Camacho bowed out as President Arroyo’s most senior economic adviser, barely six months before she defends her post in national elections in May, a time when political pressure to loosen the purse strings becomes strongest.
"Between now and the end of (Mrs. Arroyo’s current) term, politics is going to take center stage. I do not have to participate in that," Camacho said as he announced his resignation after the stock market closed on Friday.
The foreign exchange market was the first to react to Camacho’s exit, with the local currency falling to 55.58 against the dollar on Friday, from Thursday’s close of 55.29.
Analysts said shares are expected to fall when the market reopens today.
"There will be some selldowns in the market. There will still be some more negative sentiment," said Albert Gamboa, committee chairman of the Financial Executives Institute of the Philippines.
Camacho’s departure "will weigh down the market," said Astro del Castillo of the Association of Securities Analysts of the Philippines.
He said that the "biggest" market concern is whether the government would continue to strongly pursue Camacho’s reforms and programs despite assurances there would be no policy changes.
The financial community would be closely watching to see who would replace Camacho, Del Castillo said.
Mrs. Arroyo has appointed Finance Undersecretary Juanito Amatong as "officer-in-charge" at the finance department at Camacho’s recommendation.
"The effect will be negative until they find a good replacement," Del Castillo said. "If the replacement has the same credibility with foreign investors, it will be okay."
Sergio Ortiz-Luis, head of the Philippine Chamber of Commerce and Industry, warned that Camacho’s resignation would affect the country’s prospects of getting foreign loans.
"You need somebody who can be considered a heavyweight in the international market," he said, expressing doubt that Amatong would have the required stature.
Mrs. Arroyo has vowed the government would continue with macroeconomic reforms aimed at keeping the country’s chronic budget deficit and inflation under control.
"What we need most are fiscal reforms, macroeconomic reforms ... if we keep on spending without anything being added to our revenue collection, things will become harder for the government," she said on Saturday.
Camacho’s swift action on the deficit had given the Philippines a measure of international respectability.
The budget deficit in the first 10 months of the year stood at 163.88 billion pesos ($2.95 million), or 4.7 percent below the official ceiling.
Manila is confident the full-year figure would be within the target ceiling of P202 billion. – AFP