The Philippines posted a $273-million surplus in its third-quarter Balance of Payments (BoP), the Bangko Sentral ng Pilipinas (BSP) reported on Friday, 12 December — a roughly 93 percent decline from the $3.68-billion surplus recorded in the same quarter of 2024.

The balance of payments (BoP) is a comprehensive record of all economic transactions between residents of a country and the rest of the world over a specific period, typically quarterly or annually. It reflects the movement of money, goods, services, and financial assets — including international trade and foreign direct investments (FDIs).

A BoP surplus indicates that more money is entering the economy than leaving it, usually due to strong exports, high investment inflows, or robust remittances.

Sharp year-on-year drop

The sharp year-on-year drop, while still showing net inflows, suggests significantly reduced foreign investments and cross-border transactions — likely influenced by the ongoing floodgate scandal.

The BSP earlier reported that FDIs fell 40 percent year-on-year in August, dropping to $494 million from $830 million a year earlier, nearly halving foreign inflows after President Ferdinand R. Marcos Jr. exposed irregularities in flood control projects under his administration.

September 2025 saw further declines, with net FDI inflows reaching only $320 million, down from $432 million in the same month last year.

Market data from the Philippine Stock Exchange Index (PSEi) also reflects weakening foreign appetite. In the second quarter, foreign investors were net buyers, with May 2025 contributing to a wave of regional inflows as Asian markets collectively attracted around $10.65 billion in net foreign investment.

Foreign investors turned net sellers

However, in the third quarter — following President Marcos Jr.’s disclosure of ghost flood control projects — foreign investors turned net sellers. August 2025 alone recorded P3.31 billion in outflows, pushing year-to-date net foreign outflows to P45.43 billion through August.

A BoP surplus typically exerts upward pressure on the exchange rate, a trend visible in the peso’s record lows against the US dollar. It also correlates with rising foreign reserves, supported by BSP data showing continued increases in gross international reserves (GIR) since August.

For the first nine months of 2025, however, the BoP posted a $5.3-billion deficit, indicating that more funds left the economy than entered. The BSP said the current deficit is equivalent to about 1.5 percent in gross domestic product (GDP).

BSP Governor Eli M. Remolona Jr. said in an interview Friday that he expects the country’s GDP to grow by 3.8 percent in the fourth quarter, slightly lower than the third quarter’s 4.0 percent, largely due to the contraction in public infrastructure spending triggered by the flood control scandal.