The Bangko Sentral ng Pilipinas (BSP) on Monday reported that the country’s external position, represented by the balance of payments (BOP), posted a deficit of USD2.6 billion in April 2025, sharply wider than the USD639 million shortfall recorded in the same month last year. The balance represents what is left after the country’s foreign currency expenses are deducted from its earnings. It tells, for instance, whether an economy is an excessive borrower or imports too much, among other potentially problematic events.
But in a statement, the BSP attributed the April deficit primarily to the national government’s (NG) drawdowns on its foreign currency deposits with the central bank to service external debt and fund expenditures, alongside net foreign exchange operations by the BSP.
The latest figures bring the year-to-date BOP deficit to USD5.5 billion, a substantial increase from USD401 million in the same period in 2024. The central bank emphasized that this reflects the deepening trade in goods deficit, which reached USD12.7 billion in Q1 2025, according to preliminary data from the Philippine Statistics Authority.
Despite the elevated deficit, gross international reserves (GIR) stood at USD105.3 billion at end-April—down from USD106.7 billion a month earlier—but still providing a sufficient buffer. The BSP said this level is equivalent to 7.3 months of import cover and 3.7 times the country’s short-term external debt, helping mitigate immediate external vulnerabilities.
The BSP underscored the importance of maintaining a sound external sector to support overall economic resilience. While net inflows from overseas remittances and foreign borrowings offer partial offset, the sustained widening of the BOP deficit could exert pressure on the peso and complicate policy space, economists said.
The widening BOP gap highlights a growing need for prudent fiscal management and strategic foreign exchange policy, as continued external imbalances may influence future monetary policy decisions and investor confidence.
