A decline in reserve assets and the national government’s (NG) debt servicing amid elevated borrowing costs widened the Philippines’ net external liability position to $54.9 billion in the first quarter of 2026.

With the general government’s (GG) continued status as a net debtor, the country’s international investment position (IIP)—a snapshot of its foreign financial assets and liabilities—widened to a net external liability position in the first quarter, increasing by 8.1 percent from the $50.8-billion liability recorded at end-December 2025.

However, it remained two percent narrower than the $56-billion liability recorded a year ago, the latest Bangko Sentral ng Pilipinas (BSP) data released on Tuesday night, June 30, showed.

According to the BSP, the quarter-on-quarter movement was driven mainly by “a faster decline in external financial assets relative to liabilities.”

As of the first quarter, the country’s net external liability position was equivalent to 11.2 percent of gross domestic product (GDP), up from 10.4 percent in the fourth quarter of 2025. On a year-on-year basis, however, the ratio eased from 12 percent at end-March 2025.

The central bank said the decline in external financial assets was primarily due to “lower reserve assets, largely attributable to BSP foreign exchange (forex) operations and the NG’s drawdowns on its foreign currency deposits with the BSP for debt servicing.”

It added that “higher bond yields caused by market concerns over geopolitical uncertainties and the weak global outlook contributed to downward valuation adjustments in external assets, including foreign-issued debt securities.”

By sector, deposit-taking corporations, or banks, saw their net asset position increase to $3.8 billion from $2.05 billion at end-December 2025.

Meanwhile, other sectors posted a wider net liability position of $76 billion from $75.4 billion in the previous quarter, while the GG’s net debt position increased to $89.3 billion from $88.4 billion. GG debt is a broader measure of public debt that consolidates the obligations of the NG, local government units (LGUs), and social security institutions while netting out debt holdings among these public entities to avoid double counting.

The BSP remained a net creditor, with a net asset position of $106.6 billion, although this declined from $111 billion at end-December 2025.

Overall, the country’s total external financial assets stood at $258.6 billion in the first quarter, down 2.1 percent from the previous quarter but up 1.6 percent from a year ago.

Meanwhile, total external financial liabilities amounted to $313.5 billion, slightly lower than the previous quarter’s level but nearly one percent higher than at end-March 2025.

Despite these developments, the BSP noted that “the Philippines’ external position remains supported by continued foreign investment inflows and access to external financing.”

IIP is a key indicator of a country’s external position, measuring the value of its financial assets abroad against its liabilities to the rest of the world. - Derco Rosal