By Katherine K. Chan, Reporter
STEADY INFLOWS from remittances and the 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 gap narrowed to $2.124 billion last month from the $2.637-billion deficit in March and $2.558-billion shortfall in April last year.
This was the narrowest deficit recorded since the $373 million seen in January. It also marked the sixth consecutive month that the country’s BoP position settled at a shortfall.
In the four months to April, the Philippines’ BoP deficit widened to $7.411 billion from $5.516 billion in the same period a year ago.
BoP refers to the country’s economic transactions with other nations. A deficit shows that the country spent more than it received, while a surplus indicates more funds entered the country.
Stable dollar inflows from remittances and business process outsourcing, slightly better capital flows and softer import bill may have helped narrow the country’s BoP deficit in April, Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said via Viber.
However, Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the wider four-month deficit was likely due to lingering external pressures considering the country’s large trade gap.
“The narrower BoP deficit in April reflects some normalization after earlier outflows, but the wider year-to-date gap highlights persistent external pressures, particularly from the country’s large trade deficit amid strong import demand and softer exports,” he said in a Viber message.
“While remittances and services continue to provide support, these have not been enough to offset the current account shortfall, with capital flows remaining sensitive to global conditions,” Mr. Asuncion added.
Separate BSP data showed remittances from Filipinos abroad rose by 2.3% year on year to $2.874 billion in March, the highest in two months.
Latest available data showed the country’s trade-in-goods deficit widened to a six-month high of $4.512 billion in March from $4.015 billion in February and $4.509 billion a year ago.
DOLLAR RESERVES
Meanwhile, revised BSP data showed the Philippines’ dollar reserves fell to its lowest level in over a year, which analysts said was likely due to the central bank’s recent intervention in the foreign exchange market.
As of end-April, the country had $104.328 billion in gross international reserves (GIR), slightly higher than the $104.128 billion earlier reported.
However, it was still a 2.16% decline from the $106.636-billion foreign reserves in March and a 0.93% dip from the $105.308 billion in April 2025.
The end-April tally was the lowest GIR level in 15 months or since the $103.271 billion logged in January last year.
“The decline in GIR indicates that the BSP may have used part of its reserves to smooth peso volatility and meet external obligations,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message.
The central bank earlier said it remains present in the foreign exchange market to prevent sharp swings that could stoke inflation as the Middle East war continues to weigh on the currency.
On Tuesday, the peso closed at P61.75 against the dollar, unchanged from its record-low finish on Monday, Bankers Association of the Philippines data showed.
Still, according to the BSP, the country’s latest GIR level “provides a robust external liquidity buffer.”
The end-April reserves translated to 6.9 months’ worth of imports of goods and payments of services and primary income, exceeding the three-month standard.
It can also cover about 3.8 times the country’s short-term external debt based on residual maturity.
GIR comprises foreign-denominated securities, foreign exchange, and other assets such as gold. It enables a country to finance imports and foreign debts, maintain the stability of its currency, and safeguard itself against global economic disruptions.
For Mr. Ravelas, the country’s BoP position will likely remain in a deficit in the coming months considering the economy’s heavy reliance on imports.
“The key message here is not elimination, but manageability — our external position remains ‘deficit but resilient,’ supported by strong fundamentals like remittances, services exports, and adequate reserves,” he added. “So, going forward, it’s about watching global conditions and capital flows closely, while ensuring we sustain these stable sources of FX (foreign exchange).”
SM Investments Corp. Group Economist Robert Dan J. Roces likewise projects a continued deficit in the near term as “high oil prices, elevated global uncertainty, and a still-strong dollar continue to pressure the trade balance and keep demand for dollars firm.”
However, the deficit may be “smaller and more manageable” as the country continues to hold ample GIR and due to steady flows from remittances and services exports, he added.
“The BoP may stay in deficit in the near term, though a smaller and more manageable one,” Mr. Roces said. “The good news is that the country still has ample buffers through GIR, steady remittances, and recurring inflows from services exports, which help prevent external pressures from becoming destabilizing.”
The central bank expects the country’s BoP position to end at a $7.8-billion deficit or -1.5% of its gross domestic product (GDP) this year, wider than the $5.661-billion gap or -1.2% of GDP in 2025.
It also projects the GIR level to reach $111 billion by yearend, higher than the $110.8 billion recorded last year.
