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The Bangko Sentral ng Pilipinas (BSP) could lower borrowing costs as early as October if the economy shows signs of losing momentum, BSP Governor Eli M. Remolona, Jr. said, suggesting that policymakers are not ruling out further easing even after cutting rates for three straight meetings.

“If we see [economic] output slowing down because of the lack of demand, then we would step in, easing policy rates [to] strengthen demand,” he said in an exclusive interview on Thought Leaders with Cathy Yang on One News on Thursday.

But the BSP chief said monetary policy would be ineffective in addressing supply-driven slowdowns. “If it’s a supply thing, there’s little we can do. So, it has to come from a demand side for us to act decisively,” he added.

Last month, the Philippine central bank lowered its benchmark interest rate by 25 basis points (bps) to 5%, marking its third consecutive cut. That brought total easing to 150 bps since August 2024.

Mr. Remolona has repeatedly described the policy setting as a “Goldilocks rate,” balancing inflation and growth.

“We’re in the Goldilocks zone, I would say,” he said. “So, if the forecast stays… we’re going to stay where we are in terms of the policy rate. There may be small adjustments — a pause or an ease — but more or less, we’re going to be at the same range.”

The governor said two quarter-point reductions in October and December are “possible but not likely.” While not ruling them out, he said the central bank is inclined to hold steady if forecasts for both inflation and growth remain intact.

Larger cuts are improbable. “A 50-bp cut is a big shot,” Mr. Remolona said, stressing that easing would likely continue in smaller, incremental steps. He added that only a sharper slowdown in economic activity and a rise in unemployment would prompt more aggressive action.

Philippine inflation averaged 1.7% in the first eight months, below the BSP’s 2-4% target, after quickening slightly to 1.5% in August.

This was the sixth straight month that consumer price growth undershot the target. The economy expanded by 5.5% in the second quarter from a year earlier, quicker than 5.4% in the previous quarter.

The BSP projects full-year growth to settle at the lower end of the government’s 5.5-6.5% goal, with inflation ending the year at 1.7%.

The Monetary Board has two remaining policy meetings this year, on Oct. 9 and Dec. 11. Mr. Remolona said the central bank typically makes decisions every two months as new data come in, but he did not rule out off-cycle action.

“Of course, if it’s really bad, we can move the policy rate even outside our usual schedule of policy meetings, but that’s highly unlikely,” he said.

Beyond the immediate growth-inflation trade-off, Mr. Remolona said policy adjustments also help banks operate more efficiently.

“For me, it’s no longer a monetary policy thing,” he said. “It’s more of a structural thing to help banks be more efficient in terms of lending, pricing their deposits.”

The central bank chief said inflation risks are generally low. The BSP expects price increases to average 3.3% next year and 3.4% in 2027, both within target.

“If it’s not so good data, then of course we’ll ease,” he said. “The risks of higher inflation which would make us tighten, the way we see it now, those risks are small. So, I think we’re comfortable for now.” — Katherine K. Chan

State infrastructure spending declined by 25% in July, amid sluggish disbursements by the Department of Public Works and Highways (DPWH), the Budget department said.

At the same time, Budget Secretary Amenah F. Pangandaman said infrastructure disbursements may remain subdued in the coming months amid the ongoing probe into anomalous flood control projects.

In its latest disbursement report on Thursday, the Department of Budget and Management (DBM) said expenditures on infrastructure and other capital outlays fell by 25.3% to P93.3 billion in July from P124.9 billion in the same month last year.

Month on month, it dropped by 37.3% from P123.8 billion spent on infrastructure in June. 

This marked a reversal of the 6.5% annual increase seen in June after the election ban on public works disbursements was lifted in early May.

The DBM attributed the year-on-year decline in infrastructure spending to weak disbursements by the DPWH, which is currently embroiled in a controversy over anomalous flood control projects.

The Budget department noted the slow DPWH disbursements were due to project implementation schedules, including the timing and phasing of infrastructure activities, as well as delays in procurement, incomplete submission of progress billings and required documents by contractors.

