By Katherine K. Chan, A reporter
STABLE INCOME from the cost and services sector despite emerging external pressures helped narrow the Philippines’ balance of payments (BoP) gap to a three-month low in April, Bangko Sentral ng Pilipinas (BSP) data showed.
Based on central bank data released on Tuesday, the country’s BoP deficit narrowed to $2.124 billion last month from a $2.637-billion surplus in March and a $2.558-billion deficit in April last year.
This was the smallest deficit on record since the $373 million seen in January. It also marked the sixth consecutive month that the country’s BoP position was in deficit.
In the four months to April, the Philippines’ BoP deficit widened to $7.411 billion from $5.516 billion in the same period last year.
BoP refers to a country’s economic trade with other nations. A deficit shows that the country spent more money than it received, while a surplus shows that there is money coming into the country.
Stable dollar inflows from remittances and business process outsourcing, slightly better cash flows and a softer import bill may have helped reduce the country’s BoP deficit in April, Jonathan L. Ravelas, senior consultant at Reyes Tacandong & Co., said via Viber.
However, Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the large four-month deficit is due to continued external pressure given the country’s large trade gap.
“The narrowed BoP deficit in April shows some normalization after the previous exit, but the wide gap year to date highlights the ongoing external pressures, especially from the country’s large trade deficit amid strong import demand and soft exports,” he said in a Viber message.
“Although remittances and services continue to provide support, these have not been able to cover the current account deficit, with capital flows that remain sensitive to global conditions,” said Mr. Asuncion.
Separate BSP data showed remittances from Filipinos abroad rose 2.3% year-on-year to $2.874 billion in March, the highest figure in two months.
The latest available data showed the country’s gross domestic product deficit widened to $4.512 billion in March from $4.015 billion in February and $4.509 billion last year.
DOLLARS SAVED
Meanwhile, updated BSP data showed that Philippine dollar reserves fell to their lowest level in more than a year, which analysts said could be attributed to the central bank’s recent intervention in the foreign exchange market.
As of the end of April, the country had $104.328 billion in gross international reserves (GIR), slightly higher than the $104.128 billion previously reported.
However, it was still a drop of 2.16% from foreign reserves of $106.636-billion in March and a dip of 0.93% from $105.308 billion in April 2025.
The figures for the end of April were the lowest level of GIR in 15 months or since the $103.271 billion entered in January last year.
“The decline in the GIR indicates that the BSP may have used part of its reserves to smooth the volatility of the peso and meet external obligations,” John Paolo R. Rivera, senior researcher at the Philippine Institute for Development Studies, said in a Viber message.
The central bank earlier said it remained on the foreign exchange market to prevent sharp fluctuations that could cause inflation as the war in the Middle East continues to weigh on the currency.
On Tuesday, the peso closed at P61.75 against the dollar, unchanged from its low finish on Monday, data from the Bankers Association of the Philippines said.
Still, according to the BSP, the country’s latest GIR rate “provides a strong deterrent to foreign exchange.”
End-April reserves converted to 6.9 months worth of imports of goods and services and basic income, which exceeded the three-month level.
It can also cover about 3.8 times the country’s short-term external debt based on net maturity.
GIR includes foreign securities, foreign currency, and other assets such as gold. It enables a country to finance imports and external debt, maintain its currency stability, and protect itself from global economic shocks.
To Mr. Ravelas, the country’s BoP situation will likely remain in deficit in the coming months given the economy’s heavy reliance on imports.
“The key message here is not elimination, but manageability – our external position remains ‘deficient but strong,’ supported by strong fundamentals such as cash flows, exports of services, and adequate funds,” he added. “So, going forward, it’s about watching global conditions and capital flows closely, while making sure we support these stable sources of FX (foreign exchange).”
Group Economist of SM Investments Corp. Robert Dan J. Roces similarly characterizes continued deficits in the near term as “high oil prices, high global uncertainty, and a still strong dollar continue to depress the trade balance and keep demand for dollars strong.”
However, the loss could be “small and very manageable” as the country continues to hold an adequate GIR and due to the continuous flow from costs and services exports, he added.
“The BoP may remain short in the near term, although it is small and manageable,” said Mr. Roses. “The good news is that the country still has plenty of income through the GIR, steady outflows, and recurring inflows from exports, which help prevent external pressures from interfering.”
The central bank expects the country’s BoP position to end at a deficit of $7.8 billion or -1.5% of its gross domestic product (GDP) this year, which is wider than the gap of $5.661 billion or -1.2% of GDP in 2025.
It also plans for the GIR level to reach $111 billion last year, more than the $110.8 billion recorded last year.
