Manila: The Philippines has sufficient buffers to cushion the eventual phaseout of concessional Official Development Assistance (ODA) following its upgrade to upper-middle income economy status, a Department of Economy, Planning, and Development (DEPDev) official said Friday. Concessional ODA refers to foreign aid loans extended by governments or multilateral institutions to developing nations.
According to Philippines News Agency, in an interview on Bagong Pilipinas Ngayon, DEPDev Undersecretary Rosemarie Edillon stated that the phaseout of concessional loans comes with a three-year transition period, allowing the country time to adjust through measures already put in place. Among these is the Public-Private Partnership (PPP) Code of the Philippines, or Republic Act 11966, which was signed into law on Dec. 5, 2023.
Edillon explained that the law provides an alternative source of financing by enabling the implementation of government programs and infrastructure projects with private sector participation, thereby reducing reliance on multilateral institutions and other providers of concessional financing. The PPP Code establishes the legal framework needed to attract private sector investments for infrastructure and other priority projects.
"And this one will actually free up resources para naman doon sa mga kailangan ng spending ng gobyerno na hindi papasukan ng private sector. So, nakalatag na iyong ating legal and policy framework para diyan," Edillon explained, emphasizing the readiness of the legal and policy framework to support government spending on projects without private sector involvement.
The World Bank earlier mentioned that its decision to reclassify the Philippines as an upper-middle income economy was driven by broad-based economic gains that raised the country's gross national income per capita to USD4,850, exceeding the USD4,636 threshold. Edillon also highlighted the Bangko Sentral ng Pilipinas' ongoing efforts for financial inclusion, which have expanded Filipinos' access to financing while encouraging financial institutions to develop more innovative investment products. These initiatives are expected to broaden funding sources available to businesses.
She further noted that large companies can also access the international capital market for additional financing. "So, dahil nga nasa upper-middle income country tayo, again there is now that facility for them so ang kailangan lang is magtuluy-tuloy, magtuluy-tuloy itong ating magandang pinapakita in terms of macroeconomic fundamentals, in terms of policy stability," Edillon remarked, stressing the importance of sustaining positive macroeconomic fundamentals and policy stability.
