BOP swings to $1.47 billion gap in July

MANILA, Philippines — The Philippines’ balance of payments (BOP) position returned to a deficit in July as higher foreign exchange outflows, including debt payments and import-related dollar demand, weighed on the country’s external position.

Data from the Bangko Sentral ng Pilipinas (BSP) showed the country posted a BOP deficit of $1.47 billion in July, reversing the $3.4-billion surplus in June. It was also nearly nine times wider than the $167-million deficit recorded in the same month last year.

The BOP summarizes the country’s economic transactions with the rest of the world. A deficit means more foreign currency flowed out of the economy than came in during a particular period.

Despite the deterioration in July, the cumulative BOP deficit narrowed to $5.35 billion in the first seven months, about seven percent smaller than the $5.76-billion shortfall recorded in the same period in 2025.

The BSP said the year-to-date position reflected “the continued trade-in-goods deficit and net outflows from foreign portfolio investments.”

These were partly offset by sustained inflows from overseas Filipino remittances, government foreign borrowings, trade in services and foreign direct investments.

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said higher forex outflows, including external debt payments and stronger import-related dollar demand, were behind the reversal in July.

“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,” Ravelas said.

Moving forward, Ravelas said the external position would depend on the strength of remittances, business process outsourcing revenues, tourism receipts and foreign investments, as well as import demand, oil prices and global interest rates.

“The Philippines continues to benefit from strong structural dollar inflows, but maintaining a healthy balance between forex earnings and import requirements will be crucial to keeping the external position stable amid ongoing global economic and geopolitical uncertainties,” he said.

Meanwhile, gross international reserves fell by 1.4 percent to $103.32 billion as of end-July from $104.74 billion in June. The latest figure was also two percent lower than the $105.42 billion recorded a year earlier and marked the lowest since January 2025.

According to the BSP, the decline stemmed mainly from its net forex operations, government withdrawals for external debt servicing and downward valuation adjustments in foreign currency-denominated reserve assets.

These were partly offset by investment income and higher valuations of the BSP’s gold holdings.

Still, the reserves remained sufficient to cover 6.7 months’ worth of imports and about 3.7 times the country’s short-term external debt based on residual maturity.

The BSP expects the country’s BOP position to hit a $10.7-billion deficit this year, equivalent to -2.1 percent of gross domestic product. It also sees GIR at $104 billion by year-end