Philippines secures ADB financing to cushion Middle East war impact

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Philippines secures ADB financing

Highlights

The Philippines secured a $1.5 billion ADB loan under the AGAPAY program on Oct. 6 to support its 2026 external financing efforts.
The financing will help fund subsidies, cash aid, and UPLIFT measures safeguarding vulnerable sectors from Middle East conflict-related oil and economic shocks.
Remittances from the Middle East made up 18% of the Philippines' $35.6 billion inflows in 2023, while national government debt hit P19.61 trillion at end-August.

Financing package supports crisis response

As reported by BusinessWorld, citing the Department of Finance, the Philippines signed a $1.5 billion financing agreement with the Asian Development Bank on Oct. 6 under the Assistance for Greater Resilience and Alleviation of Poverty, or AGAPAY, program.

The DoF said Secretary Frederick D. Go signed the 236.64 billion-yen package after ADB approved it on Sept. 24. The funding forms part of the government’s 2026 external financing program and will be provided through the lender’s Countercyclical Support Facility, which supports countries responding to economic crises.

Go said AGAPAY will help sustain the government’s response to the economic effects of the Middle East crisis by funding measures that support vulnerable sectors, protect livelihoods and help Filipino families cope with the disruption. The package is intended to provide budgetary support for economic shocks and oil supply risks linked to the conflict, particularly through the Unified Package for Livelihoods, Industry, Food, and Transport, or UPLIFT.

Energy, remittance and fiscal pressures

President Ferdinand R. Marcos, Jr. declared a one-year state of energy emergency in March through Executive Order No. 110, citing threats to the availability and stability of energy supply. The order also adopted UPLIFT as the government’s broader response framework, covering fuel and electricity supply measures, transport affordability, targeted aid for vulnerable groups, and support for overseas Filipino workers affected by the conflict.

According to the ADB, the program will help fund fare discounts, fuel and fertilizer subsidies, assistance to small electric cooperatives, medical relief and cash assistance for vulnerable households. The bank said the Philippines imports nearly all of its fuel and depends heavily on imported fertilizer, leaving the country exposed to global price increases and supply disruptions.

ADB also said about 1.1 million Filipino workers were deployed to the Middle East in 2025, while remittances from the region accounted for about 18% of the country’s $35.6 billion in total remittances last year. Against that backdrop, the government’s debt position remains under scrutiny, with outstanding national government debt reaching a record P19.61 trillion at end-August and projected to rise to P19.77 trillion in 2026.

In our previous coverage of rising sovereign borrowing risks amid geopolitical tensions, we noted that prolonged conflicts and elevated fiscal spending are straining government finances in a higher-rate environment. We explained that persistent energy and food price shocks linked to the Russia-Ukraine war and the Middle East conflict can fuel inflation, erode fiscal headroom, and worsen refinancing pressure—especially for emerging markets with narrower revenue bases.

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