Driven by higher foreign borrowing
MANILA, Philippines — The Philippines’ net external liability position widened in the second quarter as increased foreign borrowing by banks, businesses and the government outpaced the country’s holdings of financial assets abroad, data from the Bangko Sentral ng Pilipinas (BSP) showed.
The country’s international investment position (IIP) stood at a net liability of $65.6 billion at end-June, equivalent to 13.4 percent of gross domestic product. This is wider by 19.2 percent than the $55-billion net liability or 11.2 percent of GDP at end-March.
The IIP is a snapshot of the country’s financial relationship with the rest of the world. It measures the value of financial assets held by Philippine residents abroad against liabilities owed to foreign investors and creditors.
The net liability position also widened by 2.5 percent from the $63.9-billion net liability position recorded at end-June 2025.
Total external financial assets slipped by 0.2 percent to $259.3 billion from $259.9 billion at end-March, although these were still 1.3 percent higher than the $256.1 billion recorded a year earlier.
Meanwhile, total external financial liabilities increased by 3.1 percent quarter-on-quarter to $324.9 billion from $315 billion. Liabilities were also 1.5 percent higher than the $320 billion posted at end-June last year.
The wider gap means the country owed more to foreign investors and creditors on a net basis at the end of the quarter, with the BSP attributing much of the movement to higher debt liabilities and lower reserve assets.
“Higher net loan liabilities were the primary driver of the wider net external liability position during the period,” the BSP said.
“The increase reflected higher external borrowing by banks and other sectors, as well as additional financing secured by the general government from multilateral and bilateral creditors.”
Net loan liabilities widened to $78.3 billion at end-June from $71.3 billion three months earlier and $67.5 billion a year ago. This represented the largest negative position among the financial instruments tracked by the BSP.
Direct investment debt liabilities also increased as intercompany borrowing rose. These are borrowings between foreign direct investors and their subsidiaries or affiliates. The government’s global bond issuance in June likewise increased net liabilities in debt securities.
The country’s reserve assets, meanwhile, declined to $104.7 billion from $106.6 billion in March.
These factors were partly offset by an improvement in the country’s net direct investment equity position, which reflected upward price revaluations of Philippine residents’ equity investments in foreign affiliates.
By institutional sector, the BSP remained the country’s main net external lender, although its net foreign asset position eased to $104.7 billion from $106.6 billion in March.
Banks, on the other hand, shifted to a net borrower position of $1.4 billion from a net lender position of $3.7 billion in the previous quarter, as foreign borrowings increased while their loan claims and deposit holdings abroad declined.
The general government remained the largest net borrower, with net external liabilities of $92.2 billion at end-June, wider than $89.3 billion in March.