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Two cabinet ministers in the Philippines have resigned after being linked to alleged graft over flood-control projects, as the government of President Ferdinand Marcos Jr grapples with the fallout of the mounting scandal that has undermined investor confidence and economic growth.
Executive secretary Lucas Bersamin and budget and management secretary Amenah Pangandaman, stepped down late on Monday “after their departments were mentioned in allegations related to the flood control anomaly currently under investigation”, according to presidential spokesperson Claire Castro. Both have denied accusations of corruption.
The resulting cabinet reshuffle also led to the appointment of a new finance chief, Frederick Go, who was previously special assistant to the president for investment and economic affairs.
The Philippines has been engulfed in a months-long scandal over alleged corruption in flood control projects awarded by the government.
$2bn
Average annual loss to alleged flood-control corruption
Public anger erupted after severe flooding in July caused several deaths and forced tens of thousands of people to evacuate Manila, the capital, and other parts of the country. The archipelago is one of Asia’s most typhoon-prone countries, and is frequently hit with intense rains and floods.
The alleged corruption was first revealed in August by Marcos, who pointed to financial irregularities that he said had caused flood-control infrastructure to fail. He has launched an independent fact-finding commission to probe the allegations.
Congressional hearings in the months since have implicated public officials, senators and construction groups, which have been accused of enriching themselves through project contracts while failing to deliver the projects or delivering substandard infrastructure.
Authorities say billions of pesos may have been lost and they have frozen hundreds of bank accounts allegedly linked to the scandal. The finance department has estimated that economic losses from corruption in flood control projects may have averaged 118.5bn pesos ($2bn) annually from 2023 to 2025.
The president’s cousin and speaker of the house of representatives, Martin Romualdez, has also resigned after he was linked to the scandal. He has denied wrongdoing.
Hundreds of thousands of Filipinos have taken to the streets calling for accountability. This week, an influential church group held a massive demonstration in Manila.
Marcos, whose father was accused of widespread corruption during his rule from 1965 to 1986, has also come under mounting political pressure.
He has promised to arrest lawmakers and business executives implicated in the case by Christmas. The elder Marcos was ousted after public discontent over corruption and human rights abuses.
Vice-president Sara Duterte, who has fallen out with Marcos after they came to power together in 2022, attacked the president this week, saying he “faces a profound crisis of confidence, especially in the way these corruption investigations are being handled, which appear to lack both direction and resolve”.
The flood-control scandal has also dented investor confidence, with the benchmark Philippines stock index declining 12 per cent this year. The peso has weakened almost 7 per cent against the US dollar since late May.
Economists said third-quarter growth has also been affected, as the government has cut back spending due to the probe. The economy grew 4 per cent in the third quarter on a year earlier, compared with 5.5 per cent growth in the previous quarter.
ING this month lowered its full-year growth forecast from 5.2 per cent to 4.7 per cent, pointing to a “sharp pullback in investments . . . weaker public capex, reduced construction activity, and dampening private sector sentiment”.
