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MAY AND 5-MO BOP IN DEFICIT FROM SURPLUS www.businessmirror.com.ph
By Cai U. Ordinario
5-month data: From surplus to deficit, too
IN the first five months of the year, the BOP deficit widened to $5.8 billion. This was also a reversal from the $1.6-billion surplus recorded in the same period last year. “Preliminary data indicate
P25.00 nationwide | 14 pages | 7 DAYS A WEEK
2
No supply shortage yet, but oil price shock looms: DOE
$2.0B $1.6B
1 0
May 2024
May 2025
Jan-May 2024
Jan-May 2025
-$0.3B
-1 -2 -3
Estimated Oil Price Adjustments (Pesos/Liter)
-4
Deficit
4
Why the BOP Fell
May 2025 Deficit of $298M (from a $2B surplus in May 2024)
Trade Deficit Foreign Debt Payments n Drop in Foreign Investments n Trump-era US Tariffs n n
Jan–May 2025 (YTD) Deficit of $5.8B (from a $1.6B surplus in Jan–May 2024)
that the year-to-date BOP deficit was largely due to the continued trade in goods deficit. This decline was partly muted, however, by the sustained net inflows from personal remittances from overseas Filipinos, foreign borrowings by the NG (national government), and foreign portfolio investments,” the BSP said. Meanwhile, the BSP said the BOP position mirrored the slight decrease in the country’s gross international reserves (GIR), which
Price Increase (Pesos/Liter)
-$5.8B
declined from $105.3 billion at end-April 2025 to $105.2 billion by end-May 2025. Despite the modest decline, the GIR level remains a strong external liquidity buffer, sufficient to cover 7.1 months’ worth of imports of goods and payments of services and primary income. The BSP said GIR consists of foreign assets held by the BSP, primarily in the form of foreignissued securities, gold, and foreign exchange, which serves as key in-
dicator of the country’s ability to manage external shocks. Additionally, the GIR covers approximately 3.3 times the country’s short-term external debt based on residual maturity. Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on mediumand long-term loans of the public and private sectors falling due within the next 12 months.
Continued on A2
Financial Institutions
Exhibit 5
3
2.50 - 3.00
2 BM Graphics: Ed Davad
Surplus
Moody's Ratings
T
4.25 - 4.50
-5
CONTAGION RISKS 6 families controlling conglomerates are also behind banks
HE ties between the country’s top conglomerates and the Philippine banking system represent a “double-edged sword” that could lead to contagion risks according to Moody’s Ratings. In a report, Moody’s Ratings said while these ties allowed conglomerates access to capital and banks are given corporate lending opportunities, strengthening banks, there are risks. Moody’s Ratings showed in its study that only six families in control of major conglomerates are the same ones linked to the country’s largest banks. “Ownership by large conglomerates has provided Philippine banks with capital support to grow lending and build balance sheet buffers against loan losses, as well as lending opportunities to NFCs (non-financial corporates) within the conglomerate group,” the report stated. “However, high counterparty concentration could increase systemic risk in an economic downturn. Additionally, NFCs’ heavy reliance on banks for funding means that defaults would disproportionately impact banks, rather than other creditors,” it added. Moody’s Ratings estimated that Philippine banks are the major source of funding by conglomerates. Part of these funds is the local currency bond market that was valued at $23.4 billion at the end of 2024. This represented 5 percent of the country’s GDP and 13 percent of the total outstanding bonds or 13 percent of total outstanding corporate loans.
4.30 - 4.80
5
BM Graphics: Ed Davad
In May 2025, the country’s BOP posted a deficit of $298 million, a reversal from the $2-billion surplus recorded in May 2024. “Partly due to the continued trade deficit/net imports of the country; some payment of foreign currency debts and other foreign obligations; as well as the monthly decline in foreign investments amid Trump’s higher US import tariffs,” Rizal Commercial Banking Corporation Chief Economist Michael L. Ricafort said.
