Gov't maintains borrowing plan despite Umic transition–DOF

MANILA, Philippines – The Marcos administration will maintain its borrowing program despite the Philippines’ new upper middle-income country (Umic) status, Finance Secretary Frederick Go said.

“There’s nothing for you to be worried about. For the near term, or at least for the next three years, no change. We’re not going to lose any grants. We’re not going to borrow at more expensive rates for the next three years,” Go told reporters during a press briefing.

READ: Marcos lays out plans to ‘slowly’ reduce P17-trillion national debt

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The government will maintain a 77:23 domestic-to-external borrowing mix. For 2026, it plans to borrow P2.68 trillion, including P2.05 trillion from the domestic market and P627.1 billion from foreign lenders.

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Go said the government plans to keep the borrowing mix within the 70:30 to 80:20 range through the end of the Marcos administration.

He noted that concessional loans from bilateral and multilateral development partners account for only 10 to 15 percent of the country’s external debt, reducing concerns over any future loss of access to such loan facility.

As such, the government has no plans to scale back concessional borrowings after recently signing bilateral financing agreements with Denmark and Spain.

“The good part of this Umic is borrowing and investments—attractiveness to investments and creditworthiness for lower borrowing rates,” Go said.

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“Yes, at some point, we might lose some of our grants and affect some of our concessional loans, but that’s at least three years away, and I believe that the gains more than outweigh the cons,” he added.

A-rating dream

Go said the country’s shift to Umic status, while positive, will not by itself deliver an “A” sovereign credit rating by 2028.

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“An A rating isn’t just the income classification. You’ll have to perform well on reforms, economic growth, fiscal deficit, et cetera. That’s a lot,” he said.

“Just the UMIC will not be enough to do anything. I think the UMIC is really more of recognition,” he added.

Despite recent ratings actions, Go said meeting the target depends on domestic and external factors.

“We still have two years to go. Let’s see if we will be able to accomplish it. It’s definitely a positive, but I wouldn’t say that its contribution is significant. We will need everything to cooperate. We will need global economic conditions to cooperate. We will need oil prices to cooperate,” he said.

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The Philippines currently holds investment-grade sovereign ratings from the three major credit rating agencies. Fitch Ratings confirmed its BBB rating but revised its outlook to “negative” from “stable,” S&P Global Ratings maintained its BBB+ rating but also lowered the outlook to “stable” from “positive,” while Moody’s Ratings kept its Baa2 rating and maintained its outlook. INQ