THE country’s balance of payments (BOP) deficit surged in March to its widest in over a year, Bangko Sentral ng Pilipinas (BSP) data showed on Monday.
At $2.64 billion, the shortfall was higher than last year’s $1.97 billion and February’s $2.28 billion. It was also the largest recorded since January 2025’s $4.08 billion.
It brought the year-to-date BOP position to a $5.29-billion shortfall, more than the $2.96 billion recorded in January-March 2025.
The BOP is a summary of a country’s transactions with the rest of the world for a specific period. It consists of the current account, which covers trade in goods, services, and primary and secondary income (which includes overseas Filipino worker remittances); the capital account — capital transfers and nonfinancial assets; and the financial account or investments from abroad.
SM Investments Corp. economist Robert Dan Roces said the wider deficit was mainly due to a trade gap, now worsened 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,” he added, with return to a BOP surplus this year “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, BPO (business process outsourcing) and FDI (foreign direct investments),” Roces said.
Still, he said “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.”
The country’s BOP position ended in a $5.7-billion deficit last year, reversing from 2024’s $609-million surplus. The central bank expects the deficit to widen this year to $7.8 billion, up from the $5.9-billion outlook three months earlier. The forecast for next year was set at $8.5 billion.
The country’s gross international reserves (GIR), meanwhile, markedly dropped to $106.6 billion as of end-March from $113.3 billion a month earlier.
The central bank, however, said the level “remains an adequate external liquidity buffer, equivalent to 7.0 months’ worth of imports of goods and payments of services and primary income.”
It is also equivalent to about 3.9 times the country’s short-term external debt based on residual maturity.
The country ended 2025 with a GIR of $110.8 billion, higher than the projected $109 billion. The country’s foreign reserves are expected to end 2026 at a higher $111 billion instead of $110 billion and rise to $112 billion next year.
GIR consists of the BSP’s foreign investments, gold, foreign exchange, reserve position in the International Monetary Fund and special drawing rights.
It helps “a country finance its imports and foreign debt obligations, stabilize its currency and provide a buffer against external economic shocks,” the central bank said.
It is considered adequate if it can finance at least three months’ worth of the country’s imports of goods and payments of services and primary income.
It is also considered sufficient if it is enough to pay off all of the country’s foreign liabilities that will fall due in the next 12 months.
