THE country is expected to lose access to some official development assistance (ODA) after it achieved upper-middle-income status, a Cabinet official said, but stronger economic fundamentals should more than offset this.
Socioeconomic Planning Secretary Arsenio Balisacan said the World Bank reclassification, announced late on Wednesday, would alter the mix of development financing available to the Philippines.
“While some concessional official development assistance may decline over time, the gains from stronger fundamentals and improved market access are expected to outweigh these adjustments,” he said.
The World Bank upgraded the country as gross national income (GNI) per capita hit $4,850 in 2025, reaching the upper middle-income threshold of $4,636 to $14,375.
The tradeoff is that attaining upper-middle-income status means losing access to concessional loans, subsidized financing and grants from development partners such as the World Bank and the Asian Development Bank.
Balisacan, however, said that the Philippines’ elevation signaled growing confidence in the country’s economic strength rather than the loss of financing options.
“The new classification is expected to strengthen the country’s credit profile, boost investor confidence and expand access to financing and higher-quality investments that generate better jobs for Filipinos,” he said.
Data from the Department of Economy, Planning and Development showed that the total value of the Philippines’ active ODA-funded projects grew by 6.0 percent to $39.6 billion in 2024 from $37.3 billion in 2023, spread across 426 loans and grants.
Loan commitments for infrastructure projects drove the increase, with nine of 17 fresh loans worth $8.2 billion supporting the administration’s infrastructure flagship projects.
Deepening capital markets
Chinabank Research, however, said access to concessional financing would not be “immediate as the eligibility for these facilities is generally phased out only when the GNI per capita exceeds $7,000.”
It added that the upgrade would gradually reshape the country’s financing landscape by encouraging greater reliance on market-based funding.
“The country’s upgrade may improve visibility among both onshore and offshore fixed-income investors, potentially leading to greater demand for government securities,” Chinabank said.
The government is expected to increasingly tap domestic and international capital markets, expand public-private partnerships and attract greater private sector participation in financing infrastructure and development initiatives.
“Rising income levels and a growing economy could enhance the Philippines’ appeal to foreign investors,” Chinabank said.
“This may help attract greater investment in industries such as manufacturing, technology, renewable energy, which typically generate high-quality jobs, improve productivity, and support long-term economic growth.”
‘More demanding journey’
Reyes Tacandong & Co. senior adviser Jonathan Ravelas, meanwhile, said the upgrade was the “beginning of a more demanding journey.”
“Government must use this opportunity to accelerate infrastructure, attract more investments, improve education and skills development, and create better-paying jobs so that economic growth translates into higher living standards for ordinary Filipinos,” he said.
“At the same time, we must be realistic. UMIC status reflects our economic progress at the national level, but it does not automatically mean that every Filipino is now better off.”
Ravelas noted many Filipino families were continuing to struggle with high prices, low incomes and limited economic opportunities, which underscores the need to ensure that economic growth benefits more people.
Union Bank of the Philippines chief economist Ruben Carlo Asuncion, for his part, said the country must focus on accelerating investments in infrastructure, education, healthcare and digitalization.
“Policies that encourage private investment, generate quality jobs, strengthen human capital, and enhance resilience to external shocks and climate-related risks will also be crucial,” he said.
“Ultimately, sustained economic growth that translates into higher incomes and broader opportunities for Filipinos will determine whether the country can successfully maintain its upper-middle-income standing over the long term,” he added.
