PH payments position reverses to deficit at $1.5B in July 2026

The Philippines’ balance of payments (BOP) position shifted back to a deficit in July 2026, reflecting a continued trade-in-goods deficit and settlement of some of the government’s foreign obligations.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed that the country’s overall BOP position last month stood at a shortfall of $1.5 billion, a reversal from a $3.4-billion surplus in June 2026.

The payments position takes into account Philippine transactions with the rest of the world during a specific period.

A surplus means more funds entered the country, while a deficit means more funds exited.

In an emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the July 2026 BOP deficit is the “widest in three months” or since April 2026, when the payments gap stood at $2.124 billion.

“This could reflect the trade deficit and some payment of foreign debt/obligations; versus a BOP surplus of $3.403 billion a month ago (June 2026), when there was a $2.5 billion national government global bond/ROP bond issuance,” Ricafort said.

The economist added that the BOP deficit also reflected “volatility in the global financial markets after US-Iran retaliatory attacks resumed since July 11, 2026 (after the interim deal on June 17, 2026).”

Year-to-date BOP position stood at a $5.3 billion deficit, narrower than the $5.8-billion payments deficit posted in the same period last year.

The January to June 2026 BOP position “reflected the continued trade-in-goods deficit and net outflows from foreign portfolio investments,” according to the BSP.

“These were partly offset by the sustained net inflows from personal remittances of overseas Filipinos (OFs), foreign borrowings by the national government, trade in services, and foreign direct investment,” the central bank said.

Foreign reserves

The BSP also reported that the country’s gross international reserves (GIR) amounted to $103.3 billion as of end-July 2026, down from the $104.7-billion level as of end-June 2026.

GIR measures the country’s ability to settle import payments and service foreign debt.

These are eligible foreign assets, including securities, currency and deposits, reserve position in the fund, gold, special drawing rights, and other reserve assets, held by the central bank

Despite the decline, the BSP said the end-July GIR level “remained sufficient to meet the country’s import needs, service its external debt obligations, and serve as a buffer against external economic shocks in July.”

The central bank said the decrease was mainly driven by the BSP’s net foreign exchange operations, the national government’s (NG) drawdowns on its foreign currency deposits with the BSP for external debt service, downward valuation adjustments in the BSP’s foreign currency–denominated reserve assets, and the national government’s net foreign currency withdrawals from its deposits with the BSP.

The decline in foreign reserves was partly offset 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.

“The end-July GIR level can cover up to 6.7 months' worth of imports of goods and payments of services and primary income. It can likewise service about 3.7 times the country's short-term external debt based on residual maturity,” the central bank said.

Short-term debt based on residual maturity refers to the sum of outstanding external debt with original maturity of one year or less, and principal payments on medium and long-term loans of the public and private sectors falling due within the next 12 months.

By convention, GIR is considered adequate if it can finance at least three months’ worth of the country’s imports of goods and payments of services and primary income.

The GIR level is deemed adequate if, as of a given period, it is at least equal to 100% of a country’s total short-term external debt—public and private—falling due within the next 12 months. —AOL, GMA News