By Manuel Mogato
MANILA (Reuters) - Philippine President Benigno Aquino was set on Tuesday to win unprecedented control of the two chambers of Congress after mid-term elections, raising hopes for his reforms to sustain growth, create jobs and make a dent on chronic poverty.
But the political comeback of disgraced former President Joseph Estrada, the leader of the opposition who won as mayor of the capital Manila, could spoil Aquino's reform momentum beyond his term, which ends in 2016.
Initial results from Monday's election show Estrada and his ally, Vice President Jejomar Binay, remain a formidable force in Philippine politics and could stop Aquino's chosen successor from winning the next presidential elections in 2016. Binay is expected to mount a strong presidential challenge.
With about 75 percent of unofficial vote tallies, Aquino's allies are poised to gain control of the Senate, with his coalition winning nine of a dozen seats up for grabs.
He also keeps an overwhelming majority in the lower house of Congress, becoming the country's only president to enjoy a clear majority in Congress since democracy was restored in 1986.
"This is a strong result and a clear endorsement of Aquino's reform agenda on which he now looks likely to make more progress as he gains control of the Senate," said Euben Paracuelles, an economist with Nomura in Singapore.
Aquino -- the only son of late president Corazon Aquino and her assassinated former senator husband, also called Benigno Aquino -- won the presidency in 2010 on a platform of good governance and fighting corruption to cut poverty.
Consistently enjoying popularity ratings of more than 70 percent, he has overseen a revival of investor interest in the country thanks to strong growth rates, improving public finances and his anti-graft drive.
The economy grew 6.6 percent in 2012, the fastest in the region after China. It also narrowed its fiscal gap and earned credit upgrades to investment grade in the last two months.
While allegations of vote-buying and fraud, and some incidents of violence, disrupted balloting in some places in the provinces, security officials and the election organizer declared the vote a success. The Election Commission expects to announce winning senators within the next 24 to 48 hours.
Aquino still faces problems, with a poverty rate persistently high at 28 percent and no clear fall in unemployment. Foreign direct investment also lags that of many neighbors.
Jose Mario Cuyegkeng, an economist at ING Bank in Manila, said the government had to ensure improvements on the fiscal side in order to bring about sustained growth.
"Which means you have to get the reforms on the fiscal incentives through Congress," Cuyegkeng told Reuters.
The government wants to reform incentives given to investors to plug tax holes and raise more revenue. Cuyegkeng said Aquino also had to address chronic revenue shortfalls and institute an acceptable revenue-sharing measure in mining projects.
Policymakers are also taking a look at how the government can liberalize foreign direct investment in areas like retail, agriculture and property, but that may need changing the constitution.
Markets already have one eye on the 2016 presidential election, with the risk that economic reforms could backslide if Aquino's preferred candidate does not win. Aquino is barred from running for another six-year term.
Estrada, 76, wearing his trademark orange-colored jacket and shoes and white wristband with the presidential seal, was mobbed by supporters as he was declared winner in the race for mayor of Manila.
The former movie star's scandal-plagued three-year presidency was cut short by protests in 2001 that resulted in his imprisonment, but he retains a strong following among millions of poor Filipinos.
His control over the vote-rich city in the next three years gives the opposition an important power base, potentially boosting its chances of taking the presidency in 2016.
"This is a day of triumph not only for Erap but for the Filipino masses, especially the poor Manilans," Estrada, known by his nickname "Erap", or pal, told a boisterous crowd.
(Additional Reporting By Rosemarie Francisco, Dan Carlo Canlas, Luis Miclat and Aljan Quilates; Editing by Robert Birsel)