bloody war on drugs.”
The arrest of the former president dealt the finishing blow to whatever was left to the so-called “UniTeam” alliance between the Marcos and the Duterte families.
Crossing party lines, the House of Representatives last month impeached the vice president, the first time that the second highest official of the Philippines was formally charged with a serious breach of the Constitution that could lead to her removal from office following her break with Mr. Marcos.
Moving forward, ING Bank’s Bhargava said political uncertainty would likely persist as the May 12 midterm elections approach, adding that Duterte allies would need to secure Senate seats to avoid the removal of the vice president.
“This suggests that political unrest might continue, as the outcome of Sara Duterte’s impeachment trial and the potential shifts in Senate power will keep both the public and the media intensely focused on the unfolding drama,” she said.
“From the markets’ perspective, we do not expect the political climate to impact the macro stability narrative, given that our forecasts suggest contained inflation and moderating fiscal deficits,” she added.
