A larger balance of payments (BOP) surplus in August narrowed the country’s cumulative deficit for the first eight months of the year to its lowest level in five months, according to the Bangko Sentral ng Pilipinas (BSP).

The latest data from the BSP showed that the BOP, which reflects the country’s transactions with the rest of the world, registered a $359-million surplus in August, up from the $88 million recorded in the same month last year and reversing the $167-million deficit in July.

In a statement on Friday night, Sept. 19, the BSP attributed the bigger August surplus to its net income from investments overseas.

“This surplus helped narrow the year-to-date deficit, reducing it from $5.8 billion in January to July 2025 to $5.4 billion in January to August 2025,” the BSP said.

The year-to-date BOP deficit at end-August was the narrowest since the end-March deficit of nearly $3 billion, BSP data showed.

However, the end-August deficit reversed the $1.6-billion BOP surplus in the first eight months of 2024.

Preliminary BSP data showed that the year-to-date BOP deficit was primarily driven by the sustained trade-in-goods shortfall, or merchandise imports exceeding exports.

The latest preliminary Philippine Statistics Authority (PSA) data nonetheless showed that the trade-in-goods deficit narrowed to $28.5 billion at end-July from $29.9 billion in the same seven-month period last year.

The BSP noted that this was partly offset by sustained net inflows from overseas Filipinos’ (OFs) personal remittances, the national government’s (NG) external borrowings, foreign direct investments (FDIs), foreign portfolio investments or so-called “hot money,” and services trade.

In June, the BSP widened its end-2025 BOP deficit projection to $6.3 billion, equivalent to 1.3 percent of gross domestic product (GDP) and a reversal of the $609-million surplus at end-2024.

The latest BOP position also reflected the growth in gross international reserves (GIR), or United States (US) dollar stock, which climbed to $107.1 billion at end-August from $105.4 billion at end-July.

“The level of GIR remains an adequate external liquidity buffer, equivalent to 7.2 months’ worth of imports of goods and payments of services and primary income,” the BSP said.

“Specifically, the latest GIR level ensures availability of foreign exchange (forex) to meet BOP financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans,” it added.

The central bank also noted that the end-August GIR level covers around 3.7 times the country’s short-term external debt based on residual maturity.

Short-term debt based on residual maturity includes all foreign debt originally due in one year or less, along with upcoming principal payments on medium- and long-term loans from both the public and private sectors that are set to mature within the next 12 months.

GIR consist of foreign-denominated securities, forex, and other assets such as gold. These reserves enable a country to fund imports and external debt, support currency stability, and serve as a safeguard against global economic shocks.

The BSP expects to end this year with $104 billion in GIR, lower than last year’s $106.3 billion.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), noted that the end-August BOP and GIR figures may have been bolstered by the ongoing growth of the country’s structural US dollar inflows, including remittances from overseas Filipino workers (OFWs), business process outsourcing (BPO) earnings, exports, foreign investments, and tourism revenues.

“For the coming months, BOP data could still improve with the continued increase/growth in the country’s structural inflows as the economy reopens/recovers further towards greater normalcy,” he added.

(Ricardo M. Austria)