Spending in July was also affected by contractors’ compliance with the new tax clearance requirement of the Bureau of Internal Revenue (BIR) for the release of final payments.

The BIR earlier said the failure of contractors to present their tax clearance will result in the suspension of contract settlements and the imposition of a tax line over the contract amount in favor of the government.

The updated clearance guarantees that every contractor has no outstanding tax liabilities.

“Disbursements for the Revised Armed Forces of the Philippines Modernization Program (RAFPMP) of the DND (Department of Defense) were also lower in July 2025 attributed to the timing of releases, as big-ticket items were scheduled in August,” the DBM said.

At the same time, the DBM said lower spending was partly offset by higher disbursements from the Department of Transportation, driven by local counterpart funding for foreign-assisted projects and the settlement of outstanding payables.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the government should exercise caution to prevent anomalies and corruption allegations.

“However, other infrastructure projects in good order will continue,” he said in a Viber message on Thursday.

For the January-to-July period, overall infrastructure and capital outlays disbursements slipped by 3.2% to P713.5 billion from P736.7 billion in the same period last year.

The decline was driven by combined factors, including the second-quarter election-related ban and timing of disbursements for the defense modernization program.

As of end-July, the DBM released P4.9 billion to the DPWH for nationwide classroom repairs, alongside P3.5 billion earmarked for the restoration of Gabaldon and other heritage school and the implementation of the Last Mile Schools Program.

‘TEMPORARY SLOWDOWN’
Meanwhile, Ms. Pangandaman said infrastructure spending this year was dented by the election ban, and now the ongoing investigation on flood control projects.

The Budget department warned of a temporary slowdown in infrastructure spending as the DPWH conducts tighter due diligence of projects.

“(This) following rigorous due diligence being undertaken by the DPWH to evaluate and validate status of completed projects, and employ measures to enforce stricter verification of progress billings and other payment claims,” the DBM said.

Earlier this month, the DPWH suspended the bidding of all locally funded projects for two weeks, to help the agency implement safeguards against so-called “ghost” projects.

“The DPWH has also since lifted the suspension of bidding and procurement activities for local projects to ensure continuity and timely implementation of the infrastructure program while implementing safeguards to prevent corruption and ensure compliance with existing laws, rules, and regulations,” the Budget department said.

“Infrastructure spending will hopefully normalize and catch up towards the latter part of the year.”

However, Ms. Pangandaman said it’s too early to tell if the infrastructure slowdown will dent economic growth.

“We’re working with the DBCC (Development Budget Coordination Committee) to crunch the numbers. We’ll know more after the next (DBCC) meeting,” she said.

Analysts said they expect spending to further cool until 2026 amid a widening probe on infrastructure projects.

“We may see even slower infra spending in the coming months amid scrutiny of the DPWH and the corruption scandal,” Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said in a Viber message.

Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes said the flood control scandal is a “very hot issue” that’s likely to cool infrastructure spending through yearend.

Mr. Ricafort also said slower infrastructure spending could also dampen government spending, which contributes less than a fifth to the country’s economic output.

“Risk is slowdown in infrastructure spending and overall economic growth. But would help narrow the budget deficit and curb growth in overall NG (National Government) debt,” he said. — Aubrey Rose A. Inosante, Reporter

The National Government (NG) is looking to borrow PHP 437 billion from the domestic market in the fourth quarter, the Bureau of the Treasury (BTr) said on Thursday.

In a notice on its website, the BTr said it seeks to borrow PHP 262 billion through the issuance of Treasury bills (T-bills) and PHP 175 billion through Treasury bonds (T-bonds) in the October-to-December period.

The borrowing plan for the fourth quarter is 36.6% lower than the PHP 690-billion borrowing plan for the third quarter.   

It is also 31.45% lower than the PHP 637.448 billion that the government actually raised in the July-to-September period.

