Philippines’ BoP position swings to deficit in July

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 (BOP), 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.

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.

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).

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.