The Philippines ended the third quarter of 2025 with a stronger overall financial position vis-à-vis the rest of the world, even as local companies and the national government increased their borrowing earlier in the year.
Latest data from the Bangko Sentral ng Pilipinas (BSP) show that the country’s net external liability—the gap between what Filipinos owe foreign investors and what they own abroad—narrowed by end-September, signaling improved external resilience. At the same time, sector-level data reveal rising dependence on foreign funding among corporations and the public sector.
As of end-September 2025, the country’s net external liability stood at US$58.2 billion, down from US$67.0 billion three months earlier, according to the Philippines’ International Investment Position (IIP). This 13.2 percent decline brought the gap down to 12.1 percent of gross domestic product (GDP) from 14.1 percent in the previous quarter.
The improvement reflected both asset growth and softer foreign exposure. Philippine external assets rose 1.9 percent to US$263.9 billion, while foreign investments in Philippine assets declined 1.2 percent to US$322.1 billion. In effect, Filipinos—through the government, firms, banks, and the central bank—held more assets overseas, while nonresidents slightly reduced their holdings in the Philippines.
The IIP provides a snapshot of the country’s overall external balance sheet. A lower net external liability generally points to reduced vulnerability to external shocks and a stronger financial buffer.
Borrowing pressures earlier in the year
A different picture emerges from preliminary Balance Sheet Approach (BSA) data, which track sector-level assets and liabilities. In the first half of 2025, the Philippines’ net external liabilities rose from ₱3.5 trillion in the first quarter to ₱3.7 trillion in the second quarter.
The increase was driven mainly by nonfinancial corporations and the national government. Large firms tapped more foreign loans and equity, while the government’s net debtor position widened as nonresidents and domestic financial institutions increased their holdings of government securities and foreign borrowing grew. At the same time, the BSP reduced its investments in foreign-issued debt securities, trimming part of the country’s external asset base.
While the IIP and BSA figures may seem contradictory, they reflect different time frames, currencies, and analytical lenses. Taken together, they show that although external borrowing rose earlier in 2025, subsequent asset accumulation and adjustments helped narrow the country’s overall external gap by the third quarter.
The takeaway: The Philippines remains a net external debtor, but its aggregate position has modestly improved, underscoring both progress and the continuing need for prudent debt and macroeconomic management.