The Trump administration’s 90-day freeze on U.S. foreign aid would have minimal direct impact on the Philippine economy, the National Economic and Development Authority’s (NEDA) chief said on Monday.
“The U.S. is our number one source of grants, but these account for a small portion of the overall economy,” Socioeconomic Secretary Arsenio Balisacan said.
He said that current flagship infrastructure projects remain unaffected, as they are largely funded by Japan, Korea, the Asian Development Bank (ADB), and the World Bank.
Balisacan noted, however, that an aid freeze could have indirect effects due to the U.S. being a major shareholder in global lending institutions like the World Bank and ADB.
“If lending facilities for official development assistance are affected, it could impact the medium-term prospects,” he said.
While the immediate impact of the aid freeze is expected to be limited, Balisacan emphasized the importance of proactive measures.
On the possibility of U.S. tariff increases, the NEDA chief acknowledged potential repercussions on the Philippines’ integrated supply chains.
“If there’s higher tariffs in the U.S., this could spark retaliation by other countries, which would impact the global economy. But our economy is primarily domestic, with about 60% coming from local activities,” he explained.
To bolster resilience, Balisacan emphasized the need to diversify trade and investments.
“The key is to intensify efforts to diversify our economy and trade, and ensure aggressive participation in bilateral and regional trading arrangements to buffer these disturbances,” he said.
Balisacan highlighted the government’s Philippine Development Plan, which aims to reduce dependence on external aid and prioritize investments in agriculture, industry, and digitalization.
This policy strengthens the country’s economic foundation and reduces vulnerabilities to external shocks, it was explained.
Last week, President Donald Trump ordered the temporary suspension of foreign assistance to nearly all foreign aid funding, allowing only emergency food programs and military aid to Israel and Egypt to continue.
The move comes amid heightened discussions on the direction of U.S. foreign policy over the next four years.
Editor’s Note: This is an updated article. Originally posted with the headline “NEDA downplays potential impact of US foreign aid freeze.”
