BOP deficit widens to $2.64 billion in March

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April 21, 2026 | 12:00am

“Importantly, a deficit at this stage is not a red flag – it reflects an economy investing and expanding, with import demand tied to growth and capacity-building, and remains sustainable as long as core inflows and reserves stay intact.”

MANILA, Philippines — The Philippines’ balance of payments (BOP) deficit widened in March, as persistent external pressures and higher import costs continued to weigh on the country’s external position.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed that the BOP recorded a $2.64-billion deficit in March, bringing the cumulative shortfall for the first quarter to $5.29 billion. The latest figure was wider than the $1.97-billion deficit recorded in the same month last year.

The BOP reflects the country’s transactions with the rest of the world, including trade, investments and financial flows. A deficit indicates that more dollars flowed out of the economy than came in during the period.

Alongside the wider deficit, the country’s gross international reserves (GIR) declined to $106.6 billion as of end-March, 5.9 percent lower than the $113.26 billion as of end-February.

Despite the drop, the BSP said the reserve buffer remains adequate to shield the economy from external shocks.

“This level of reserves remains an adequate external liquidity buffer, equivalent to seven months’ worth of imports of goods and payments of services and primary income,” the central bank said.

The GIR also covers about 3.9 times the country’s short-term external debt based on residual maturity, indicating sufficient capacity to meet near-term foreign obligations.

Reserves consist of foreign-denominated securities, foreign exchange holdings and other assets including gold, which the BSP said help ensure enough dollar liquidity to meet import requirements, service external debt and manage currency volatility.

SM Investments Corp. group economist Robert Dan Roces said the wider BOP deficit reflects both structural and cyclical pressures on the external account.

“The wider BOP is largely a function of a still-elevated trade gap – imports holding up on strong domestic demand – now compounded by higher oil prices and tighter global liquidity. Elevated US rates are dampening portfolio inflows, while geopolitical risks are pushing up the import bill and risk premia,” Roces said.

He added that a return to surplus this year is unlikely, with the more plausible scenario being a narrower but manageable deficit.

“A return to surplus this year looks unlikely. The more realistic path is a narrower but manageable deficit, with improvement hinging on lower oil prices, easing global rates and steady inflows from remittances, business process outsourcing and foreign direct investment,” he said.

Roces also noted that the deficit should not immediately be seen as a warning signal.

“Importantly, a deficit at this stage is not a red flag – it reflects an economy investing and expanding, with import demand tied to growth and capacity-building, and remains sustainable as long as core inflows and reserves stay intact,” he said.

The BSP expects the country’s BOP deficit to hit $7.8 billion this year, equivalent to 1.5 percent of gross domestic product. It expects the shortfall to widen further to $8.5 billion in 2027 or 1.6 percent of GDP.