Pressure mounts on Marcos from graft scandal

Rising anger in the Philippines over a huge corruption scandal has forced out two ministers from President Ferdinand Marcos Jr's cabinet, testing his administration’s efforts to restore public trust and investor confidence.

- MANOLO SERAPIO JR DITAS LOPEZ

This file photo, dated Nov 16, shows protesters holding a banner calling for the resignation of Philippine President Ferdinand Marcos Jr during an anti-corruption rally in Quezon City, Metro Manila. AFP

(AFP)

The revamp underscores Mr Marcos’s determination to press ahead with his corruption crackdown, even as allegations touch his own allies. It also reflects growing pressure on the president from the graft claims linked to flood-mitigation projects in one of the world’s most typhoon-prone countries.

Whether it’s enough to arrest deteriorating sentiment is unclear. The unfolding scandal, which Mr Marcos first exposed in July, caused economic growth to slump in the third quarter and has weakened both the peso and stocks. The cabinet reshuffle adds anew layer of uncertainty, analysts say, and could put Philippine assets under renewed pressure.

Markets were largely steady yesterday, with the peso off 0.1% at 58.98 to the dollar at 10.55am in Manila, and the main stock index up 0.2%. Still, the Philippines’ benchmark stock index has fallen 11% this year, bucking gains across the region, with the MSCI Asia Pacific Index up 23%. Manila is the world’s third-worst-performing stock market this year, according to data compiled by Bloomberg.

“The resignation of two cabinet officials may help defuse the situation because the budget controversy happened under their watch, but it will not dissolve public anger and frustration,” said Bob Herrera-Lim, managing director of risk consultancy Teneo. The crisis will likely persist through early next year, and the outcome hinges on whether those involved in graft will be held to account regardless of their links to Mr Marcos, he said.