The Philippines improved its financial position with the rest of the world in the third quarter of 2025, as the country’s net external liabilities fell by 9.3 percent, according to preliminary data from the Balance Sheet Approach (BSA).
Net external liabilities declined from P3.6 trillion in the second quarter to P3.3 trillion in the third quarter, reflecting stronger external asset holdings by the Bangko Sentral ng Pilipinas (BSP) and other depository corporations.
The improvement was largely driven by increased investments in foreign debt instruments by the central bank and banks, although this was partly offset by a rise in government securities and loan obligations owed by the general government to nonresidents.
The BSP and other depository corporations both posted stronger net creditor positions during the quarter, pointing to healthier balance sheets.
For the central bank, the gain came from higher holdings of debt securities issued by nonresidents, along with lower deposit liabilities to the general government compared with the previous quarter.
Other depository corporations also posted a better position, supported by increased holdings of rest-of-the-world debt securities, lower deposit liabilities, and higher loan receivables from non-financial corporations.
In contrast, the general government’s net debtor position widened in the third quarter. This was due to higher holdings of government securities by nonresidents and other financial corporations, increased loan obligations to nonresidents, and lower deposits with the central bank. Government securities continued to serve as the government’s main source of funding.
Still, a key buffer remained in place: 68.9 percent of the general government’s obligations were denominated in domestic currency, helping limit exposure to exchange rate volatility.
The Balance Sheet Approach, developed by the International Monetary Fund in 2002, is a financial stability monitoring tool that tracks potential vulnerabilities across economic sectors and how these sectors are linked. Unlike traditional indicators that focus on flows over time, the BSA looks at the stock of financial assets and liabilities at a specific point in time, offering a clearer snapshot of balance sheet risks.