Government reforms addressing corruption remain imperative to restoring investor confidence in the Philippine economy, according to RCBC Chief Economist Michael Ricafort.

In an exclusive statement to DAILY TRIBUNE, Ricafort said meaningful reforms addressing governance issues must remain a priority despite the country’s recent political developments.

“What’s really important is that priority reform measures, especially those that require legislation, stay on track and are not distracted by political noise,” he said.

“Predictability is also important for other legislative reform measures that further improve governance, the economy, fiscal management, among others, to be tackled and eventually passed in a timely manner,” he added.

Economic growth began slowing sharply in the second half of last year, coinciding with the exposure of the flood control scandal to the general public. Gross domestic product (GDP) growth fell to 4.4 percent — below the government’s target for the third consecutive year — as probes into the controversy led to weaker public infrastructure spending and deteriorating investor confidence.

In response to the latest corruption scandal, the Marcos administration has vowed to enhance transparency in the national budgeting process, implement stricter oversight over future infrastructure projects, and pursue digitalization and ease-of-doing-business reforms aimed at restoring credibility in the broader business environment.

Ricafort said the success of these reforms weighs heavily on investor sentiment, which had already remained subdued even before the Middle East conflict escalated in March, based on surveys conducted by the Bangko Sentral ng Pilipinas.

“These factors are also considered by investors, especially legislative reform measures that pertain to and benefit them,” he said.

However, the still-unresolved “floodgate” scandal has continued to cast a shadow over the economy, even as newer political and geopolitical developments take center stage.

The Middle East conflict’s broad economic impact has compounded the country’s already weak growth outlook, which had already been downgraded by institutions such as the Asian Development Bank (ADB), S&P Global, and the World Bank following the corruption controversy.

GDP growth slowed further to 2.8 percent in the first quarter of this year, which government officials likewise attributed to lingering effects of the graft scandal and the global energy shock.

In a Friday commentary, Fitch Solutions unit BMI warned that the government’s failure to hold corrupt politicians accountable, alongside Vice President Sara Duterte’s ongoing impeachment proceedings, may keep the country’s perceived political risk elevated and further weaken institutional credibility.

“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.

“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.

Following the release of the weak first-quarter growth figures, Economy, Planning and Development Secretary Arsenio Balisacan said reforms remain among the administration’s top priorities 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.”