Credit rating agency Fitch unit BMI Research said it may downgrade the short-term political risk index score for the Philippines if the resignation of Vice President Leni Robredo as Housing secretary results in additional resignations from President Rodrigo Duterte’s Cabinet.
“Although the Philippine Vice President Leni Robredo’s resignation from her Cabinet post is unlikely to lead to any political instability over the immediate term, we believe that this could be an indicator of wider discontent within Duterte’s cabinet over his style of leadership,” BMI Research said in a report released Wednesday.
Robredo quit her post as chair of the Housing and Urban Development Coordinating Council on Monday, saying she was advised by the Palace to desist from attending Cabinet meetings starting that day, which she took as an indication of a plot to unseat her.
BMI Research’s report said that Robredo’s move, given Duterte’s “strongman” leadership style and his propensity to act before consulting his Cabinet on important issues such as foreign policy, could lead to more Cabinet-level resignations in the months ahead, potentially leading to disruptions in policy formation and enactment.
At this point, however, BMI is maintaining the Philippines’ short-term political risk score of 64.6 (out of 100). But it added that any exodus of Cabinet officials in the coming months could prompt the research outfit to pencil in a downgrade.
“Any additional resignation by key members of the cabinet could prompt us to downgrade the country’s short-term political risk index score,” it said.
The country’s current policy-making process – a subcomponent of BMI’s short-term political risk index – stands at 74.6, and compares favorably with the rest of the region.
Robredo had pointed out that from the start of the new administration, she and President Duterte knew they had major differences.
When the stock market on Monday reflected some reaction to her resignation, analysts said political dissent at the top, though not unexpected, hurts an already fragile domestic financial market.
The marketing and research head of A&A Securities, Justino Calaycay Jr., said then that a Cabinet member quitting her post over political differences with the President “shows the imbalance of views in the Cabinet as it takes no opposition to the President’s views. This is dangerous in the sense that an alternate view lends a wider perspective to policy formulation.”
Beyond the knee-jerk reaction, however, the analysts polled by The Manila Times at the time said they did not see Robredo’s move and political differences in government having a significant impact on investment, unless such differences got reflected in economic policy-making by the Cabinet.