The Philippines government is accelerating approval of development projects following the World Bank's classification of the country as an upper-middle-income economy, with officials announcing the strategy during a press chat on Monday, July 6. Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio Balisacan confirmed the country has a three-year transition period to secure concessional loans before access to cheaper development financing gradually narrows. The reclassification came after the Philippines' gross national income per capita reached $4,850 in 2025, surpassing the $4,636 threshold for upper-middle-income status.
Philippines Secures Three-Year Transition Window for Concessional Loans
Balisacan stated during the press chat that the effect of losing concessional loans would not be immediate. "In the next three years, we still maintain those concessional loans, but gradually, we will lose eventually those ones," he said. He added that some development partners may still provide concessional financing on a project basis for high-impact projects.
DEPDev Undersecretary Joseph Capuno said the government recently conducted a recalibration exercise to firm up investments through the end of the Marcos administration. He estimated there are around 20 to 30 projects in the pipeline involving development partners such as the World Bank, Asian Development Bank, and Japan International Cooperation Agency. "The strategy is actually to approve all those in the pipeline before the three-year window closes," Capuno said.
Government Prioritizes Social Sector Projects Over New Infrastructure
Capuno announced the government would be more selective in approving new projects requiring government financing for next year due to "very limited" fiscal space. The message to implementing agencies is to prioritize new projects in the social sector while slowing down approvals of new infrastructure projects. "You want to prioritize new projects in the social sector, slow down a bit on the infrastructure sector," Capuno said.
He clarified that ongoing infrastructure projects will still be pushed forward. "We're going to slow down on approvals of new infrastructure projects. But expedite spending on ongoing projects," Capuno stated. "It's not a slowdown on all infrastructure projects, only on new. But expedite, ongoing."
Income Upgrade Strengthens Philippines Credit Profile
Balisacan said the new income classification sends an important signal about "the quality of your governance, the quality of your investment climate, the quality of your institutions, and the quality of your investment in public infrastructure." He stated that these improvements will get reflected in the financial market and that private firms will be able to benefit from those developments.
The income upgrade comes as growth fell short of expectations in the first quarter of 2026, inflation remained a persistent concern, and public infrastructure spending weakened amid delays in government disbursements. Balisacan said the administration's priorities for the second half of the year are to restore confidence and growth, protect households from inflation and external shocks, raise productivity and competitiveness, and strengthen institutions.
FAQ
What did the Philippines do after the World Bank upgraded its income status?
The Philippines government announced on Monday, July 6, that it would accelerate approval of 20 to 30 development projects in the pipeline with partners including the World Bank, Asian Development Bank, and Japan International Cooperation Agency during the three-year transition period before access to concessional loans narrows.
Why is the Philippines prioritizing social sector projects over new infrastructure?
DEPDev Undersecretary Joseph Capuno stated the government has "very limited" fiscal space for next year and will prioritize new social sector projects while slowing down approvals of new infrastructure proposals, though ongoing infrastructure projects will be expedited.
