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MANILA - The National Economic and Development Authority (NEDA) is confident the country will reach the upper middle income economy status next year.

But the government is also preparing for its impact since the Philippines will lose Official Development Assistance (ODA) benefits.

The ODA and ODA Loans are given to developing nations through grant aid and/or concession loans with low interest and have a longer term period to help poorer nations. Many infrastructure projects in the Philippines are through ODA loans.

“Once you graduate from a lower middle income country, you lose already your ODA privileges— which means lower subsidized interest rates,” said NEDA Sec. Arsenio Balisacan.

Balisacan added they may approve more ODA projects next year before the country formally hits upper middle income status.

“Many of our current ODAs now are long term anyway. That’s why we have been approving also many projects because we want to take advantage of the situation we are still a lower middle income country.”

NEDA Undersecretary Joseph Capuno clarified that there will be a grace period of about two years. So the country will still have access to loans with low interest and longer term.

“When we reach upper middle income country status next year, we have a grace period up to 2027 for the concessional terms available or extended to us by our ODA partners,” Capuno said.

NEDA Usec. Rosemarie Edillon also added that they are not waiting for 2027, as they are already preparing now in case the Philippines loses eligibility for ODA loans. One of the government’s strategies is to improve credit ratings as this will make it easier for the country to borrow money.

“We are actually also preparing for that eventually we will no longer qualify for the concessional loans. So we have actually, the economic team has crafted the ‘road to A’… Make sure we get to that A so the valuation, the cost of capital for the Philippines will be brought down,” Edillon said.

NEDA said the government is also beefing up the economy so there won’t be a problem if the country needs to borrow money for projects in the future. Other sources of funds also include the Public Private Partnership program and the country can still apply for a loan but with different interest rates and terms.

The World Bank says upper middle income economies are those with gross national income per capita between $4,466 and $13,845. Balisacan said the Philippines hit GNI per capita of over $4,200 last year and may reach the upper middle income bracket by the end of 2025.