The Philippines’ balance of payments (BOP) position swung back to a deficit of $1.5 billion in July 2026, reversing the $3.4-billion surplus recorded a month earlier amid the country’s continued trade deficit and payments for some foreign obligations.
Data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed that the July shortfall was the widest in three months, or since the $2.124-billion deficit recorded in April.
The BOP reflects the country’s financial transactions with the rest of the world over a given period. A surplus indicates that more funds flowed into the country than out, while a deficit means the opposite.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the July deficit could be attributed to the trade gap and payments for foreign debt and other obligations.
The July figure also came after the government raised $2.5 billion through a global bond issuance in June, helping push the country’s BOP to a $3.403-billion surplus that month.
Ricafort also pointed to volatility in global financial markets following the resumption of US-Iran retaliatory attacks on July 11, after an interim agreement reached on June 17.
For the first seven months of 2026, the country posted a cumulative BOP deficit of $5.3 billion, narrower than the $5.8-billion shortfall recorded during the same period last year.
The BSP said the January-to-June BOP position was weighed down by the persistent trade-in-goods deficit and net outflows from foreign portfolio investments.
These were partly offset by sustained inflows from overseas Filipino remittances, foreign borrowings by the national government, trade in services, and foreign direct investments.
Foreign reserves
The country’s gross international reserves (GIR) also declined to $103.3 billion at the end of July from $104.7 billion a month earlier.
GIR represents the country’s stock of readily available foreign assets, including securities, foreign currency and deposits, reserve positions in the International Monetary Fund, gold, special drawing rights, and other reserve assets. It provides a buffer for meeting import payments and servicing foreign debt.
Despite the month-on-month decline, the BSP said the end-July reserve level remained sufficient to cover the country’s import requirements, service external debt, and cushion the economy against external shocks.
The decrease was mainly attributed to the BSP’s net foreign exchange operations, the national government’s drawdowns from its foreign currency deposits with the central bank to service external debt, valuation adjustments on the BSP’s foreign currency-denominated reserve assets, and net foreign currency withdrawals by the national government.
These were partly offset by income from the BSP’s investments abroad and higher valuations of its gold holdings following the increase in international gold prices.
The BSP said the end-July GIR could cover 6.7 months’ worth of imports of goods and payments for services and primary income. It could also cover around 3.7 times the country’s short-term external debt based on residual maturity.
Short-term external debt based on residual maturity includes outstanding obligations with an original maturity of one year or less, as well as principal payments on medium- and long-term loans falling due within the next 12 months.
By convention, a country’s foreign reserves are considered adequate when they can cover at least three months of imports of goods and payments for services and primary income.
The GIR is also considered adequate when it is equivalent to at least 100% of total short-term external debt—both public and private—falling due over the following 12 months.
