MANILA (Reuters) - Benigno Aquino was cruising to victory in the Philippine presidential race on Tuesday after fears of a failed election proved unfounded, with attention turning to whether he can deliver his promised economic reforms.
The country’s first automated election ran far better than many had expected -- particularly after a technical problem last week -- and the quick, clear result allowed investors to bypass fears of prolonged political instability.
The stock market gained 3.85 percent and the peso rose more than 1 percent as Aquino’s strong lead added to the boost from the euro zone rescue package that lifted global markets and investor sentiment this week.
“A strong mandate will bring policy continuity, which is what people want to see. The last thing they want to see is always uncertainty, as we’ve seen in Britain,” said Song Seng Wun, regional economist at CIMB Research in Singapore. “The popular support hopefully will translate into confidence in the economy.”
To sustain that confidence, Aquino must deliver on promises to crack down on graft and bring the yawning budget deficit under control by cutting spending and collecting more tax revenue.
Questions remain over whether the 50-year-old senator, who has had a lackluster career as a lawmaker, will be strong enough to press ahead with reforms and tame the deficit, which is expected to top 300 billion pesos ($6.7 billion) this year.
The source of Aquino’s popularity is largely his parents’ legacy, rather than his own unremarkable political achievements.
His anti-corruption platform was founded on the goodwill generated by the family name and its reputation for propriety -- his father was an opposition leader assassinated during the reign of Ferdinand Marcos. His mother Corazon took up the mantle and became president when the People Power revolution ousted Marcos.
Her death last August powered an emotion-driven push for her son, popularly known as “Noynoy,” to run for the presidency.
Aquino said his priorities would be increasing the efficiency of tax collection and cutting back unnecessary public spending.
“We have to do away with the frivolous items of this government,” he said in an interview with Reuters in a museum devoted to his parents at the family estate north of Manila.
He reiterated the fiscal position could be improved by better collection of existing taxes and rejected a suggestion by the current finance minister to increase the rate of consumption tax.
“Before we start imposing new taxes, we should be collecting the taxes that are already there,” Aquino said.
Many financial analysts believe he may have to backtrack and impose tax increases to prevent the country facing fiscal crisis.
“Tackling the deficit would be the number one priority for the next government,” said Paul Joseph Garcia, chief investment officer of ING Investment Management Philippines.
“We’re not in a Greece-type level of fiscal crisis, but definitely the fiscal deficit is a priority for the next administration. They may have to increase taxes, that will of course need a lot of political will,” he said.
Aquino is likely to at least have a decisive mandate. The Commission on Elections said Aquino had 40.2 percent of votes with 78.55 percent counted by early Tuesday. Former president Joseph Estrada was second with 25.5 percent.
Aquino had 12.3 million votes to Estrada’s 7.8 million, with 30.4 million votes counted. Comelec has said there was a turnout of about 75 percent of 50.7 million registered voters.
“A clear-cut triumph would remove under-currents of political legitimacy that accompanied the incumbent Arroyo administration and hamstrung its policy agenda,” said Tom Byrne, sovereign regional credit officer for Asia at Moody’s Investor Services.
But electoral legitimacy does not mean he can avoid worrying about keeping political allies and powerful groups on side.
“Aquino will have to prove that his short political resume will not prevent him from effective policy-making, as he tries to manage the inevitable competing interests,” said Roberto Herrera-Lim, Asia director for the Eurasia Group consultancy.
One key power bloc is the military, which has exerted a strong influence since the fall of Marcos, although its role this election was largely limited to providing security in what has been considered one of the country’s least-violent polls.
Cory Aquino faced a number of coup attempts when president but Major-General Gaudencio Pangilinan, head of the military’s operations division, said her son would find a changed military.
“The armed forces that president Aquino the mother inherited was kind of problematic,” he said. “The organization now has matured ... and our direction, our professionalism is highest.”
Aquino will also have to contend with the family of the late dictator -- Marcos’s widow, Imelda, won a seat in Congress, daughter Imee won a local governor’s position and son Ferdinand Jr was on track to be elected one of 12 senators -- as well as outgoing president Gloria Macapagal Arroyo.
Arroyo, who was ineligible to run for president again, won a seat in Congress in the election. Analysts and opponents think she wants to become Speaker of the House, from where she could push for the introduction of a parliamentary system to create the role of prime minister and reduce the power of the president.
Additional reporting by Rosemarie Francisco and Manolo Serapio Jr; Editing by Andrew Marshall and Paul Tait