“Our bond auctions will be biweekly but the tenor will be dual, similar to what we’ve been doing for the three- and 20-year bonds,” National Treasurer Sharon P. Almanza said in a Viber message.

Ms. Almanza said the breakdown of amounts per tenor for T-bills and T-bonds will be announced in the weekly notice of offering.

For October, the NG plans to borrow P180 billion domestically, consisting of PHP 110 billion in T-bills and P70 billion in T-bonds.

The government will hold auctions for T-bills on Sept. 29, Oct. 6, Oct. 13, Oct. 20 and Oct. 27. It seeks to raise PHP 22 billion from the sale of 91-day, 182-day and 364-day T-bills from each of these auctions in October, but no breakdown was given.

For the Sept. 29 auction, the BTr will raise PHP 7.5 billion each from 89-day and 182-day papers, as well as PHP 7 billion from 364-day T-bills.

For longer-dated offerings, the BTr will auction off PHP 35 billion worth of three-year and 10-year bonds on Oct. 7, and PHP 35 billion worth of seven-year and 25-year bonds on Oct. 21.

For November, the government is looking to borrow PHP 158 billion from the domestic market, composed of PHP 88 billion from T-bills and PHP 70 billion from T-bonds.

The NG seeks to raise PHP 22 billion from each of the four auctions scheduled on Nov. 3, 10, 17 and 24. It will offer 91-day, 182-day and 364-day T-bills at these auctions, but no specific breakdown was given.

The government will offer five-year and 10-year bonds worth PHP 35 billion on Nov. 4, and seven-year and 20-year bonds worth PHP 35 billion on Nov. 18.

In December, the NG will borrow PHP 99 billion from the domestic market, composed of PHP 64 billion from T-bills and PHP 35 billion from T-bonds.

The government is looking to raise PHP 22 billion from the offering of 91-day, 182-day and 364-day T-bills at the Dec. 1 and 8 auctions, and PHP 20 billion at the Dec. 15 auction.

The government scheduled only one T-bond auction in December. It will sell three-year and 10-year bonds on Dec. 2, with the goal of raising PHP 35 billion.

There are less auctions in December to take into account the holiday season.

A trader said demand is expected to be strong in the fourth quarter, while yields could ease further due to the lower supply of bonds relative to the previous quarter’s offering.

“This is a welcome development for investors as there will be choices in terms of tenors.

“Also, expect rates to trend lower since we only have bi-weekly bond auctions next quarter. There should be strong demand given the relatively lower supply,” the trader said.

The trader noted that the BTr will conduct dual bond offerings in the October-to-December period to address demand for short and long tenors, and since the government has almost completed its borrowing plan for the year due to the retail Treasury bond (RTB) offering.

However, the trader expressed concern that investor confidence could be dampened by the ongoing corruption scandal involving anomalous flood control projects.

“Not sure also if it will be something good for our image given that we want to be included in the JPMorgan bond index,” the trader said.

JPMorgan this month tagged Philippine peso-denominated government bonds as “Index Watch Positive,” which is the final review phase for inclusion in its Government Bond Index for Emerging Markets series.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the lower borrowing program for the fourth quarter has been a consistent trend amid lower maturities and due to less working days during the holiday season.

However, he said the widening budget deficit and lower interest rates may increase the share of domestic borrowings in the government’s total borrowing mix.

Latest BTr data showed gross domestic debt stood at PHP 1.34 trillion as of end-July.

This was composed of PHP 881.84 billion in fixed-rate Treasury bonds, PHP 300 billion in fixed-rate Treasury notes and PHP 159.85 billion in Treasury   bills.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at PHP 1.56 trillion or 5.5% of gross domestic product this year. — Aaron Michael C. Sy, Reporter

The Philippines kept its title as the world’s most disaster-prone nation for a 21^st straight year, with typhoons and floods battering communities while billions of pesos meant to protect them vanish in graft scandals.

