The infighting within the the ruling party, Partido Demokratiko Pilipino-Lakas ng Bayan (PDP-Laban), may disrupt the government’s policymaking at the height of a pandemic-induced crisis, Fitch Solutions said.
In a commentary published by Fitch Solutions on Monday, Sept. 13, the research group said the pre-election tensions are being a threat in the Philippines as the Duterte administration’s focus will likely shift away from COVID-19 ahead of the May 2022 elections.
“Political distractions and infighting within the governing coalition could hamper efforts to reopen and support the economy,” the report from the research arm of credit ratings agency Fitch Group said.
In particulars, Fitch Solutions said the tug of war between the factions of President Rodrigo Duterte and Senator Manny Pacquiao is detrimental to the country’s near-term policy-making outlook.
“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,” the commentary said.
Fitch Solution said there is already “confusion” over the quarantine protocols in the country that highlighted the uncertainty facing the economy in the near term.
Moreover, COVID-19 cases have been surging domestically as the more infectious Delta variant has become prevalent and leading economic readings point to continued economic weakness, Fitch Solutions said.
Similarly, the research firm said Google mobility data suggested that retail and recreation, transit and workplace activity remained significantly below pre-pandemic levels, while Filipinos are also being squeezed by high inflation.
“The prospects of easing social restriction measures also remain relatively low, due to the country’s low vaccination rate; 17.3 percent of the population have received one vaccine dose and 14.6 percent are fully vaccinated as of September 8,” the report said.
For this reason, Fitch Solutions has downgraded the country's Short-Term Political Risk Index (STPRI) score from 64.8 to 6.0.
“We lowered the policy-continuity score to reflect our expectations for disruptions. Indeed, signs of significant disruptions to policymaking, such as delays to the passing of the 2022 budget, could prompt us to revise our score even lower,” Fitch Solutions said.
However, Fitch Solutions noted that the infighting within PDP-Laban raised the prospects for opposition candidates winning the presidency.
So far, Senator Panfilo Lacson and Senate President Tito Sotto are two who have officially launched their presidential and vice-presidential bids for next year.
There is also speculation that Pacquiao could run for president and there were reports that he has met several times with Vice-President Leni Robredo, which raised the possibility of a broad coalition between the senator and the opposition,
However, uncertainty remains over what President Duterte’s daughter Sara Duterte and Ferdinand “Bongbong” Marcos Jr. plan to do, given their strong support bases.
“We highlight that alliances can switch ahead of the October 8 deadline for candidates’ nominations, as the split within the PDP-Laban has shown,” Fitch Solutions said.