By Katherine K. Chan, A reporter
Balance of the PHILIPPINES of payments (BoP) deficit in 2025 was below the central bank’s full-year forecast despite posting a wider deficit in December.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that the country’s BoP position reached 5.661 billion dollars, which is the result of a surplus of $609 million seen in 2024.
This was less than the central bank’s target of a deficit of 6.2 billion or -1.3% of the country’s gross domestic product (GDP).
In December alone, the BoP deficit decreased year-on-year to $827 million from a gap of $1.508 billion.
However, it widened from the $225-million deficit recorded in November.
“The Philippines’ outstanding payments registered a deficit of $827-million by December 2025, bringing the full-year result to a deficit of $5.7-billion,” the BSP said in a statement late Monday.
BoP refers to a country’s economic trade with other nations. A surplus shows more money coming into the country, while a deficit shows that the country spent more money than it received.
Chief Economist Rizal Commercial Banking Corp. Michael L. Ricafort said the BoP deficit in December was partly due to the country’s ongoing trade deficit.
The Philippines’ trade balance, or the difference between the value of imports and exports, narrowed to a $45.2 billion gap as of the end of November from $50.18 billion in the same period in 2024.
Meanwhile, John Paolo R. Rivera, a senior researcher at the Philippine Institute for Development Studies, said that low inflows and direct foreign investment, as well as continued outflows from portfolio investment, may also contribute to the recent BoP deficit.
“It shows a combination of weak income, soft FDI (foreign direct investment), and persistent net portfolio investment outflows, as well as persistent trade deficits caused by imports,” he said in a Viber message.
“The (December) deficit reflects year-end debt payments, repatriation of profits, and portfolio rebalancing, which is typical at the end of the year.”
Total FDI inflows recorded a double-digit annual decline every month since August 2025. In October, it fell by 39.8% to $642 million from $1.067 billion last year.
Mr. Ricafort said the country’s BoP situation may improve in the near term if management reforms are implemented.
“In the coming months, the BoP data will be even better if anti-corruption measures and other reform measures, especially in advancing the country’s governance level, are taken seriously, just like 10-15 years ago, as this helps to improve the confidence of international investors in the country,” he said in an email.
RECORD A DOLLAR DEPOSIT
Meanwhile, the central bank’s dollar reserves stood at $110.833 billion as of the end of 2025, 4.31% higher than the $106.257 billion posted last year.
This marked a new annual Gross International Reserves (GIR) level, breaking the previous record of $110.117 billion at the end of 2020.
The level of dollar reserves in 2025 also exceeded the BSP’s estimate of 109 billion dollars per year.
At the end of December, the country’s GIR rate was converted to 7.4 months of imports of goods and services and basic income, above the three-month rate.
“Specifically, the latest GIR rate ensures the availability of foreign currency to meet the balance of payments needs, such as the payment of purchases and debt service, in extreme cases where there is no export earnings or foreign loans,” the central bank said.
It is also enough to cover about 3.9 times the country’s short-term external debt based on net maturity.
GIR includes foreign securities, foreign currency, and other such assets like gold. It allows the country to dienance imports and foreign debts, maintain the stability of its currency, and protect itself from disruptions in the global economy.
To Mr. Rivera, the frequency of FDIs, export performance, income inflows, monetary policy actions of the US Federal Reserve, among other global financial conditions, will determine the state of the country’s BoP this year.
“Although near-term pressures from global uncertainty and the weakness of the PHP (Philippine peso) may persist, fiscal consolidation and exports may help reduce the deficit this year, as the GIR is expected to remain stable with the curb. a big external shock,” he said.
By 2026, the BSP expects the overall BoP position to end with a debt of $5.9-billion or -1.2% of Philippine GDP. Meanwhile, it sees the GIR level reaching $110 billion by the end of the year.