The Southeast Asian country posted a risk score of 46.56 in the 2025 WorldRiskIndex, unchanged from last year but still ahead of 192 other nations. India ranked second, followed by Indonesia, Colombia, and Mexico, according to the study released on Wednesday by Germany’s Bündnis Entwicklung Hilft and Ruhr University Bochum.

The index weighs exposure to disasters such as cyclones, floods, and earthquakes alongside vulnerability indicators like poverty, inequality, and health systems. A score of 100 signals extreme risk.

The Philippines faces a broad spectrum of hazards, but river and coastal flooding remain the most significant threats, according to the report.

The ranking highlights how climate change continues to hit the archipelago, which is lashed by about 20 tropical storms each year. The latest assessment comes as the country braces for Tropical Storm Opong, days after Super Typhoon Nando — internationally named Ragasa — plowed through Luzon.

At the same time, government flood control programs are collapsing under the weight of corruption scandals. A sweeping investigation this year exposed widespread misuse of funds, forcing the removal of P255 billion ($4.4 billion) worth of projects from the proposed 2026 national budget. Flood control allocations were cut to zero.

“One problem that has become obvious is that the needed infrastructures like flood control projects are not being built because of corruption,” Maria Ela L. Atienza, a political science professor at the University of the Philippines, said in a Viber message. There seems to be more focus on relief rather than disaster prevention, she added.

China, Mexico and Japan led in disaster exposure, but the Philippines still placed fourth globally with a score of 39.99. The country also ranked “very high” in vulnerability (54.2) and coping capacity (58.54), underscoring weak infrastructure and strained social systems.

Provinces most at risk of flooding included Cagayan, Agusan del Norte, Pangasinan, Pampanga, Maguindanao and Metro Manila, each scoring above 82% in exposure. By contrast, Marinduque, Laguna, Batanes, Sarangani and Dinagat Islands had low flood exposure.

Metro Manila’s flood risk has been worsened by “soil sealing,” where rapid urbanization covers natural surfaces with concrete, preventing water absorption.

The capital sits on a low-lying river plain intersected by the Pasig River and a dense canal network. Laguna, meanwhile, benefits from hilly terrain and the buffering capacity of Laguna de Bay, which absorbs excess water.

GOVERNMENT FAILURES

The Philippines’ top ranking reflects governance failures more than geography, analysts said.

“Risks have skyrocketed because of the fact that public spending on risk management through flood controls and climate change was substandard to nonexistent,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message. “Politicians and their cahoots decided to be greedy.”

Despite disaster-related laws and international financing for resilience, spending has skewed toward emergency relief. Manila regularly deploys military and civilian assets for typhoon response, but falls short in long-term prevention such as drainage systems, retention basins, and reforestation.

Ms. Atienza said development plans at the local and national levels should be balanced with effective disaster-risk management.

“Big infrastructures like airports and highways as well as commercial establishments and housing projects should not destroy the environment and cause dangers to people or make areas more disaster-prone,” she added. 

Disaster risk is increasingly shaped by social inequality and weak institutions, even in developed economies, according to the report. In Africa, almost 80% of the continent is classified as high- or very high-risk, while Asia and the Americas remain hotspots.

China, with a risk score of 30.62, ranked eighth overall, while the US did not make the top 10. Globally, the gap between disaster exposure and coping capacities has widened as governments struggle to finance prevention.

The Philippines’ risk score, while slightly lower than last year, remains stubbornly high despite decades of donor-backed disaster management programs. Manila has passed multiple disaster laws, created a national council and tapped international climate finance, but implementation has lagged.

The costs are rising. Super Typhoon Nando caused billions of pesos in damage to agriculture and infrastructure this month, compounding fiscal stress as the government pushes higher social spending and grapples with debt exceeding 60% of GDP.

With flood control funds scrapped in the 2026 budget, analysts said the Philippines risks more economic and human losses.

“The current challenges in flood risk management require a fundamental rethinking of disaster preparation,” according to the 2025 report, noting that extreme weather events are not only increasing in frequency, but are also increasingly exceeding the capacities of existing protection systems.

