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The government is aiming to sign this year 25 official development assistance (ODA) agreements amounting to USD 10.3 billion (PHP 593.382 billion) before the country reaches upper middle-income status by mid-2026.

Finance Secretary Frederick D. Go said there are 10 ODA loans from Japan, 10 pipeline loans from South Korea, and five loan deals from France lined up for this year.

“These total 25 ODA loan agreements with a total value of USD 10.3 billion,” he said on Thursday.

Mr. Go said the Philippines is expected to be classified as an upper middle-income country (UMIC) by the World Bank within the year.

“We will be less reliant on concessional loans once the country moves into an upper-middle class according to the World Bank. So, we will have to find other sources of financing,” Mr. Go said, adding that he expects the government to be more reliant on public-private-partnership projects.

The Philippines has remained in the lower middle-income bracket since 1987, despite posting a higher gross national income (GNI) per capita of USD 4,470 in 2024. This was only USD 26 shy of the World Bank’s adjusted GNI per capita requirement of USD 4,496-USD 13,935 for UMIC status.

The Washington-based lender is scheduled to release its updated annual country status thresholds in July.

Mr. Go added that the government is eyeing alternative financing sources for projects in infrastructure, climate change, energy, and agriculture.

The government is also in discussions with the Asian Infrastructure Investment Bank (AIIB) to fund two projects this year.

This includes the Luzon Digital Connectivity project under the Department of Information and Communications Technology (DICT) worth USD 500 million and “Metro Manila Sponge City” under the Metropolitan Manila Development Authority (MMDA) worth USD 150 million.

“So those are the two that they are looking at but not certain yet. We are still discussing with the AIIB, DICT, and MMDA. The cooperation with AIIB continues to be robust,” Mr. Go said.

Since the start of the Marcos administration, the Philippines and Japan have signed 12 financing deals worth ¥910.38 billion (about PHP 341.2 billion).

As of December last year, Japan accounted for USD 13.9 billion or 33.54% of the Philippines’ total ODA portfolio.

Japan is the Philippines’ largest ODA loan provider and third-largest source of ODA grants.

Meanwhile, Mr. Go said the government is still awaiting clarification from the US on the newly imposed global tariffs.

“What we are hopeful for and what we assume it to be is that if they apply the 15% tariffs on us, it will continue to apply on the goods that they were applying a 19% tariff on. So, our assumption is all the goods that were exempted before, which are the semiconductors and the major agricultural exports, will continue to be not included in the list of items to be subjected to the new 15% tariff,” he said.

The US on Tuesday started collecting a temporary 10% global import tariff, but said it was working to raise it to 15%.

The Trump administration’s new tariff policy comes after the US Supreme Court ruled that President Donald J. Trump had exceeded his authority when he imposed the reciprocal tariffs.

The ruling had invalidated the tariffs imposed by the Trump administration on China, Japan, South Korea, Taiwan and Association of Southeast Asian Nations economies. Most Philippine-made goods had faced a 19% US tariff. — Aaron Michael C. Sy

The administration of Philippine President Ferdinand R. Marcos, Jr. is accelerating structural reforms and diversifying trade ties to shield the economy from global volatility following sluggish economic growth last year.

During the Association of Southeast Asian Nations (ASEAN) Editors and Economic Opinion Leaders Forum in Makati City on Tuesday, Mr. Marcos said the government is pushing the bureaucracy to make it more responsive to policy shifts as external shocks, from geopolitics to supply chain disruptions, become more frequent.

Mr. Marcos cited trade negotiations with nontraditional partners such as Latin American nations, members of the European Union (EU) and Canada, among others.

The President framed the next phase of his administration around strengthening economic resilience after the pandemic and amid what he described as increasingly complex geopolitical tensions.

While the government had expected a more stable global environment after the pandemic, he said successive economic and political shocks have required a recalibration.

“One of the main things that we are striving for is to provide stability,” he said. “Whatever shocks come, we are more robust, we are resilient and we are able to adjust.”

That balancing act, preserving policy continuity while remaining agile, will define Manila’s economic strategy in the coming years, he added.

Halfway through his six-year term, Mr. Marcos said that embedding reforms deep enough to outlast political cycles will be key to turning short-term growth into a long-lasting one.

The Philippines’ gross domestic product (GDP) growth slowed to a post-pandemic low of 4.4% in 2025, after a graft scandal affected government spending, consumption and investor and consumer confidence.

The Marcos administration is now targeting GDP growth of 5-6% in 2026, 5.5-6.5% in 2027 and 6-7% in 2028. These new targets are slightly lower than the earlier 6-7% growth goal for 2026 to 2028.

“Flood control problems, scandal, whatever you want to call it, have certainly played a very large part in that,” Mr. Marcos said, referring to his exposé about anomalous flood control projects last July in his annual address to Congress.

“Unfortunately, it had to be done. It is one of those things where you just have to rip the band-aid off. There was no easy way to do it. And otherwise, then the old practices would continue and the Philippines would flatline.”

The President also blamed the Ukraine-Russia war and disruptions in global commodity markets, which have also affected the Philippines through higher food and energy prices.

“It is uncertainty that we are fighting with,” he noted.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the Philippines is “moderately sensitive” to global volatility but generally less trade-dependent than export-heavy peers such as Vietnam and Thailand.

