Philippines eyes $1.5-B loan from ADB to mitigate impact of Middle East war

By Justine Irish D. Tabile, Senior Reporter

THE PHILIPPINES is eyeing a $1.5-billion loan from the Asian Development Bank (ADB) to mitigate the impact of the Middle East (ME) war, the Department of Finance said.

“We have expressed our intent to tap the ADB’s countercyclical support facility in the amount of up to $1.5 billion to provide additional funding to support the response measures under the UPLIFT framework in order to better respond to the ongoing impacts of the Middle East conflict,” Finance Secretary Frederick D. Go told reporters last week.

“This includes assistance to vulnerable sectors in order to mitigate the impact of oil supply and other shocks,” he said.

In March, the Philippine government declared a national energy emergency and activated the Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT) framework to address the impact of the Middle East conflict on the economy.

Last month, the ADB offered the Philippine government up to $1.75 billion in additional financing, on top of about $2 billion in policy-based loans prepared for the country this year.

ADB’s countercyclical support facility provides rapid budget support to member countries for shocks including pandemics, global financial crises, and conflicts such as the war in the Middle East.

Mr. Go said the timing of the loan approval would depend on the ADB’s internal process.

On June 12, the ADB said it is deploying $4 billion in financing to help countries withstand the impact of the Middle East conflict, including about $3 billion requested by governments and $1 billion provided as trade finance.

Economists said the proposed financing would serve as a precautionary buffer against external shocks while having only a limited impact on the country’s debt position.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the country still has the capacity to take on the new ADB loan despite tightening fiscal space.

“The Philippines has enough fiscal space to accommodate an additional $1.5 billion in financing, with the amount relatively small compared to the government’s overall borrowing program and unlikely to materially shift debt or deficit metrics,” he told BusinessWorld.

“That said, fiscal buffers are clearly tighter than in previous years, which means authorities are being more deliberate in preserving flexibility,” he added.

Mr. Asuncion said the proposed loan should be viewed less as immediate spending support and more as insurance against a worsening crisis.

“The facility is likely more valuable as a contingent financing buffer rather than something that will be fully drawn immediately, giving policymakers room to respond should conditions worsen,” he added.

As of end-April, the National Government’s outstanding debt stood at P18.47 trillion, inching down from a month prior’s P18.49 trillion but up 10.25% from P16.75 trillion in April 2025.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas described the additional ADB loan as “a smart, confidence-boosting move” that keeps policy flexible without compromising fiscal discipline.

“At roughly $1.5 billion, this is very manageable for the Philippines — it’s less about adding strain and more about strengthening buffers. It won’t materially move the debt needle, but it reinforces liquidity at a time of rising global uncertainty,” he said in a Viber message.

“The government is essentially buying insurance against potential shocks from higher oil prices or external volatility. And like any good insurance, the real value is in having it available — so I’d expect this to function largely as a standby buffer, to be drawn only if conditions significantly worsen,” he added.

Jose Enrique “Sonny” A. Africa, executive director of the think tank IBON Foundation, said the larger issue is the “general trajectory of persistent deficits, rising debt service, and weak revenue mobilization.”

“The government’s cumulative fiscal position is more and more constrained by overall debt service taking up a growing share of public resources that might otherwise go to social services, social protection, and economic development,” he added.