“At the same time, practical examples from various regions of the world show that successful coping strategies are based on the interplay of several factors: technological innovation, local capacity for action, and ecological resilience,” it added. — Aubrey Rose A. Inosante, Reporter

The Philippines’ budget deficit widened in August as revenues fell faster than spending, adding pressure on the government to borrow more and keep within its deficit ceiling.

The gap ballooned 56% to PHP 84.8 billion (USD 1.5 billion) from a year earlier, according to data released by the Bureau of the Treasury on Wednesday. Compared with July, the shortfall surged more than fourfold from P18.9 billion.

Collections fell 8.8% to PHP 352.5 billion, dragged by a steep decline in nontax revenues, which slid nearly 68% to PHP 21.3 billion. Treasury income dropped 53%, while remittances from other offices tumbled 73%.

Tax revenues, however, inched up 3.4% to PHP 331.2 billion. Bureau of Internal Revenue collections rose 5% to PHP 250.1 billion, offsetting weaker Bureau of Customs receipts, which slipped 1.4% to PHP 77.4 billion.

Government expenditures fell 0.7% to PHP 437.3 billion in August from a year ago, weighed by lower primary spending, which excludes interest payments. Primary outlays dropped 3.5% to PHP 374.2 billion.

Interest payments, by contrast, jumped almost 20% to PHP 63.1 billion. The primary deficit — net of interest costs — widened to PHP 21.7 billion from just PHP 1.4 billion a year earlier.

For January to August, the fiscal gap rose 25% to PHP 869.2 billion from a year earlier. The deficit represents 56% of the PHP 1.56-trillion full-year ceiling, leaving room for additional borrowing in the final four months.

Spending climbed 7.2% to PHP 3.95 trillion, already 65% of the government’s PHP 6.08-trillion expenditure program. Primary spending increased 6% to PHP 3.37 trillion, while interest payments grew almost 15% to PHP 584.1 billion, making up 15% of total disbursements.

Revenue collections rose 3.1% to PHP 3.09 trillion, equivalent to 68% of the PHP 4.52-trillion full-year goal. Tax revenues made up 90% of the haul, rising 8.9% to PHP 2.79 trillion.

The BIR collected PHP 2.14 trillion, up 11%, boosted by higher corporate and personal income taxes, value-added tax, tobacco excise, percentage tax on financial institutions, and documentary stamp duties. The robust performance of the BIR allows the deficit to remain manageable, the Treasury said.

Customs collections edged up 1.1% to PHP 621.4 billion, supported by efforts against smuggling and illicit trade.

Nontax revenues, by contrast, fell 31% to PHP 298.3 billion, though this still accounted for 97% of the PHP 306.5-billion annual target.

Treasury income slipped 5.5% to PHP 189.3 billion, surpassing the revised PHP 179.2-billion goal. The bureau cited higher interest earnings on deposits, dividends from state companies, and remittances from the Philippine Amusement and Gaming Corp. and Manila International Airport Authority.

The primary deficit surged 52% to PHP 285 billion in the eight-month period, accounting for 85% of the total fiscal gap. The Treasury attributed the increase to the government’s push for priority programs and growth-supportive spending.

The government aims to cap the deficit at PHP 1.56 trillion this year, equivalent to 5.5% of gross domestic product (GDP). Officials plan to gradually narrow the shortfall to PHP 1.55 trillion or 4.3% of GDP by 2028. — Aubrey Rose A. Inosante

A House of Representatives committee on Monday moved to channel billions worth of flood control funds to education and health as they began revising the proposed PHP 6.793-trillion national budget for 2026.

The House sub-committee on Budget Amendments Review redirected PHP 255 billion in flood control funding originally allocated for the Public Works department next year towards the Health and Education departments, in line with President Ferdinand R. Marcos, Jr.’s call to strengthen human capital development.

