A lack of accountability in dealing with corrupt politicians may precipitate further political unrest and worsen the country’s already grim economic outlook, according to Fitch Solutions unit BMI.

In a Friday commentary, BMI said that while the Middle East conflict remains the primary external risk facing the Philippines, failure to hold corrupt officials accountable threatens to undermine stability through growing public discontent.

“The appearance of impropriety or perceived lack of accountability is likely to undermine the credibility of the corruption probe, which we think will keep political risk elevated in the Philippines,” BMI said.

“[A] potential trigger for renewed unrest is the perception that senior figures remain insulated from accountability,” it added.

BMI’s commentary follows a week of intensifying political developments. On Monday, Vicente “Tito” Sotto was ousted as Senate President in favor of Alan Peter Cayetano, who previously served as House Speaker under former president Rodrigo Duterte.

The timing of Cayetano’s ascent to the Senate presidency drew scrutiny, with Vice President Sara Duterte’s second impeachment proceedings headed to the Upper House and Senator Ronald “Bato” dela Rosa reportedly facing the possible service of an International Criminal Court warrant tied to alleged crimes against humanity committed during his tenure as Philippine National Police chief under the elder Duterte, who is currently detained in The Hague awaiting trial on similar charges.

Following a dramatic return to the Senate on Tuesday, tensions escalated when gunshots were reportedly fired inside Senate premises on Wednesday evening, prompting a lockdown shortly after the Articles of Impeachment against Duterte were transmitted to the chamber past 7:30PM.

BMI noted that Senators Francis “Chiz” Escudero, Joel Villanueva, and Jinggoy Estrada — all allegedly linked to the ongoing flood control scandal for further investigation — voted in favor of Cayetano, adding that his leadership may intensify already elevated political frictions.

“As a key ally of Sara, [Cayetano’s] accession significantly reduces the already narrow path to conviction. Indeed, Duterte allies can now shape the pace and narrative of the trial,” BMI said.

“If the Senate overreaches by either stonewalling proceedings or dispensing with a proper trial, this will likely prove divisive given mounting clamour for a proper trial, raising political risks in the Philippines,” it added.

BMI also said the Philippines’ Rule of Law Indicator under its Political Risk Index has been steadily deteriorating, highlighting increasing risks of weakened accountability.

The commentary echoed earlier warnings from political economists that domestic political tensions could further complicate an already fragile economic environment amid the global energy crisis.

“[T]here are a lot of complicating factors in terms of how our ability to manage the crisis turns into a broader political narrative,” political economist Bob Herrera-Lim said previously.

“We can’t disentangle these things from what is happening in the world outside,” he added, noting that the Marcos administration’s handling of the energy crisis, alongside Vice President Duterte’s impeachment proceedings, may have “material effects” on the economy.

The still-unresolved “floodgate” scandal was widely cited as a major factor behind economic growth slowing below target to 4.4 percent last year. Analysts and government officials alike said investigations into the controversy weakened infrastructure spending and investor sentiment, dragging down overall growth and underscoring the economic costs of political instability.

Cayetano’s Senate presidency marks the latest political victory for the Duterte camp, whose widening rift with the Marcos faction stands in stark contrast to the “UniTeam” alliance formed during the 2022 elections.

Political economist Julio Teehankee warned in November that tensions between the Marcos and Duterte camps had “fundamentally fractured the ruling coalition, creating an environment of intense political instability that directly impedes effective governance and risks delaying key structural economic reforms.”

Economic growth further slowed to 2.8 percent in the first quarter of this year, which the government attributed to lingering effects of the infrastructure scandal and the global oil shortage.

Economy, Planning and Development Secretary Arsenio Balisacan said reforms remain a key priority for the administration moving forward.

“Restoring public trust and strengthening institutional credibility remain among the Marcos administration’s highest priorities,” Balisacan said.

“Addressing corruption fairly and transparently is essential to rebuilding confidence among businesses, investors, and consumers alike.”