MANILA: The national government of the Philippines is exploring alternative formats for offshore funding as the country transitions away from its reliance on official development assistance (ODA) loans, according to economic managers. This strategic shift comes as the Philippines is poised to achieve upper-middle-income status, which will affect its eligibility for certain types of financial aid.
According to Philippines News Agency, the Development Budget Coordination Committee (DBCC) has identified Eurobonds, Environmental, Social and Governance (ESG)-linked notes, and Sukuk or Islamic bonds as potential options for offshore funding. The committee emphasized the importance of leveraging the Philippines’ sovereign creditworthiness to secure affordable credit from international markets, complementing its domestic funding efforts.
The move to explore different funding formats is part of the government’s broader strategy to maintain reliable access to foreign currency-denominated market financing, especially
as the country approaches its goal of becoming an upper-middle-income country (UMIC) by next year. Achieving this status would mean losing access to ODA loans, which are typically contracted with foreign governments to promote sustainable social and economic development.
National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan provided assurances that the Philippines’ development partners would continue to offer access to ODA loans, at least in the near term. Balisacan noted, “What we are told by some is that once you graduate from a lower middle-income country, you lose already your ODA privileges, which means a lower subsidized interest rate. But we are assured, when we are talking with our development partners, that at least for the near term, we continue to have access to similarly attractive loans.”
Highlighting the long-term nature of many current ODA arrangements, Balisacan mentioned that the government is actively approving projects to take advantage of the favorable conditions
while still classified as a lower middle-income country. NEDA Undersecretary Joseph Capuno added that the grace period for concessional terms on ODA loans would extend until 2027, allowing time for preparation of infrastructure flagship projects funded by such assistance.
The government’s proactive engagement with development partners and implementing agencies underscores its commitment to ensuring a smooth transition as it approaches the next stage of economic growth and development.
