Lighthearted Exchange Amid Budget Talks
During the intense budget deliberations, a rare moment of levity emerged when Finance Secretary Ralph Recto jokingly warned his son, Batangas 6th District Representative Ryan Recto, about challenging him too much in the hearing. This playful banter came as the younger Recto raised concerns about the Philippines narrowly missing the classification as an upper-middle income country.
At the Development Budget Coordination Committee briefing held for the House appropriations panel, the key phrase upper-middle income country surfaced early in the discussions. Representative Ryan Recto expressed disappointment that the nation fell short by a mere $26 to reach this economic threshold.
Understanding the Upper-Middle Income Country Status
Upper-middle income countries are identified based on gross national income (GNI) per capita, calculated by dividing a country’s total income by its population. The World Bank classifies economies with a GNI per capita between $4,496 and $13,935 as upper-middle income.
Representative Recto pointed out, “For the fiscal year 2026, the Philippines recorded a GNI per capita of $4,470, an improvement from $4,230 the previous year. However, this was still $26 short of the threshold for upper-middle income status.” He added, “Madam Chair, we’re still a lower-middle income country, falling within $1,136 to $4,495. It was a missed opportunity to advance our classification.”
Assurance and Jokes from the Finance Secretary
Secretary Recto responded with confidence, assuring that the target would be reached within the year. He said, “Don’t worry, we will catch up by this year,” prompting laughter from lawmakers and officials present. He then lightheartedly warned, “And if you still have a lot of questions to throw at me, I will run against you in our district.”
Representative Recto acknowledged the economic team’s hard work, stating, “I believe we are capable of achieving that target. I commend the economic team and this administration, including you, Mr. Secretary, for your achievements.”
Challenges of Becoming an Upper-Middle Income Country
Secretary Recto also highlighted important considerations regarding the implications of the Philippines attaining an upper-middle income status. “One challenge is that Official Development Assistance loans will become more expensive, as borrowing costs increase once we exit the lower-middle income category,” he explained.
He further noted, “The poverty incidence calculation will change. Currently, poverty is measured at $4.20 per day per individual. If we become upper-middle income, the threshold rises to $8.40, which could affect poverty statistics.”
Background on the Recto Political Legacy
Before Representative Ryan Recto assumed office, his father, Secretary Ralph Recto, served as the representative for Batangas’ sixth district and was a deputy speaker in the 19th Congress. In January 2024, the elder Recto left his congressional seat after being appointed by President Ferdinand Marcos Jr. to lead the Department of Finance, succeeding former Secretary Benjamin Diokno.
Diokno has since been appointed to the Monetary Board, according to officials.
Serious Budget Deliberations Amid Light Moments
Despite the humorous exchange between father and son, sources noted that the first day of budget deliberations was marked by serious and sometimes tense discussions. Topics included fiscal space, financial viability, and concerns about funding sources.
At one point, Navotas City Representative Toby Tiangco questioned House appropriations chairperson Mikaela Suansing about a small committee from the 19th Congress tasked with amending the 2025 national budget after its approval on third reading. When Suansing said the committee would consider Tiangco’s request, he questioned why such information was not readily available. Suansing replied that she was not the appropriations chairperson at that time.
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