The Philippines narrowed its net external liability position at the end of 2025, as growth in overseas financial assets outpaced the accumulation of debt, signaling strengthening of the country’s balance sheet with the rest of the world.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that the country’s international investment position (IIP) showed a net liability of $50.8 billion as of December, a 2.5 percent improvement from the $52.1 billion recorded in the previous quarter.

On an annual basis, the gap shrank 0.8 percent from $51.2 billion in December 2024.

The central bank remains the primary pillar of the country's creditor status, maintaining a net asset position of $111.0 billion. This was bolstered by a 1.6 percent expansion in reserve assets during the final three months of the year.

The narrowing of the overall deficit comes as the country’s total external financial assets—investments held abroad—rose to $264.1 billion, a 5.4 percent jump from the previous year.

Central bank officials noted that the net liability now represents 10.4 percent of gross domestic product, a decline from the 10.8 percent ratio seen in September. The downward trend suggests that the country’s foreign debt obligations are becoming more manageable relative to the size of the domestic economy.

The general government remains a net debtor, though its total obligations eased by 1.7 percent during the quarter to $88.4 billion. The decline was largely attributed to non-residents selling off government securities.

While the government reduced its debt load, local banks, classified as deposit-taking corporations, strengthened their positions. The banking sector increased its net asset position to $2.05 billion from $1.85 billion in September.

Conversely, "other sectors"—which include non-financial corporations—saw their net liability position widen to $75.4 billion from $73.7 billion in the prior quarter. Total foreign investments in Philippine assets reached $314.9 billion at year-end, a 4.4 percent increase from 2024, though the growth was more measured compared to the pace of capital flowing out of the country into foreign markets.

The IIP serves as a critical barometer for the Bangko Sentral in assessing the Philippines’ financial resilience. By tracking the delta between what the country owns abroad and what it owes to foreign entities, policymakers can better gauge the economy’s vulnerability to external shocks and shifts in global capital flows.