THE Asian Development Bank (ADB) urged the Philippines to finalize its borrowing plan for the 12 months as the federal government faces a revenue shortfall while also planning to support segments of society classified as vulnerable to the consequences of the Iran war.
“The federal government… is facing perhaps less revenue this 12 months due to slowdown within the economy, they usually are also facing issues helping essentially the most vulnerable people due to crisis and all,” ADB Country Director Andrew Jeffries told reporters last week.
“And so, the federal government needs to actually take into consideration and prioritize what it’s going to borrow for this 12 months,” he added. “And again, that process has not been finalized yet.”
He added that the Philippines and the ADB have been discussing a counter-cyclical support facility geared toward helping developing countries just like the Philippines weather the impact of the Middle East conflict.
“We’ve shared details and we’ve had backwards and forwards, but there has not yet been a proper request for one. But they’re considering it amongst numerous options, because, as , the impact here is pretty high,” he added.
He said the impact of the conflict is being felt through higher oil prices, rising inflation, and slower economic growth.
“There’s obviously a high impact here, as expected, the one query is how long it will last, and no one really knows that. But…we’re actually willing to support,” he said.
The Philippine economy grew 2.8% in the primary quarter, dragged down by the lingering effects of last 12 months’s corruption scandal.
Meanwhile, headline inflation accelerated to 7.2% in April, exceeding the Bangko Sentral ng Pilipinas’ (BSP) 5.6%-6.4% forecast for the month. It also marked the second straight month that inflation breached the BSP’s 2%-4% goal range.
UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion said he expects a recalibration in borrowing reasonably than a slowdown.
“While weaker growth could dampen revenue collection and force the federal government to be more deliberate in prioritizing projects, the identical external shock can also be increasing fiscal pressures,” he said via Viber.
“Because of this, financing needs are unlikely to ease meaningfully. As an alternative of a pointy pullback, we expect borrowing to stay broadly regular, but with a greater deal with essential, high-impact spending and more flexible financing instruments akin to policy-based loans,” he added.
The Bureau of the Treasury reported that the National Government’s gross borrowings amounted to P1 trillion in the primary quarter.
This represents 37.4% of the P2.68-trillion gross borrowing program for the 12 months in line with the Budget of Expenditures and Sources of Financing 2026. — Justine Irish D. Tabile