PHL yet to finalize borrowing plan, ADB says

THE Asian Development Bank (ADB) urged the Philippines to finalize its borrowing plan for the year as the government faces a revenue shortfall while also planning to support segments of society classified as vulnerable to the effects of the Iran war.

“The government… is facing maybe less revenue this year because of the slowdown in the economy, and they are also facing issues helping the most vulnerable people because of the crisis and all,” ADB Country Director Andrew Jeffries told reporters last week.

“And so, the government needs to really think about and prioritize what it is going to borrow for this year,” 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 aimed at helping developing countries like the Philippines weather the impact of the Middle East conflict.

“We’ve shared details and we’ve had back and forth, but there has not yet been a formal request for one. But they are considering it amongst a lot of options, because, as you know, 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 only question is how long this will last, and nobody really knows that. But…we’re certainly willing to support,” he said.

The Philippine economy grew 2.8% in the first quarter, dragged down by the lingering effects of last year’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% target range.

UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion said he expects a recalibration in borrowing rather than a slowdown.

“While weaker growth could dampen revenue collection and force the government to be more deliberate in prioritizing projects, the same external shock is also increasing fiscal pressures,” he said via Viber.

“As a result, financing needs are unlikely to ease meaningfully. Instead of a sharp pullback, we expect borrowing to remain broadly steady, but with a greater focus on essential, high-impact spending and more flexible financing instruments such as policy-based loans,” he added.

The Bureau of the Treasury reported that the National Government’s gross borrowings amounted to P1 trillion in the first quarter.

This represents 37.4% of the P2.68-trillion gross borrowing program for the year according to the Budget of Expenditures and Sources of Financing 2026. — Justine Irish D. Tabile