Fitch Ratings: Flood control fiasco imperils Phl credit rating

The Philippine economy continues to bear the brunt of the ongoing flood control corruption scandal, Fitch Ratings said, noting that further unrest could spill over to the country's credit rating.

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Fitch Ratings Head of Asia-Pacific Sovereigns Thomas Rookmaaker said the controversy surrounding the anomalous government flood control projects threatens the country's political stability, fiscal policy implementation, as well as business and consumer confidence.

"We believe that the flood control corruption scandal in the Philippines poses an ongoing risk to political stability, fiscal policy execution, and business and consumer confidence," Mr. Rookmaaker told BusinessWorld in an email.

Government officials, lawmakers and contractors have been accused of getting billions of pesos in kickbacks from substandard or nonexistent flood control projects. This has triggered widespread protests, slowed government spending, and hurt investor and consumer sentiment.

"The overall impact the scandal will have on the Philippines' public finances is still uncertain," Mr. Rookmaaker said.

"Public investment spending is likely to remain weak for quite some time, but continued social unrest could simultaneously lead to spending pressures to head off public discontent."

In October, government spending fell for a third straight month to P430.6 billion, down 7.76% from P466.8 billion a year ago. Revenues likewise slipped by 6.64% to P441.7 billion from P473.1 billion last year.