THE National Economic and Development Authority (NEDA) is hoping to make the Philippines less dependent on official development assistance (ODA) in preparation for its reclassification as upper middle-income, at which point it will lose access to concessional rates. 

“With the ODA, as already indicated by Secretary (Karl Kendrick T.) Chua, we have been moving forward to less reliance on ODA as we are expecting to move up to upper middle-income status,” NEDA Undersecretary Jonathan L. Uy said at a Senate budget briefing Thursday.

The ODA portfolio was $20.01 billion as of March, with $18.368 billion in the form of loans and $1.641 billion in grants. Japan was the top source of foreign aid with 42.66% of the total.

The government hopes to achieve an A-level sovereign credit rating by 2022 to offset lost access to low-cost loans. The Philippines is expected to graduate to upper middle-income status that year.

Senator Maria Imelda Josefa R. Marcos said in the same briefing that the utilization rate for ODA remains low. 

Disbursements of ODA loans rose 21% to $2.23 billion in 2019, but the utilization rate was only slightly higher at 20.09%, from 19.29% in 2018. Meanwhile, the utilization rate of ODA grants slowed to 51% last year from 70% the year prior.

Mr. Uy said the improvement of ODA utilization will depend on how implementing agencies can better perform their functions and how NEDA enhances its monitoring and evaluation.

“As we move towards upper-middle income country status, it is expected that we will not be eligible for that much ODA and therefore, we have to improve in terms of project preparation, planning and management,” he said. 

With a gross national income (GNI) per capita of $3,850 in 2019, the Philippines is currently classified as a lower middle-income economy. The  World Bank defines the category as GNI per capita of between $1,036 and $4,045.

The country has been reliant on foreign aid to fund many of its projects, especially for infrastructure.

Under the revised list of the government’s flagship infrastrastructure projects approved by the NEDA Board last month, 50 out of 104 projects will be funded through ODA, 30 via public-private partnerships and the remainder via internal funds.

Mr. Chua said only two projects have been completed so far, construction work is ongoing for 44 projects, 34 have been approved and are in the preparation stage, and 24 are still awaiting approval.

The two projects completed are the P3.29-billion Angat Water Transmission Improvement Project and the P1-billion Luzon Bypass Infrastructure Project.

He said those on the list are set to be implemented within the current government’s term. — Beatrice M. Laforga