BOP deficit widens to $2.6 billion in April

MANILA, Philippines — The Philippines incurred a balance of payments (BOP) deficit of $2.6 billion in April, as the government tapped foreign reserves to service debt and cover spending, while the Bangko Sentral ng Pilipinas intervened in the foreign exchange market.

The April shortfall was the widest monthly deficit in three months or since January’s $4.08 billion and the $639 million recorded in April 2024, central bank data showed.

The BOP provides a snapshot of the country’s international transactions and is a key barometer of economic resilience. A deficit indicates that more dollars left the country than came in during the period.

April’s gap also exceeded the $1.97-billion deficit in March, pushing the four-month cumulative BOP shortfall to $5.52 billion from only $401 million in the same period last year. This year-to-date figure is the largest since 2022, when the country recorded a $7.2 billion deficit.

“The BOP deficit reflected the national government’s drawdowns on its foreign currency deposits with the BSP to meet its external debt obligations and pay for its various expenditures, and the BSP’s net foreign exchange operations,” the central bank said.

The cumulative BOP gap, meanwhile, continues to be driven primarily by a widening trade in goods deficit.

Latest data from the Philippine Statistics Authority showed that the country’s trade deficit widened by 23.1 percent to $12.71 billion in the first quarter from $11.26 billion in the same quarter last year.

Exports grew by 5.9 percent to $19.27 billion from $18.23 billion, but imports expanded at a faster pace of 11.9 percent to $31.97 billion from 29.5 billion.

“This decline was partly muted by sustained net inflows from overseas Filipino remittances and foreign borrowings by the national government,” the BSP said.

Personal remittances from overseas Filipino workers inched up by 2.7 percent to $9.4 billion in the first three months of the year from $9.15 billion in the same period last year.

Of the total, cash remittances coursed through banks went up by 2.7 percent to $8.44 billion from $8.22 billion.

As a result, the country’s gross international reserves (GIR) declined to $105.3 billion as of end-April from $106.7 billion a month earlier.

Despite the drop, the BSP noted that the GIR remains a strong external buffer, enough to cover 7.3 months’ worth of imports and payments of services and primary income, and 3.7 times the country’s short-term external debt based on residual maturity.

The BSP expects the BOP position to hit a surplus of $2.1 billion or 0.4 percent of gross domestic product for this year.