THE country’s balance of payments (BOP) position ended in a $5.7-billion deficit last year but was smaller than what the Bangko Sentral ng Pilipinas (BSP) had projected.
The result, a reversal from 2024’s $609-million surplus, came as the shortfall markedly widened to $827 million in December from $225 million a month earlier.
The BSP had forecast a full-year deficit of $6.2 billion.
Philippine Institute for Development Studies senior fellow John Paolo Rivera said the wider deficit was due to weaker capital inflows, lower foreign direct investments (FDI), continued net hot money outflows, and a large trade gap.
He added that the December deficit likely reflected year-end factors such as debt payments, profit remittances and portfolio adjustments that are common at the end of the year.
The BOP is a summary of a country’s transactions with the rest of the world for a specific period. It consists of the current account, which covers trade in goods, services and primary and secondary income (which includes overseas Filipino worker remittances); the capital account — capital transfers and nonfinancial assets; and the financial account or investments from abroad.
The central bank expects the BOP deficit to widen this year to $5.9 billion from a previous projection of $3.4 billion.
“Looking ahead, the BOP position will hinge on FDI recovery, export performance, remittance growth, and global financial conditions, particularly US interest rates,” Rivera said.
“While near-term pressures from global uncertainty and PHP weakness may persist, a pickup in investments and exports could help narrow the deficit this year,” he added.
Meanwhile, the country’s gross international reserves (GIR) ended 2025 at $110.8 billion, the BSP also said on Wednesday, higher than the projected $109 billion.
The central bank said the reserves remained an “adequate external liquidity buffer, equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.”
“It covers about 3.9 times the country’s short-term external debt based on residual maturity,” it added.
The country’s foreign reserves are expected to end this year at $110 billion.
Rivera said that the latest GIR level showed that the country’s external buffers remained strong and were sufficient to cover imports and external obligations.
“GIR is expected to remain broadly stable barring major external shocks,” he added.
GIR consists of the BSP’s foreign investments, gold, foreign exchange, reserve position in the International Monetary Fund and special drawing rights.
It is considered adequate if “it can finance at least three months’ worth of the country’s imports of goods and payments of services and primary income.”
It is also considered sufficient “if it provides at least 100-percent cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate 12-month period.”