Pre-election tensions to disrupt pandemic recovery — Fitch unit

MANILA, Philippines — The infighting within President Rodrigo Duterte’s political party in the run-up to the 2022 elections is threatening to get in the way of policymaking and disturb the government’s pandemic response, a unit of the Fitch group warned.

While political uncertainties are common ahead of elections, the current pre-election tensions could prove damaging to the economy’s recovery prospects as the pandemic drags on. In a report sent to journalists on Monday, Fitch Solutions warned that political distractions “could hamper efforts to reopen and support the economy”.

That said, Fitch Solutions lowered the Philippines’ Short-Term Political Risk Index (STPRI) score to 64.0 out of 100, from 64.8. A lower score reflect “higher near-term risks of political instability,” the Fitch unit explained.

“Focus will likely shift away from the need to boost the Philippines’ vaccine uptake rates and address supply issues,” Fitch Solutions said. "There is a risk that policy-making processes will slow as attention is turned to political jostling rather than measures to speed up the Philippines’ economic recovery from the Covid-19 pandemic and longer-term reforms."

Duterte’s political machine created a public spectacle in past months, one that is characterized by flip-flopping statements from the Dutertes of Davao City on their election plans as well as mudslinging within the ruling PDP-Laban party.

Currently, PDP-Laban is divided into two factions, with the camps of Duterte and Sen. Emmanuel “Manny” Pacquiao, who is emerging as a prominent challenger to the president’s camp, nominating separate candidates for key positions for next year’s presidential elections.

Last week, the president’s faction, headed by Energy Secretary Alfonso Cusi, picked Sen. Christopher “Bong” as the party’s presidential bet while Duterte accepted the nomination to run for vice president. That decision triggered tensions within the Duterte household, with presidential daughter and Davao City Mayor Sara Duterte dropping her bid for presidency because she and her father agreed that “only one of us will run for a national position”.

Pacquiao’s camp, which is composed of party mainstays like Sen. Aquilino “Koko” Pimentel III, will announce their candidates in late September.

The strife within the political party would likely force the Commission on Elections to decide which side would represent PDP-Laban in May. As it is, Fitch Solutions said the politicking could provide an opportunity for opposition candidates, “but uncertainty remains high over who will run.”

But beyond politics, Fitch Solutions said the pre-elections drama could create a big headache for Duterte’s successor, who would likely inherit an economy that won’t be back to its pre-pandemic strength anytime soon. Worse, the Fitch unit said the political jostling could delay the passage of the 2022 budget, which would effectively deny the economy and people of critical public programs during the health crisis.

“Longer-term reforms that would benefit the next president could also stall. These include proposed reforms to ease restrictions on foreign ownership in the utilities and retail sectors, as well domestic hiring requirements,” it added.