THE Philippines could face a slight increase in borrowing costs for very long-term loans after three years under its new upper-middle-income country (UMIC) status, according to the Asian Development Bank (ADB).
ADB Philippines Country Director Andrew Jeffries said the change would only take effect after the Philippines maintains its UMIC status for three consecutive years and would apply if the government chooses to take out very long-term loans from the multilateral lender.
The increase would be around 0.1 percent, which Jeffries described as ‘very slight.’
‘If the government chooses to borrow very long term, there’s an increase in the cost slightly. The government, when they borrow from [the] ADB, the repayment period can vary. It’s up to them to choose that,’ Jeffries told reporters on the sidelines of a media briefing the ADB organized last Monday.
The Philippines was upgraded to UMIC status by the World in July after the country purportedly reached a gross national income of $4,850 last year.
The reclassification marks a development milestone but also puts the country on a transition toward greater reliance on market-based financing as it gradually loses access to some concessional financing from multilateral development institutions.
Earlier, the Department of Economy, Planning, and Development (DepDev) confirmed that the Marcos administration is seeking to fast-track the approval of 20 to 30 additional infrastructure and social-sector projects eligible for concessional financing. (See: https://businessmirror.com.ph/2026/07/06/phl-rushes-20-infra-projects-to-draw-from-cheap-loans/)
Jeffries, however, said the potential increase in ADB borrowing costs could be more than offset by other cost advantages associated with being a larger, higher-income economy.
‘Becoming a UMIC and being a bigger economy would probably lower some costs across the board. Borrowing-wise, generally, that would more than offset that tiny thing,’ he added.
As the Philippines transitions toward greater reliance on market-based financing, ADB President Masato Kanda said the lender is also looking to deepen its role in mobilizing private capital for the country.
‘We believe the Philippines has a huge potential, including the demographic dividend and the good infrastructure we are building up,’ Kanda said during the briefing.
Kanda said ADB has ambitions to expand its private-sector operations in the Philippines but declined to provide a specific financing target, noting that the size of the pipeline could be influenced by major projects, particularly in utilities and power.
He said ADB wants to play a more active role in private-sector development, but the country needs to improve its investment environment by strengthening productivity, credibility, and regulation.
‘I think one of the things we have to focus on is creating an enabling environment by good regulatory reform and cultivating the domestic capital market,’ Kanda said.
The ADB committed $143.3 million for private-sector operations in the Philippines last year, while another $109.4 million was mobilized alongside its financing.