Malacañang on Monday assured the public that the Philippines’ recent elevation to an upper middle-income economy will not immediately trigger higher borrowing costs, emphasizing that any potential changes to multilateral loan terms are years away and likely negligible.
Palace Press Officer and Communications Undersecretary Claire Castro, quoting Finance Secretary Frederick Go, explained that lenders typically monitor a country’s economic standing for a three-year period to ensure stability before adjusting interest rates.
Because of this grace period, the country’s borrowing terms will remain unaffected for 2026 and 2027.
“The effect on multilateral loans will not take effect immediately. Most of them have a period to see if we maintain the status for about three years, before there is an effect on loan rates,”
Castro further noted that the overall financial impact would be “very minimal and only affects very few,” ensuring that the financing for the upcoming national budget remains secure.
“An effect is very minimal and only affects very few. So, for 2026 or 2027, there will be no effect.”
“Kung may ipapataw man, mababago ang rates, hindi pa ito mararamdaman sa loob ng tatlong taon,”
“Sa ngayon, wala pa kasi sabi nga natin, ito ay titignan sa loob ng tatlong taon So iyong 2027 budget ay hindi naman maaapektuhan,”
The reclassification by the World Bank comes after nearly 40 years of the Philippines being categorized as a lower middle-income nation. The upgrade was triggered by the country’s Gross National Income (GNI) per capita climbing to $4,850 in 2025, surpassing the institutional threshold of $4,636.
While economic managers view the milestone as a testament to the country’s 5.8% average annual growth over the past five years under the Marcos administration—expected to bolster investor confidence and international credit ratings—independent economists caution that it could eventually limit the country’s access to low-interest, concessional loans reserved for poorer nations.