Saturday, June 21, 2025 Vol. 20 No. 251
Balance of Payments (BOP): Surplus vs Deficit Billions $
A
WIDE trade deficit, payment of debts abroad, and a decline in foreign investments caused the country’s Balance of Payments (BOP) to go into deficit in May 2025, according to the Bangko Sentral ng Pilipinas (BSP).
n
1 O
Gasoline
Diesel Estimated High
M
OTORISTS, including jeepney drivers whose request for fare hikes is still pending, should brace for even higher local pump prices after four days of trading at the Mean of Platts (MOPS). Department of Energy (DOE) Oil Industry Management Bureau (OIMB) Director Rodela Romero said diesel prices are expected to increase by P4.30 to P4.80 per liter. Gasoline prices, meanwhile, are expected to increase by P2.50 to P3 per liter; while kerosene prices are projected to increase by P4.25 to P4.50 per liter. “[These are the] estimated adjustments based on the 4-day trading in MOPS and relevant international oil market news,” Romero said on Friday, amid ap-
Kerosene Estimated Low
prehension that the escalating conflict between Israel and Iran could worsen the fallout on global trade, given the disturbance in the Strait of Hormuz that Iran controls. “Major oil price shock looming as Israel-Iran conflict threatens critical global shipping passage,” said Romero in a text message. That vital waterway accounts for a quarter of global oil traffic; and a third of natural gas. However, DOE OIMB Rino Abad assured on Friday that there is no supply shortage of oil and that 17 million barrels of oil per day are still accessible from the Persian Gulf area. Iran, Abad said, continues to export around 1.6 million barrels per day and the Strait of Hormuz remains open to date. Cai U. Ordinario
PHILIPPINE CONGLOMERATES ARE INTERLINKED THROUGH THEIR NUMEROUS SUBSIDIARIES, WHICH INCLUDE BANKS (AT THE END OF MAY 2025)
Philippine conglomerates are interlinked through their numerous subsidiaries, which include banks At the end of May 2025
A LIFELINE FROM THE MOUNTAINS An aerial view of the newly completed Upper Wawa Dam in Rizal, which is set to begin commercial operations in December. Finished seven months ahead of schedule, the dam will supply up to 710 million liters of water daily— benefiting 3.5 million Filipinos and marking the largest water supply dam built in the country in over half a century. Story on A3 News. WAWAJVCO/PRIME INFRA
Notes: Please see Appendix for full entity names. Source: Moody’s Ratings First-degree relationship: Parent conglomerate holding company. Second-degree relationship: NFCs within the conglomerate tree. Some of these NFCs could be portfolio companies held by a family member or an investment vehicle within the conglomerate tree. Third-degree relationship: NFCs in which the conglomerate tree has less than 1% shareholding. Third-degree relationships to banks could potentially be shareholdings held in trust accounts but the banks appear in the related NFC's list of top 100 shareholders. Source: PSE and FactSet
“SUPERMAN” LANDS AT SM MALL OF ASIA SM Supermalls President Steven Tan presented to the creative team and stars of “Superman” custom-made jeepneys as special tokens during the red carpet event held at the SM Mall of Asia Music Hall. “Superman” is set to premiere in cinemas nationwide starting July 9, with tickets now available for purchase at SM Cinema. (L-R): DC Studios Co-chairman & Co-CEO Peter Safran, Director James Gunn, Rachel Brosnahan (Lois Lane), David Corenswet (Clark Kent/Superman), and SM Supermalls President Steven Tan. SM SUPERMALLS
PESO EXCHANGE RATES n US 57.3270 n JAPAN 0.3942 n UK 77.1851 n HK 7.3030 n CHINA 7.9765 n SINGAPORE 44.5881 n AUSTRALIA 37.1135 n EU 65.9031 n KOREA 0.0416 n SAUDI ARABIA 15.2782 Source: BSP (June 20, 2025) However, in the event of an economic downturn, bank-conglomerate linkages could raise systemic risks. Financial distress in a