IMPLEMENTING an endgame to the week-old siege of Marawi City is a tall order for the military, but one that must be executed swiftly to douse any speculation of spiraling political and security instability that would imperil the socio-economic gains this country has been trying so hard to achieve for decades.
At least two credit rating agencies have acknowledged how perilous the situation in Mindanao has become. And the country’s top economic manager, Socio-economic Planning Secretary Ernesto Pernia, no less has conceded how serious the situation is.
The latest body count places at least 46 combatants killed—15 security forces and 31 rebels—plus eight civilians confirmed killed, but the fate of innocent civilians taken hostage by the terrorists remains unknown.
On May 24, a day after President Rodrigo Duterte issued Proclamation 216, “Declaring a state of martial law and suspending the writ of habeas corpus in the whole of Mindanao,” S&P Global Ratings affirmed the investment grade credit rating of telco PLDT, but with a cautionary remark on the country’s security situation.
“We affirmed the ratings on PLDT because we expect the company to maintain its business fundamentals over the next 12 to 24 months despite our assessment of an increase in country risk in the Philippines,” said S&P Global.
The credit watchdog criticized the Duterte government’s policies on foreign relations and national security. “On May 23, 2017, we lowered our country risk score of [the]Philippines from moderately high risk to high risk. This reflects slightly diminished predictability of future policies as a result of the government’s pronouncements on foreign policy and national security,” it said.
S&P Global, which regards the Philippines as an investment grade sovereign debtor, now perceives the business and financial climate in the country in a bad light. “In our view, the Philippines no longer demonstrates an evident strength in its business or financial environment compared to those of similarly ranked countries such as Indonesia and Vietnam,” it said.
In reaffirming a stable outlook on the country’s credit rating, S&P Global said it did so because “… we do not expect improvements in the country’s economic, financial and institutional environment in the near term.”
Global credit rating agencies can afford to be scathing in their comments in their country risk assessments, but government officials, particularly Cabinet officials like Pernia, must strike a balance between their analysis of the situation and their employer—the Duterte administration—if they want to keep their jobs.
“We trust the President and his security officials to do what has to be done to restore peace and order and protect our fellow Filipinos in the South,” Pernia said in a statement released by the National Economic and Development Authority over the weekend.
However well-meaning Pernia is in his zeal to put forward the greater good of inclusive economic growth, his statement must not be misconstrued as a license to abuse power and authority even with martial law in place, especially the military authorities that are implementing Proclamation 216 in Mindanao.
Phelim Kine, deputy Asia director ot Human Rights Watch, emphasized that the government has a responsibility to protect the population from armed militants, “but gaining the backing of affected people means abiding by the rule of law.”
Because of the Marawi siege, BMI Research, a company from the Fitch credit rating agency, downgraded the country’s “short-term political risk index score to 63.1, out of 100, from 63.5 previously.”
Pernia also emphasized that economic growth cannot be sufficiently sustained nor be inclusive without peace and achieving peace; security and public order is a bedrock strategy under the Philippine Development Plan 2017-2022. The impact on the economy of the crisis in Mindanao will largely depend on how things pan out.