Phl urged to recalibrate borrowing program after UMIC upgrade

The Philippines may need to rethink its borrowing strategy after clinching upper-middle income country (UMIC) status, as this could gradually close the door on cheap loans and aid from development partners, analysts said.

- Aubrey Rose Inosante

On July 1, the World Bank announced the upgrade after the country’s gross national income (GNI) per capita hit $4,850 in 2023, breaching the UMIC threshold of $4,636 to $14,375.

“The Philippines’ transition to an upper-middle income country is an affirmation of the reforms and policies the government has consistently pursued to strengthen our economic fundamentals and create more opportunities for our people,” Finance Secretary Frederick Go said in a statement.

“Now, we must continue to build on these gains so that the benefits of economic development reach more Filipinos,” he added.

However, economists warned that the shiny new status comes with trade-offs.

Ser Percival Peña-Reyes, director of the Ateneo Center for Economic Research and Development, said the country could face higher borrowing costs as it may lose over time access to concessional loans and official development assistance (ODA), typically reserved for poorer nations.