Shockwaves from the arrest of former President Rodrigo Duterte might affect the financial markets in the short term amid the country’s positive economic outlook, former deputy governor of the Bangko Sentral ng Pilipinas Diwa Guinigundo said Wednesday.

To ensure peace and order, Guinigundo said the government must continue to communicate with the public that it continues to focus on fulfilling its primary duties.

“The government must communicate so that people will be pacified, that Duterte’s arrest is something that does not concern them directly,” he said.

Duterte was taken under custody of the national police and in coordination of the International Criminal Police Organization upon arriving at the Ninoy Aquino International Airport last Tuesday from Hong Kong.

This was after the Netherlands-based International Criminal Court issued an arrest warrant for the former president accused of crimes against humanity due to his anti-illegal drug war.

“In the short run, financial markets may be disturbed. But over time, people will realize that something can be done here, that we don’t tolerate this kind of offense,” Guinigundo said in the general membership meeting by Management Association of the Philippines on Wednesday.

Guinigundo said the government’s cooperation with the international police signals stronger confidence in foreign investors that it values the rule of law.

Rule of law, positive effect

“It will encourage people to invest here. When there is rule of law, there is stability of investments and production,” he stressed.

The positive investor sentiment will support favorable economic outlook for the Philippines by international credit raters, Guinigundo added.

Due to manageable debt and relatively faster economic growth post-pandemic, S&P Global Ratings late last year upgraded the Philippines’ credit outlook from stable to positive for this year and the next.

“If our macroeconomic fundamentals will continue to hold and correct policies will continue to be formulated and implemented, I think we can recover,” Guinigundo said.

Following the news of Duterte’s arrest, data from the local bourse showed the Philippine Stock Exchange Index decreased by 2.42 percent to 6,206.55 last Tuesday and by 0.18 percent to 6,195.26 on Wednesday.

The Bureau of the Treasury also reported investors asked for a higher rate for seven-year bonds of around 6.143 percent, up from 6.096 percent of the comparable bond offered in the secondary market last 10 March and from 5.973 percent seen last 11 February.

However, Guinigundo said financial markets will be shaken if Duterte supporters, including followers of pastor Apollo Quiboloy, increase and mount massive protests.

“A small number of 2,000 or even 10,000 protesters won’t disrupt business activities. It will depend on how related situations are going to pan out,” he said.