Fitch Solutions cites policy boost, long-term political risk as Duterte consolidates influence on Congress

EMERGING results of the May 13 mid-term elections showing President Rodrigo R. Duterte will likely consolidate his influence on lawmakers, especially those in the Senate, will mean stronger impetus for reform but also carry long-term political risk, Fitch Solutions Macro Research said in a May 14 note e-mailed to journalists on Wednesday.

“Initial results from the May 13 Philippine mid-term elections suggest incumbent President Rodrigo Duterte has further consolidated his power, ahead of the final three years of his presidential term,” read the note, titled: “Philippine Mid-Terms Boost for Duterte.”

Noting that nine of 12 top Senate bets, with 92% of votes counted, were allies of Mr. Duterte, Fitch Solutions said “[t]he strong show of support for Duterte will both give him the confidence and ability to push ahead with his reform program.”

Should final results, expected to be announced on May 19, confirm that Mr. Duterte has consolidated his hold on Congress, Fitch Solutions said it will “revise up the ‘policy-making’ sub-component of our short-term political risk score of 63.1 out of 100 for the Philippines.”

Michael Langham, senior country risk analyst at Fitch Solutions, said in a separate e-mail that “government policy should be more agile in responding to downside risks to growth,” citing in particular remaining tax reforms.

At the same time, however, “reduced opposition within the Senate lowers the potential checks and balances on Duterte’s administration and may, over time, see a decline in our long-term political risk index score of 65.4 out of 100 for the country,” the note read.

“… [A]t Fitch Solutions, we do note that too much fiscal stimulus, particularly populist policies, or reforms that aim to simply boost construction and household consumption as drivers of growth could ultimately destabilize the economy in the longer term,” Mr. Langham wrote.

As of 2:00 p.m., partial, unofficial Senate race results from 98.68% of clustered precincts in the country showed nine out of the top 12 spots occupied by Mr. Duterte’s allies still led by reelectionists Cynthia A. Villar (24,720,986) and Grace Poe-Llamanzares (21,607,707)

Partial, official results from the Commission on Elections as of 9:09 p.m. on May 14, covering 34 out of 167 clustered precincts, reflected overall dominance by Mr. Duterte’s allies, although an opposition bet — reelectionist Paolo Benigno “Bam” A. Aquino IV (2,335,724) — made it to 12^th place. The top 12 were led by Ms. Villar (4,092,454) and Ms. Poe-Llamanzares (3,650,288), followed by former special assistant to the President Christopher “Bong” T. Go (3,293,341) and Taguig City 2^nd District Rep. Pilar Julianna “Pia” S. Cayetano (3,251,819).

Rounding up the top 12 were former Philippine National Police and Corrections chief Ronald “Bato” M. Dela Rosa (3,128,061), reelectionist Juan Edgardo “Sonny” M. Angara (3,022,995), Ilocos Norte Gov. Maria Imelda Josefa “Imee” R. Marcos (2,850,643), former Metropolitan Manila Development Authority chairman Francis N. Tolentino (2,584,833), former senator and actor Manuel “Lito” M. Lapid (2,520,316), as well as reelectionists Aquilino Martin “Koko” D. Pimentel III (2,439,571), Maria Lourdes “Nancy” S. Binay (2,366,035) and Mr. Aquino. — A. L. Balinbin and V. M. M. Villegas