PH’s Upper-Middle-Income Status May Affect Loan Access

WITH the country’s elevation to upper-middle-income economy, socioeconomic planning secretary Arsenio Balisacan disclosed that there is no need to worry about the country losing access to some official development assistance (ODA) amid stronger economic fundamentals. 

Balisacan explained this would mean that although the World Bank (WB) reclassification would alter the mix of development financing available to the Philippines, the gains from stronger fundamentals and improved market access are expected to outweigh the said adjustments. 

The Philippines was upgraded as gross national income (GNI) per capita hit $4,850 in 2025, breaching the upper middle-income threshold of $4,636 to $14,375.

Despite the positive development, the tradeoff is that in attaining upper-middle-income status would mean losing access to concessional loans, subsidized financing and grants from development partners such as the World Bank and the Asian Development Bank (ADB).

Still, Balisacan viewed 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,” the socioeconomic chief pointed out.

Data from the Department of Economy, Planning and Development (DEPDev) 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.

DEPDev attributed the increase to loan commitments for infrastructure projects with nine of 17 fresh loans worth $8.2 billion supporting the administration’s infrastructure flagship projects.

Meanwhile, Chinabank Research forecasted that 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 alter 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,” it noted even as 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. 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,” Chinabank continued. 

On the other hand, Reyes Tacandong & Company senior adviser Jonathan Ravelas observed that the upgrade was the “beginning of a more demanding journey” for the Philippine economy. 

“The 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,” Ravelas stressed.

“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,” he added. 

The renowned market strategist noted that many Filipino families are already struggling with high prices, low income 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 agreed, provided that the country 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,” Asuncion spelled out.

“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 concluded.