Phl urged to keep focus on reforms

MANILA, Philippines – Moody’s Investors Service yesterday warned prolonged focus on political matters under the Duterte administration could detract attention from economic and fiscal reforms.

In its 2017 outlook titled “Stable outlook balances external, political risks against economic, institutional reforms,” Moody’s said political risk in the Philippines is low but more unpredictable than before.

Moody’s said President Duterte who assumed office last June 30 has clashed with legislators over extrajudicial killings linked to the war on drugs and sparked controversy over allowing a hero’s burial for late president Ferdinand Marcos.

“While Duterte has high approval ratings, a prolonged focus on political matters could detract attention from economic and fiscal reforms,” the report said.

Likewise, Moody’s said President Duterte expressed his intent to pursue a more independent foreign policy such as ending joint military exercises with the US armed forces.

The country’s chief executive has launched tirades against US President Barack Obama, UN Secretary General Ban Ki-moon, and the European Union for allegedly meddling in the government’s all out war against illegal drugs.

On the other hand, President Duterte has announced his China pivot pushing closer ties with Beijing up to the point of dismissing the Permanent Court of Arbitration ruling in July 2016 that invalidated China’s territorial claims to much of the West Philippine Sea.

“While this has yet to translate to official policy changes, political risks are more unpredictable than they were before,” Moody’s said.

Uncertainties brought about by the timing of the interest rate hike by the US Federal Reserve as well as the victory of Republican Donald Trump in the US have rattled the global financial markets.

Coupled with the political noise in the domestic front, the Philippine stock market nosedived while the peso ended up as the worst performing currency in the region as it flirted with the 50 to $1 level last December.

Moody’s said its outlook for sovereign creditworthiness in Asia Pacific for 2017 is stable overall reflecting expectations for the fundamental credit conditions that would drive sovereign credit over the next 12 to 18 months.

The debt watcher said the gross domestic product (GDP) growth in the region would generally remain relatively robust but warned lackluster global demand would weigh on the more trade-reliant economies.