World Bank approves new six-year Philippine lending program 

The board of executive directors of the Washington-based World Bank has approved the group’s new lending program, or so-called country partnership framework (CPF), for the Philippines covering the years 2026 to 2031, with a focus on boosting investment in education, health, job creation, digitization, and strengthening economic and social resilience, according to a report by Philippine News Agency.

The newly endorsed CPF aligns with the Philippines’ development agenda, ensuring support is directed at the nation’s most urgent needs and priorities, the World Bank Group (WBG) said in a May 22 statement.

“The Philippines has made remarkable development progress in recent years and this CPF marks a key milestone in our partnership. It is designed to help the Philippines build on this positive momentum to create more jobs for its young population, build resilience to shocks, further reduce regional disparities, and invest in education and health,” said Manuela V. Ferro, World Bank vice president for East Asia and Pacific.

The endorsement comes as the Philippines nears upper-middle-income country status, the World Bank noted. The lender cited that the country’s economic trajectory has gained strength, with average annual real gross domestic product (GDP) growth rising from 3.7 percent during the period 1990 to 2010, to 5.2 percent from 2010 to 2024, and average annual per capita income growth increasing from 1.5 percent to 3.5 percent over the same periods.

Labor market conditions have improved, with the creation of 11.7 million new jobs and a 24-percent rise in real wages since 2010, the World Bank said. These gains, together with remittance inflows, contributed to a drop in poverty—from 18.1 percent in 2021 to 15.5 percent in 2023—while regional income disparities narrowed, it added.

However, the World Bank pointed out that challenges remain, particularly in access to basic services like clean water, sanitation, quality education, healthcare, and nutrition. Climate-related hazards likewise continue to threaten livelihoods, with over 70 percent of the population exposed to multiple natural risks, it also noted.

“Investing in the capacity of local governments is critical for improving access to quality of public services, such as health and nutrition, agriculture, social welfare, and water supply and sanitation. These investments will foster the development of human capital and resilient communities, while also increasing the potential for sustained long-term growth,” said Zafer Mustafao%u011Flu, World Bank division director for the Philippines, Malaysia, and Brunei.

The CPF represents a coordinated strategy by the WBG’s three key institutions: the International Bank for Reconstruction and Development (IBRD), which supports public sector reforms; the International Finance Corp. (IFC), which works with the private sector; and the Multilateral Investment Guarantee Agency (MIGA), which offers political risk insurance for investors, the statement said.

“A vibrant and dynamic private sector is crucial for the Philippines to achieve its next stage of development and create quality jobs for its growing population. The IFC will intensify its efforts to improve access to finance for businesses, foster innovation for productivity and job creation, and catalyze private investments in resilient infrastructure and human capital. Our aim is to support the private sector's full potential to drive inclusive economic growth and build a more resilient future for the Philippines,” said Kim-See Lim, the IFC’s regional director for East Asia and the Pacific.

According to the joint statement, the WBG has committed to providing financial and technical support to roll out the newest Philippine CPF, including sustained IFC engagement and new opportunities for MIGA to facilitate cross-border investments.

This lending plan coincides with the second half of the Marcos Jr. administration and a new Philippine President in mid-2028. It will also serve as the World Bank’s financing program as the country climbs to upper-middle-income status by next year, at the earliest.

Once the Philippines becomes an upper middle-income country, it will eventually lose access to relatively lower interest rates attached to official development assistance (ODA), or cheap loans extended by multilateral lenders like the World Bank, the Manila-based Asian Development Bank (ADB) and the China-led Asian Infrastructure Investment Bank (AIIB), as well as its bilateral development partners such as Japan and South Korea, among others.