“The main transmission channels of global volatility are oil prices (import dependence), exchange rate pass-through to inflation, and financial conditions (portfolio flows, risk-off episodes),” Mr. Rivera said via Viber.

Compared with regional peers that are more deeply integrated into global manufacturing supply chains, the Philippines faces smaller exposure to abrupt trade disruptions, he noted.

Mr. Rivera said the country’s defenses include international reserves, a flexible exchange rate, a predominantly domestic-currency public debt profile and resilient forex (foreign exchange) inflows from remittances and services.

Mr. Rivera said energy and logistics costs, limited export diversification and uneven infrastructure execution may hamper competitiveness and the economy’s recovery.

He said productivity gains and investment in infrastructure will be critical to sustaining long-term growth.

University of Asia and the Pacific Associate Professor George N. Manzano said the Philippines is an open economy but is less exposed to global trade shocks than more export-dependent ASEAN peers.

He noted the country’s trade as a share of GDP is smaller than in Singapore, Vietnam and Thailand, meaning external disruptions transmit with somewhat less intensity. — Chloe Mari A. Hufana, Reporter

A House of Representatives committee on Monday approved a proposal to abolish the Philippines’ travel tax that critics say is burdensome and adds costs for Filipino overseas travelers.

The House Committee on Tourism has consolidated six bills seeking to scrap the levy collected from air and sea travelers, a tax imposed under a 1977 presidential decree, despite concerns that its removal could cut funding for agencies that rely on the collections to support services.

A consolidated measure proposing the removal of the travel tax will be endorsed to the House Appropriations and Ways and Means committees to iron out provisions on funding and taxes.

“Why is there a travel tax? It was meant to discourage our countrymen from traveling abroad and to instead support domestic tourism,” Mark T. Lapid, chief operating officer of the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), told lawmakers.

“But it evolved in the years that succeeded… Its purpose became to help all the infrastructure needed for tourism, for our scholars and rehabilitating and improving our heritage sites,” he added.

The government collects a travel tax of PHP 1,620 (USD 28.35) from economy air passengers and PHP 2,700 (USD 47.24) from first class air passengers, if they are departing to a foreign country.

Exempt from travel tax are overseas Filipino workers, Filipino permanent residents overseas who stayed less than a year in the Philippines, and children aged two years and below.

The levy was first imposed by Republic Act No. 1478 in 1956 and was later amended through Presidential Decree No. 1183 in 1977.

President Ferdinand R. Marcos, Jr. has declared the bill abolishing the travel tax a priority and had urged Congress to pass it before the adjournment in June.

The government could forgo around PHP 8 billion yearly if such a proposal is signed into law by Mr. Marcos, Finance Secretary Frederick D. Go said last week.

Authorities collected about PHP 8.7 billion in travel tax revenue in 2025, according to a position paper from TIEZA that was submitted to the congressional committee and obtained by BusinessWorld. Collections reached PHP 7.8 billion in 2024, PHP 6.3 billion in 2023, PHP 332 million in 2021, PHP 713 million in 2020, and PHP 7.1 billion in 2019.

Under the law, 50% of the proceeds from the travel tax collection go to TIEZA, while 40% go to the Commission on Higher Education (CHED) for tourism-related education programs.

The remaining 10% goes to the National Commission for Culture and the Arts.

The three agencies supported the move to scrap travel tax granted their funding would be secured via the annual budget bill.

“To be honest, what goes to TIEZA is only around 35%,” Mr. Lapid said. “That’s because we are in charge of the administrative fee.”

“We’re spending around P500 million to collect our travel tax,” he said.

In its position paper, TIEZA said 90% of its budget relies on the travel tax, and “any disruption without a viable alternative is critical.”

“The travel tax provides the fiscal agility required for immediate tourism response,” it said, noting that its funding source allows the agency to “urgently address” tourism needs.

TIEZA is also pursuing projects to build tourism facilities such as rest areas, master-plan tourist destinations across the country and boost cruise tourism by supporting cruise port terminal development.

Impact on CHED

“The consequences of abolition are disproportionately borne by the education sector,” the CHED said in a position paper, which was obtained by BusinessWorld. “The removal of the travel tax would immediately eliminate a stable and steady source of funding, impacting its ability to sustain current and planned programs.”

CHED Chairperson Shirley Agrupis said the agency’s education development program is funded largely by travel tax revenues, and scrapping the levy could affect 5.4 million students who rely on it.

“If the travel tax is repealed without a replacement revenue source, we will lose 85.6% of its funding,” she told lawmakers.

The House Appropriations Committee will work to “fine-tune” its funding requirements for the agencies that’ll be affected by its scrapping, its chairwoman, Nueva Ecija Rep. Mikaela Angela B. Suansing, told the panel.

“Given the criticality of the funds, we will work to ensure that those funds remain available for the different government institutions involved,” she said. “We’ll work… to structure it in a way that it would be responsive to the different needs of the agencies.”

Scrapping the Philippines’ travel tax would be positive for the tourism industry, Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said.

“It lowers the cost of flying, stimulates outbound and inbound travel, and makes the Philippines more competitive as a regional hub,” he said in a Viber message.

“But it’s not a silver bullet. The real gains come only if the lost revenue is replaced by smarter funding for tourism — better airports, smoother visas, and stronger destination marketing,” he added. — Kenneth Christiane L. Basilio, Reporter