Philippine Peso Slumps as Graft Scandal Deepens, Weighing on Investor Confidence

The Philippines took a major step in its ongoing anti-graft campaign on Tuesday, as the Office of the Ombudsman filed the first criminal charges against officials implicated in a corruption scandal involving flood infrastructure. The case centers on resigned lawmaker Zaldy Co and several public works officials, accused of violating anti-graft and public fund misappropriation laws. The move marks a turning point in President Ferdinand Marcos Jr.'s efforts to restore public trust and investor confidence after months of scandal.

The corruption allegations involve billions of pesos in misused public funds, with some projects found to be substandard, poorly documented, or non-existent.

The scandal has gripped the nation since Marcos first revealed the misuse in July, triggering widespread public outrage and protests. The fallout has already affected economic growth, with the third-quarter GDP falling short of expectations.

Marcos has faced mounting pressure to address the corruption, with critics accusing him of delaying accountability. Vice President Sara Duterte has publicly criticized the administration's handling of the investigation, calling it a "crisis of confidence." Meanwhile, civil society groups and church leaders have organized large-scale protests, demanding justice for what they describe as systemic graft.

The Political and Economic Fallout

The scandal has deepened as more allegations surface, including accusations against Marcos himself. Ex-Congressman Zaldy Co, who was at the center of the controversy, claimed in a video posted online that Marcos received 25 billion pesos in kickbacks from flood-related projects. Marcos's office has dismissed the claims as "propaganda," but the controversy has further damaged the administration's credibility.

Public spending has also taken a hit. Infrastructure outlays fell sharply in the third quarter, contributing to a weaker-than-expected economic growth rate. The government has frozen more than 6 billion pesos in assets tied to those implicated in the scandal, with officials vowing to seek their forfeiture.

Legal Actions and Public Reactions

The Ombudsman has signaled that more legal actions are likely to follow. In a televised briefing, the office's spokesperson noted that the charges filed against Co and public works officials are the first of many expected in the coming weeks. The cases now proceed to the Sandiganbayan anti-graft court, where they will be heard according to reports.

Meanwhile, protests continue across the country. Over 200,000 people gathered on Monday at Rizal Park in Manila for the second consecutive day of anti-graft demonstrations. Many protesters, including students and farmers, shared personal stories of how the scandal has impacted their lives, calling for those responsible to be jailed according to analysis.

What Analysts Are Watching

Investor sentiment has been severely impacted by the scandal. The peso has weakened, and the stock market has fallen, reflecting growing concerns over the Philippines' economic stability. Analysts are closely watching how the Marcos administration responds to the crisis and whether it can effectively restore confidence in public spending.

Some believe that the resignation of key cabinet officials, including Executive Secretary Lucas Bersamin and Budget Secretary Amenah Pangandaman, could help ease tensions. However, experts caution that these moves alone may not be enough to quell public anger unless more high-profile individuals are held accountable according to Bloomberg analysis.

Marcos has vowed to jail those found guilty by Christmas, but the process will require swift judicial action and public transparency. The outcome of the ongoing investigation and the administration's ability to manage the fallout will play a crucial role in shaping the country's economic and political future.