“We want to ensure that we are able to reallocate it in a way that the budget will be most responsive to the needs of the Filipino people,” said Nueva Ecija Rep. Mikaela Angela B. Suansing, who chairs the House Appropriations Committee.

The reallocation follows allegations of irregularities in flood control projects, including substandard, incomplete or nonexistent infrastructure, in a country prone to flooding.

The House sub-committee overseeing fund rechanneling is part of a broader push to improve transparency in budget deliberations, replacing the previously opaque “small committee” that handled revisions to the national spending bill.

The House will begin plenary deliberations on the proposed national spending plan today (Sept. 23), Ms. Suansing said, over a month after the Budget department submitted the National Expenditure Program to Congress.

Ms. Suansing said deliberation on the budget will continue until the House passes the budget bill on second reading before the end of September.

Congressmen raised the Department of Education’s (DepEd) proposed budget by 2.8% or PHP 26.54 billion to PHP 955.04 billion for 2026.

The bulk of the proposed funding increase would go towards DepEd’s classroom construction efforts amid a shortage in government schools, more than doubling the allocation to PHP 36.5 billion from PHP 13.2 billion.

The boost in classroom construction budget could fund an additional 19,300 classrooms nationwide, helping ease classroom shortages in government schools, Party-list Rep. Brian Poe Llamanzares, vice-chairman of the House Appropriations Committee, told lawmakers.

Other programs that received additional funding include the school-based feeding program (PHP 1.5 billion), additional compensation for teachers providing tutoring (PHP 984.11 million), and teaching overload pay for teachers (PHP 579.55 million), among others.

The House sub-committee also separately added P6.61 billion for the Commission on Higher Education’s (CHED) Tertiary Education Subsidy to PHP 22.17 billion and hiked the Tulong Dunong Program budget by PHP 2.69 billion.

CHED Chairperson Shirley C. Agrupis earlier told lawmakers that about 300,000 college students could lose access to government grants if Congress does not increase the budget for the programs that cover the full or partial cost of college education for students enrolled in state colleges.

Lawmakers also increased the Department of Health’s proposed budget for next year by 3.2% to PHP 948.07 billion from PHP 918.79 billion initially earmarked under the National Expenditure Program.

Of the amount, PHP 26.73 billion would be channeled towards the government’s health financial assistance for poor patients, with PHP 2.4 billion allotted for the completion of key government hospitals nationwide.

Congressmen also tweaked the government’s subsidy for the Philippine Health Insurance Corp. (PhilHealth) to PHP 60 billion, aligning with Mr. Marcos’ directive to restore part of the PHP 89.9 billion the National Government took from the state health insurer last year.

“This is in line with the pronouncement… to return back what was taken from the budget of PhilHealth,” Surigao del Sur Rep. Romeo S. Momo, Sr., vice-chairman of the House appropriations panel, told lawmakers.

The Budget department is “working on identifying the appropriate funding source to effect the return” of the P60-billion PhilHealth funds, Budget Secretary Amenah F. Pangandaman told BusinessWorld.

“While other options — such as the use of savings, unprogrammed appropriations, or a supplemental budget — exist under current budgetary frameworks, these are subject to strict constitutional and legal requirements,” she said, noting that providing funding to PhilHealth via Congress is the “clearest and most transparent path.”

Congressmen also increased the Social Welfare department’s budget for the Assistance to Individuals in Crisis Situations (AICS) program by PHP 32 billion to PHP 59.04 billion. AICS provides financial assistance to individuals in crisis, including medical, burial, transportation, and educational assistance.

They also hiked the Department of Agriculture’s budget by PHP 41.08 billion to PHP 176.01 billion.

About PHP 8.98 billion would be redirected towards the construction of additional farm-to-market roads, with PHP 9.21 billion going towards the construction of post-harvest facilities and rehabilitation of existing structures, among others, a presentation by the House Appropriations Committee showed.

The House sub-committee also channeled about PHP 1 billion to the Transportation department for its Metro Rail Transit Line 3 rehabilitation project, and an additional PHP 266 million for its operations.

