Vital fiscal reforms seen with admin’s Senate win

MANILA, Philippines — With President Rodrigo Duterte consolidating power now that the administration slate seems headed for a Senate win, analysts and economists see vital structural reforms taking off, but said that a decline in “checks and balances” was a cause for concern.

“Duterte will hope that with increased support in the Senate, his reforms and fiscal plans will face less obstacles. Key reforms include shifting toward a federal system of governance, cutting corporate tax rates and reinstating  the death penalty,” the UK-based Fitch Solutions Macro Research said in a commentary on Tuesday.

“However, reduced opposition within the Senate lowers the potential for ‘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 report added.

Political stability

Euben Paracuelles, an economist at Japanese investment house Nomura, said in a separate commentary that the administration’s election win was “likely supportive of political stability and the government’s reform agenda.”

Passing fiscal reforms remained crucial, as these are designed to help fund an ambitious infrastructure program while at the same time maintaining fiscal sustainability, Paracuelles noted.

“I think the main benefit is that both houses are aligned in supporting the government agenda for constitutional change, federalism and infrastructure spending,” said Jose Mari Lacson, head of research at local fund management firm ATR Asset Management.

Moving forward, Fitch Solutions expects Mr. Duterte to begin pushing his reforms, particularly support for his federal governance plans, which would need the backing of both houses.

But Fitch Solutions said the President also faced “increased domestic pressure over his relations with China, with majority of Philippine voters distrustful of growing Chinese influence.”