Press Releases

On the imminent Upper Middle Income Status of the Philippines

July 21st, 2025

At the margins, the status is more academic than anything. While it comes with less access to concessional loans, it also signals greater credibility in the investor markets. The point, after all, is that you are more investable—so you need concessional terms less. We don’t finance our budget with ODA as much as we used to anyway, and we mostly do it with bond offerings now, so UMIC status will be good for the market rates of our borrowing.

So I’m not worried at all about the negative impacts of UMIC status on borrowing rates. It’s probably positive for us, if you look at it portfolio-wide.

There is low appetite for tax reform in the public space, so politicians are less likely to take them on. The online response to CMEPA, for example, was very knee-jerk. That makes new tax measures harder to move in the short term, and shifts the space for reform to the expenditure side.

There is bigger political space and public clamor for reform on the expenditure side. That means the quality of expenditure and the speed of delivery. That includes fixing procurement, improving agency absorptive capacity, and accelerating implementation of big-ticket and PPP pipeline projects.

If we can’t raise more revenue for now, we need to get more out of what we already spend.

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