Charged to taxpayers

The World Bank (WB) elevated the Philippines to the ranks of upper-middle income economies (UMIC). So effective July 1 this year, the WB moved the Philippines a step higher from lower-middle income to UMIC. This does not mean, however, that most of us Filipinos can now be considered middle-income class, too, facetiously saying.

The WB underscored the upscaling of the Philippines to UMIC status serves only as a macroeconomic marker. It does not indicate that poverty, inequality, low wages or high living costs have been addressed. The WB tempered its evaluation with a caution that “no single measure can fully capture the complexity of a country’s development.” 

According to available socioeconomic data from Google, for a standard Filipino family of five, the threshold for being considered “wealthy” is typically cited as P333,000 or more per month. The upper-income Filipino earners comprise the top three percent to five percent of Filipino households. The greater bulk of the population falls into the low-income or lower-middle class brackets.

 Some may even argue the effectivity starting this week of the first tranche of the P85, two-step increase in the daily minimum wage could raise to middle-income class the thousands of employees and workers in the National Capital Region. But employers and management are also sharpening their axes to implement cost-cutting measures. 

 More often than not, the usual target of companies who do not wish to see their profits shrink further is to reduce the number of their employees and workers. As such, we may see the ranks of jobless and underemployed Filipinos swell to new heights.

While the UMIC status indeed is a milestone that reflected broad economic growth, such achievement was accumulated through the years from one administration to another. 

It would be foolhardy for government drumbeaters to credit achieving UMIC status as an accomplishment of the present administration. For this administration, this poses greater challenge for President Ferdinand “Bongbong” Marcos Jr. (PBBM) to sustain this UMIC status in the remaining two years of his term of office at Malacañang Palace. It would be reasonable to expect that PBBM is fully cognizant of this fact when he delivers his penultimate State of the Nation Address (SONA) next week. 

Actually, the WB merely reclassified the Philippines to UMIC status after the country posted a Gross National Income (GNI) per capita of $4,850 in 2025. As far as the WB, one of the major international lenders, is concerned, our country has surpassed the threshold of $4,636 GNI per capita. The Philippines, along with Jordan, Micronesia, Sri Lanka and Vietnam, moved to UMIC status in the WB updated standards.

The UMIC economies are countries that have GNI per capita within the range of $4,636 to $14,375. By WB standards, high-income economies are those with GNI above $14,375 while lower-middle income economies have GNI per capita within the range of $1,176 to $4,635. 

According to the WB evaluation: “The Philippines achieved its reclassification through broad-based expansion. GDP grew at an average of 5.8 percent per year over five years, reflecting gains across all major industries, not a single sector boom, but an economy-wide shift.” The WB updated classifications will remain as a global reference until the end of June 2027. 

As a global reference of WB for tracking development and economic progress, UMIC classification on the Philippines matters a lot. Based on these income groupings, the WB and other international financial institutions determine which countries can access official development assistance (ODA) and highly concessional loans. 

This is the downside of the UMIC. This will mean the Philippines will soon no longer enjoy easier access to ODAs and cheaper loans from abroad offered only to lower income countries.

Thus, a number of our lawmakers expressed apprehension over the higher income country status instead of being elated. 

Both pro-administration and even the opposition ranks in the 20th Congress are not excited at all about this much improved WB global reference to the Philippines. In fact, Sen. Loren Legarda filed last week Senate Resolution 505 directing the Department of Economy, Planning and Development, in coordination with the Department of Finance and other agencies, to submit a comprehensive report on the implications of UMIC status on our economy. 

In her Resolution, she noted with obvious dismay the Philippines had remained a lower-middle income country since 1987. It took nearly 39 years for our country to advance to the next tier, she pointed out. In contrast, she claimed Vietnam leaped to UMIC status driven by robust export-led manufacturing and strong foreign direct investment in just 17 years.

Legarda cited remittances from overseas Filipino workers – which accounted for 8.7 percent of our country’s gross domestic product in 2024 – have been driving Philippine economic growth through these years. 

Legarda sought public hearings on a whole gamut of policy measures to sustain the UMIC classification and strategies to ensure benefits are felt across all sectors. In particular, she expressed profound concern on the following: expected impact on concessional financing, ODAs, grants and loan terms, effects on sovereign borrowing, credit perception, fiscal space, among other things. 

Legarda, who now belongs to the new Senate minority bloc, will have to wait though for the first reading of her Senate Resolution 505 for referral to the appropriate Senate committee. At the earliest time, this is when both chambers of the 20th Congress start the second regular sessions on July 27, coinciding with the traditional SONA of the President.

Incidentally, PBBM issued Executive Order 110 last week while Congress is still in recess. EO 110 expanded the President’s Unified Package for Livelihood, Industry, Food and Transport, or UPLIFT assistance program. No less than PBBM announced the provision of P2,000 “ayuda” or cash subsidy to 7.5 million low-income households. 

The expanded UPLIFT program will run from July to December this year, supposedly to mitigate the impact of rising fuel and energy costs due to the renewed escalation of the Middle East conflict. 

Again, charged to our taxpayers’ money.