Philippines to Fast-Track ODA Project Approvals Amidst UMIC Reclassification

The Philippine government will fast-track the approval of Official Development Assistance (ODA)-funded projects over the next three years to maximize access to concessional financing following the country’s elevation to upper-middle income country (UMIC) status, economic planners said. Economy Secretary Arsenio M. Balisacan said the Philippines will continue to qualify for some concessional loans for the time being, though these will gradually decline as the country gets richer. The World Bank recently reclassified the Philippines as an upper-middle income country after it posted a per capita gross national income of $4,850, putting the country on track to be weaned away from some concessional financing. "There will be other development partners who continue to lend to us at concessional rates, at least for those projects that they see as having a high developmental impact and those are the ones that we will be exploring with these agencies, development partners," Mr. Balisacan said. "In the meantime, we have the time to develop our capacity to access other sources of financing, particularly those that are evolving now, like climate-related financing, and ensure that not just the government, but the private sector can also access those financing," he added. Department of Economy, Planning, and Development Undersecretary Joseph J. Capuno said the government began recalibrating its project pipeline last week, even before the World Bank announced the UMIC reclassification. "The strategy is actually to approve all those in the pipeline before the three-year window closes," Mr. Capuno said. "Now that UMIC status has been announced, all the more we need to quickly approve quality infrastructure and social sector investments. (There’s) quite a number of them … easily around 20 to 30," he added. With the government’s limited fiscal space for next year, Mr. Capuno said the government will be very selective in the infrastructure projects it approves. "Our message to the implementing agencies during our recalibration exercise last week is that we’re going to be very selective in approving projects for next year that would require government financing precisely because there is very limited fiscal space," he said. Projects requiring government financing could still be approved if their funding requirements are deferred until 2028, when the government expects fiscal space to improve, Mr. Capuno said. "If they can slide the government financing to 2028, we can approve more, because by that time we see the fiscal space becoming larger." "Our message is that we want to prioritize new projects in the social sector and slow down a bit on new projects in the infrastructure sector," he added, noting that the strategy will not impact ongoing projects. — Justine Irish D. Tabile