By Katherine K. Chan, Reporter
THE Philippines’ balance of payments (BoP) position swung to a deficit for the first time in three months in July, data from the Bangko Sentral ng Pilipinas (BSP) showed.
According to central bank data released late on Wednesday, the country’s BoP position stood at a $1.47-billion deficit in July, a reversal from the $3.403-billion surplus in June.
Year on year, the BoP gap ballooned from $167 million.
This was the first time since April that the monthly BoP position stood at a deficit.
“The overall balance of payments, which captures the transactions of the country with the rest of the world, recorded a $1.5-billion deficit in July 2026,” the BSP said in a statement.
BoP refers to the country’s economic transactions with other nations. A deficit shows that the country spent more than it received, while a surplus indicates more funds entered into the country.
“The July BoP deficit reflected the country’s persistent trade gap, portfolio investment outflows, and external debt-related payments, particularly after June benefited from sizeable foreign borrowing inflows,” Union Bank of the Philippines (UnionBank) Chief Economist Ruben Carlo O. Asuncion said in a Viber message.
Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., attributed the month-on-month reversal to higher foreign exchange outflows, including external debt payments and stronger dollar demand for imports.
“While the year-on-year deterioration looks significant, monthly BoP figures are often influenced by the timing of large transactions and should not be viewed in isolation,” he added via Viber.
In the seven months to July, the country’s deficit stood at $5.347 billion, narrower than the $5.756-billion gap in the comparable year-ago period.
“The year-to-date BoP position reflected the continued trade-in-goods deficit and net outflows from foreign portfolio investments,” the central bank said.
“These were partly offset by the sustained net inflows from personal remittances of overseas Filipinos (OFs), foreign borrowings by the NG (National Government), trade in services, and foreign direct investment,” it added.
The Philippines’ trade-in-goods balance, or the difference between the values of exports and imports, ballooned to a $30.81-billion gap as of end-June from $24.48 billion a year ago.
UnionBank’s Mr. Asuncion said the narrower year-to-date deficit shows the Philippines’ external position remained manageable.
“Moving forward, developments in global financial markets, trade flows, remittances, tourism receipts, and foreign investments will be key determinants of the BoP outlook,” he added.
On the other hand, Mr. Ravelas noted that the country has to keep a healthy balance between its foreign exchange earnings and import needs to shield its external position against persistent global risks.
“The Philippines continues to benefit from strong structural dollar inflows, but maintaining a healthy balance between foreign exchange earnings and import requirements will be crucial to keeping the external position stable amid ongoing global economic and geopolitical uncertainties,” he said.
The central bank has noted that trade imbalances and tighter financial conditions will continue to strain the country’s external position until next year.
It projects the BoP deficit to widen to $10.7 billion or -2.1% of gross domestic product (GDP) by yearend from $5.7 billion or -1.2% of GDP in 2025.
18-MONTH LOW GIR
Meanwhile, the central bank’s dollar reserves amounted to $103.317 billion as of July, down nearly 2% from the $105.418 billion logged the prior year, revised data showed.
This was the lowest gross international reserves (GIR) it held in 18 months or since the $103.271 billion logged in January 2025.
It was likewise the fifth straight month that the GIR level slipped on an annual basis.
Month on month, the BSP’s dollar reserves fell by 1.36% from $104.745 billion.
The lower reserves were largely due to the central bank’s net foreign exchange operations, according to the BSP, as the weak peso during the period required its intervention.
As of end-July, the local unit stood at P61.432 versus the greenback, about 7.2% or P4.126 weaker than P57.306 in the same period last year, according to BSP data.
The central bank also said its GIR fell after the National Government withdrew from its foreign currency accounts with the BSP to pay its external debts, with its total withdrawals exceeding its deposits.
However, the drags were partly tempered by “income from the BSP’s investments abroad and upward valuation adjustments in the BSP’s gold holdings due to the increase in the price of gold in the international market.”
Dollar reserves are the central bank’s foreign assets held mostly as investments in foreign-issued securities, foreign exchange and monetary gold, among others.
These are supplemented by claims to the International Monetary Fund (IMF) in the form of reserve position in the fund and special drawing rights (SDRs).
The Philippines’ reserve position in the IMF stood at $725.2 million as of July, reflecting a 0.52% year on year dip from $729 million.
Meanwhile, the BSP’s gold holdings also climbed to a two-month high of $17.49 billion, jumping by 26.89% from $13.783 billion a year earlier.
Its SDRs — or the amount the Philippines can tap from the IMF’s reserve currency basket — also increased by 1.22% to $3.937 billion from $3.89 billion.
In the seven-month period, the BSP’s securities slipped by 7.95% to $67.157 billion from $72.958 billion a year ago. This refers to highly liquid and marketable debt securities, excluding investments under the Asian Bond Fund (ABF) and Bank for International Settlements Investment Pool (BISIP).
However, the central bank’s foreign currency and deposits plunged by about 75% to $1.879 billion during the period from $7.516 billion last year.
On the other hand, the BSP’s other reserve assets nearly doubled (85.4%) to $12.129 billion as of July from the $6.542 billion a year ago. These include overnight investment — repurchase agreement pool, due from or to brokers, accrued interest receivables, and investments under ABF and BISIP.
At end-July, the country’s GIR level translated to 6.7 months’ worth of imports of goods and payments of services and primary income, more than double the three-month standard.
It could also cover about 3.7 times the country’s short-term external debt based on residual maturity.
The BSP sees its foreign reserves shrinking to $104 billion this year from the $110.8 billion it held in 2025.
