Philippine net external liabilities widen to USD 65.6 billion

The Philippines’ net external liability position widened to USD 65.6 billion at end-June 2026 as government, banks, and other sectors increased foreign borrowing, the Bangko Sentral ng Pilipinas reported.

The borrowing helps finance government programs and business activity, but adds obligations that borrowers must service. For taxpayers and households, the public-interest issue is how those funds are used and whether borrowers can meet repayments without disrupting public services or credit.

Preliminary international investment position data put the gap between external financial liabilities and assets at 13.4% of gross domestic product. That compared with USD 55.0 billion, or 11.2% of GDP, at end-March.

The gap widened by USD 10.5 billion, or 19.2%, during the quarter, according to the BSP’s Sept. 30 report. Compared with end-June 2025, when it stood at USD 63.9 billion, the gap increased by USD 1.6 billion, or 2.5%.

The BSP said external liabilities remained predominantly long-term, helping limit the need to replace maturing financing in the near term.

Total external financial liabilities rose 3.1% during the quarter to USD 324.9 billion from USD 315.0 billion. External financial assets slipped 0.2% to USD 259.3 billion from USD 259.9 billion, remaining broadly stable.

Compared with a year earlier, liabilities increased 1.5% from USD 320.0 billion, while assets rose 1.3% from USD 256.1 billion.

Higher net loan liabilities drove most of the quarterly widening. These increased to USD 78.3 billion from USD 71.3 billion as banks and other sectors borrowed more abroad and the government obtained financing from multilateral and bilateral creditors.

Intercompany borrowing also increased net direct investment debt liabilities to USD 36.8 billion from USD 35.3 billion. The government’s June global bond issuance helped raise net debt securities liabilities to USD 13.3 billion from USD 12.3 billion.

The BSP linked government financing to fiscal requirements, priority programs, and infrastructure projects.

Lower reserve assets and reduced bank deposits abroad also widened the gap. Net currency and deposit assets fell to USD 9.7 billion from USD 11.3 billion.

Higher valuations of residents’ equity investments in foreign affiliates partly offset these changes. Net direct investment equity liabilities narrowed to USD 21.6 billion from USD 23.3 billion, while net portfolio equity liabilities eased to USD 24.9 billion from USD 25.1 billion.

Banks shifted from a net external asset position of USD 3.7 billion at end-March to net liabilities of USD 1.4 billion at end-June. The BSP attributed the shift to higher foreign borrowing and lower loan claims and deposits abroad.

The general government remained a net borrower, with net external liabilities of USD 92.2 billion, compared with USD 89.3 billion in March. Other sectors’ net liabilities increased to USD 76.6 billion from USD 76.1 billion.

Other sectors comprise financial corporations outside the central bank and deposit-taking sector, nonfinancial corporations, households, and nonprofit institutions serving households.

The BSP remained the main net creditor, with net external assets of USD 104.7 billion, down from USD 106.6 billion in March.

Reserve assets, which provide a buffer against external financing pressures, declined 1.8% during the quarter to USD 104.7 billion from USD 106.6 billion. They were 1.2% below the USD 106.0 billion recorded a year earlier.

The central bank attributed the quarterly decline partly to lower valuations of its gold holdings following a fall in international gold prices. Government withdrawals from foreign currency deposits with the BSP for external debt payments also reduced reserves.

Other sectors overtook the BSP as the largest holder of external financial assets, accounting for USD 112.5 billion, or 43.4% of the total. The central bank held USD 108.6 billion, or 41.9%, while banks held USD 38.2 billion, or 14.7%.

Reserve assets remained the largest asset component at 40.4%. Residents also increased holdings of foreign equity and debt securities, while upward valuations lifted direct investment equity assets.

On the liability side, other sectors accounted for USD 189.1 billion, or 58.2% of the total. The general government held USD 92.2 billion, or 28.4%, banks USD 39.6 billion, or 12.2%, and the BSP USD 3.9 billion, or 1.2%.

Higher valuations of foreign investors’ shares in Philippine enterprises also increased equity liabilities during the quarter. The Philippine Stock Exchange Index rose 1.5%, from 5,948.94 at end-March to 6,037.17 at end-June, the report noted.

Loans were the largest liability component at USD 88.6 billion, or 27.3%, followed by direct investment debt at USD 77.8 billion, or 23.9%. Direct investment equity accounted for USD 59.7 billion, or 18.4%, and debt securities USD 50.4 billion, or 15.5%.

The international investment position measures external financial assets and liabilities at a given date. It includes equity investments as well as debt, so the net liability figure is broader than an external debt total.

Changes reflect financial transactions, market prices, and exchange rates. A wider liability position can therefore arise from new borrowing or valuation changes, while reserve assets and the maturity of obligations help determine the financing risks borrowers face.