Lawmakers also added an additional PHP 900.56 million for the acquisition of 40 fast patrol ships for the Philippine Coast Guard (PCG), and PHP 656.86 million to acquire a “dark vessel” detection system for ships operating in Philippine waters.

The PCG has been at the forefront of Manila’s efforts to assert its territorial claims in the South China Sea, where China’s expansive nine-dash line overlaps with the exclusive economic zones of the Philippines, Vietnam and Malaysia.

Congressmen also agreed to provide the Defense department with an additional PHP 556.86 million for the development of a forward operating base in Palawan province, which faces the disputed waterway. Another PHP 300 million was earmarked for the acquisition of land lots for the construction of an air force base in Laoag, Ilocos province.

The decision to reallocate flood control funds toward human capital development is a step in the right direction for the government, said John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies.

“Lawmakers must ensure that these funds go beyond recurring costs and are directed toward systemic improvements such as teacher training, health infrastructure, digital access and nutrition,” he said in a Viber message.

Congress should also consider revisiting the broader proposed national budget rather than focusing solely on the PHP 255-billion flood control funds, Mr. Rivera said.

“Without it, this reallocation may just be a temporary fix rather than a transformative pivot,” he said.

“The issue is that we should place our funds in investments with higher gains,” Leonardo A, Lanzona, an economics professor at the Ateneo de Manila University, said in a Facebook Messenger chat. “We should target these funds to the poor since these are the households that need the resources the most and hence produce the greatest gains.” —Kenneth Christiane L. Basilio, Reporter, with inputs from Aubrey Rose A. Inosante

The Philippines is projected to be the third-most affected economy in Southeast Asia by US tariffs, as its exports to the US are expected to contract by 13%, a United Nations Development Programme (UNDP) report showed.

In its report “Disruption, Diversification, and Divergence” released on Sept. 18, the UNDP said the Philippine exports to the US could potentially drop by 13.1%, due to the newly imposed tariffs.

“The imposition of steep US tariffs is projected to trigger a significant demand-side shock, particularly for Asia-Pacific economies with high trade exposure,” it said.

“The Asia-Pacific region as a whole faces a 6.4% decline in total exports to the US due to tariff-induced price increases, with Southeast Asia hit the hardest at 9.7%,” it added.

In Southeast Asia, Cambodia is the most vulnerable to the US tariffs, with an expected 23.9% drop in total exports to the US.

Vietnam is the second-most affected by tariffs, with a likely 19.2% decline in total exports.

Other Southeast Asian economies are also expected to see a decline in exports to the US, with Thailand’s exports likely to fall by 12.7%, followed by Malaysia (10.4%), Indonesia (6.4%), and Singapore (3.8%).

These estimates are based on US tariff rates as of July 31.

In an executive order signed on July 31, US President Donald J. Trump imposed a 19% duty on many goods from five members of the Association of Southeast Asian Nations (ASEAN) — the Philippines, Cambodia, Malaysia, Thailand and Indonesia. These rates took effect on Aug. 7.

The US is the Philippines’ top export destination, receiving $12.14 billion in shipments last year.

The UNDP said that small, highly trade-dependent economies that focus on lower-value products are the most exposed to tariff shocks.

“Their reliance on narrow export baskets and limited markets leaves them without meaningful buffers against external volatility. In such settings, tariff increases are transmitted directly into export losses, foreign exchange constraints, and employment pressures, with limited scope for policy mitigation given constrained fiscal space and less flexible labor markets,” it said.

Meanwhile, larger economies that concentrate on higher-value products are more likely to absorb the impact of tariff shocks, UNDP said.

According to the UNDP, the Philippines had one of the highest shares of exempted goods relative to its total exports to the US at 27%.

This was behind Malaysia (39%) and Vietnam (28%), but ahead of Thailand (26%), and China (24%).

US TARIFF RULING

Meanwhile, the Philippine government is still waiting for the final decision of the US Supreme Court on the legality of Mr. Trump’s global tariffs.

