US-based rating agency Moody’s Investors Services has taken note of the pressure exerted by Malacañang on big businesses, particularly on telecommunications providers as well as water concessionaires, which is considered an indication of unpredictability as well as weakening of political and legal governance in the Philippines.
In an online media roundtable, Moody’s senior vice president Christian de Guzman said the debt watcher has assigned a higher political risk to the Philippines due to the unpredictability in government policies.
In his fifth State of the Nation Address, President Duterte told PLDT’s Smart Communications and Ayala-led Globe Telecom to shape up by December or face expropriation.
Businessman Manuel V. Pangilinan leads PLDT while the Ayalas control Globe. Both businesses also control water concessionaires Maynilad Water Services Inc. through Metro Pacific Investments Corp. and Manila Water Co. through Ayala Corp.
Those water concessionaires have already been pressured into new concession deals with the government that declared their current agreements as allegedly disadvantageous to Filipinos.
Moody’s is also looking at other developments including the failure of media giant ABS CBN to obtain a new franchise from the House of Representatives.
Despite the political risk, Moody’s also took note of the country’s economic and fiscal management that can help the Philippines weather the health crisis. The economic outlook of the country remains highly uncertain, but the strengthening of the country’s fiscal position in recent years would provide a layer of protection against the COVID-19 shock. Furthermore, the country’s structural economic and external strengths remain intact, notwithstanding the acute shock from the pandemic.
Some will insist that our current leaders can afford to up the political risk because of the country’s strengths that were established by previous administrations, but wouldn’t it be more prudent if those risks didn’t have to be introduced so the Philippines and can be better positioned to weather this particularly severe global health and economic crisis?
Where do our leader’s priorities lie?*