Philippines’ Net External Liability Declines to $65.5B

The Philippines’ net external liability position narrowed to $65.5 billion as of end-December 2024, a 10.2% decrease from the $72.9 billion recorded at end-September 2024, according to the Bangko Sentral ng Pilipinas (BSP). ​

This improvement was driven by a 3.4% contraction in external financial liabilities, which outpaced a 1.4% decline in external financial assets. Total outstanding external financial liabilities stood at $318.2 billion, while external financial assets amounted to $252.7 billion. ​

The decrease in external financial liabilities was primarily due to an 8.2% decline in foreign portfolio investments (FPI) to $96.3 billion from $104.9 billion, and a 2.0% reduction in foreign direct investments (FDI) to $129.3 billion from $132.0 billion.

The notable decline in net FPI was attributed to a 14.1% decrease in nonresidents’ investments in equity securities of local corporations, which fell to $37.6 billion. This mirrored the drop in the Philippine Stock Exchange Index (PSEi), which experienced significant declines amid growing concerns over the policies of U.S. President-elect Donald Trump, particularly the proposed import tariff hike that could lead to higher interest rates. ​

Additionally, outstanding investment in debt securities by nonresidents declined by 3.9% to $58.7 billion. This decrease was driven by foreign investors’ net selling of their holdings in debt securities issued by the national government to residents in the secondary market, as well as net repayments of debt securities held by nonresidents. ​

On the assets side, the country’s reserve assets stood at $106.3 billion as of end-December 2024, a 5.7% decrease from $112.7 billion at end-September 2024. Residents’ net direct investments in debt instruments also declined by 2.7% to $41.8 billion.

Year-on-year, the net external liability position grew by 29.0% from $50.7 billion at end-December 2023. This was due to an 8.5% growth in total external financial liabilities from $293.1 billion, despite a 4.2% increase in total external financial assets from $242.4 billion.

The BSP held the largest share of the country’s total external financial assets at 43.9%, valued at $110.8 billion as of end-December 2024. This level was 5.9% lower than the $117.8 billion recorded at end-September 2024.

The decrease was mainly due to a 5.7% decline in reserve assets, which constitute the majority of the BSP’s external financial holdings.

The other sectors accounted for 40.9% of the country’s outstanding external financial assets at $103.4 billion, while the banking sector held 15.2%, amounting to $38.5 billion. ​

On the liabilities side, the other sectors contributed the largest share to the country’s total external financial liabilities at 58.0%, equivalent to $184.6 billion as of end-December 2024.

The national government’s outstanding external financial liabilities accounted for 27.5% at $87.6 billion, while the banking sector’s share was 13.3% at $42.2 billion.

The BSP held the remaining 1.2%, equivalent to $3.7 billion, mostly in the form of Special Drawing Rights (SDRs). ​