“We still have to wait for the final decision of the Supreme Court on this,” Special Assistant to the President for Investment and Economic Affairs Undersecretary Ma. Angela E. Ignacio said during the Philippine Economic Briefing in Clark.

Reuters reported the US Supreme Court has scheduled arguments that will hear the legality of the Trump tariffs on Nov. 5.

The High Court is taking up the case after a lower court ruled that Mr. Trump had overstepped his authority in imposing most of his tariffs under the 1977 law known as the International Emergency Economic Powers Act. The tariffs are still in effect during the appeal to the SC.

Ms. Ignacio said the Philippine government is still looking to secure an “optimal and mutually beneficial agreement” with the US, which has previously expressed interest in securing tariff exemptions for selected US imports and a free-trade agreement.

Ms. Ignacio also said the country is looking at alternative export markets such as the European Union, the Middle East and Australia. — ARAI

The Philippines’ balance of payments (BoP) surplus ballooned to USD 359 million in August, reflecting gains in the central bank’s net income from overseas investments, the Bangko Sentral ng Pilipinas (BSP) said.

Preliminary data from the BSP showed the BoP surplus stood at USD 359 million in August, widening from USD 88 million in the same month last year.

Month on month, the BoP position swung to a surplus from the USD 167-million deficit recorded in July.

“The BoP surplus reflected the Bangko Sentral ng Pilipinas’ net income from its investments abroad,” the central bank said in a statement.

BoP refers to the country’s economic transactions with other nations. A surplus indicates more funds entered the country, while a deficit shows that the country spent more than it received.

In the January-to-August period, the country’s BoP position swung to a USD 5.397-billion deficit, a reversal from the USD 1.592-billion surplus in 2024.

“Preliminary data indicate that the year-to-date BoP deficit was largely due to the continued trade in goods deficit,” the BSP said.

The Philippines’ trade-in-goods balance, or the difference between the values of exports and imports, narrowed to USD 28.46 billion in the January-to-July period, from USD 29.93 billion a year ago.

“This was partly offset by the sustained net inflows from personal remittances from overseas Filipinos, foreign borrowings by the National Government, foreign direct and portfolio investments, and trade in services,” the BSP said.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in an e-mail that the latest BoP position partly reflects the central bank’s investment gains from abroad.

“(This was) offset by the continued Trump risk factor or premium that led to some market volatility worldwide in view of the Aug. 7, 2025 extended deadline for US trade deals and tariffs,” he added.

US President Donald J. Trump’s higher tariffs on imports from dozens of countries, including the Philippines, took effect on Aug. 7.

The US imposed a 19% tariff on Philippines goods.

Mr. Ricafort said the August BoP position also came as the government paid off external debts and increased volatility in the local foreign exchange market.

In August, the peso performed weaker at an average P57.2525 per US dollar from the P56.7523 recorded in July.

The BSP expects the overall BoP position to end at a USD 6.3-billion deficit or -1.3% of gross domestic product (GDP) this year and a USD 2.8-billion deficit or -0.5% of GDP in 2026.

DOLLAR RESERVES

Meanwhile, the BSP said the BoP position mirrored the rise in gross international reserves (GIR) to USD 107.1 billion as of end-August from USD 105.4 billion as of end-July.

“The latest GIR level ensures availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans,” the BSP said.

The central bank said the level of dollar reserves as of end-August “remains an adequate liquidity buffer,” equivalent to 7.2 months’ worth of imports of goods and payments of services and primary income, more than double the three-month standard.

It is also enough to cover about 3.7 times the country’s short-term external debt based on residual maturity.

GIR comprises foreign-denominated securities, foreign exchange, and other assets such as gold. It enables a country to finance imports and foreign debts, maintain the stability of its currency, and safeguard itself against global economic disruptions.

The central bank expects GIR to settle at USD 104 billion by end-2025 and USD 105 billion in 2026. — Katherine K. Chan