A nearly two-year-high balance of payments (BOP) surplus in June significantly trimmed the Philippines’ cumulative external payments gap, bringing the first-half 2026 deficit down to $3.88 billion—nearly half the shortfall recorded in the first five months.

This rebound was driven by a $3.4-billion surplus recorded in June alone, which helped narrow the year-to-date deficit from the $7.28 billion reported for the January to May period.

This strong June performance represents the highest monthly surplus in 21 months since September 2024, effectively reversing the trend of heavy deficits seen earlier in the year.

According to the Bangko Sentral ng Pilipinas (BSP), the year-to-date BOP position continues to be driven by a persistent “trade-in-goods deficit and net outflows from foreign portfolio investments.”

However, these factors were “partly offset by the sustained net inflows from personal remittances of overseas Filipinos (OFs), foreign borrowings by the national government (NG), trade in services, and foreign direct investment (FDI),” the BSP said in a statement on Monday night, July 20.

With this improvement, the first-half deficit of $3.88 billion is now well below the $5.59-billion first-half gap a year ago and the $5.66-billion full-year 2025 deficit. Just a month earlier, the five-month cumulative total had already exceeded the entire previous year’s gap.

Based on the central bank’s full-year forecast of a $7.8-billion deficit for 2026, the country has now reached half of that projection within the first six months, down from the 93.3 percent recorded as of May.

With the BOP position continuing to tread positive territory, the country’s gross international reserves (GIR) rose to $104.7 billion as of end-June.

This marks an increase from the $104 billion reported at end-May, although it remains below the year’s peak of $113.3 billion reached in February.

According to the BSP, the recent increase in reserves was primarily driven by the NG’s net foreign currency deposits and the BSP’s net income from its overseas investments. These gains were slightly tempered by downward valuation adjustments in gold and foreign currency assets, as well as government drawdowns for external debt service.

While lower, the first-half reserves level remains a highly adequate external liquidity buffer, the BSP said, capable of covering 6.8 months’ worth of imports of goods and payments for services and primary income.

Additionally, it provides sufficient coverage to settle about 3.7 times the country’s short-term external debt based on residual maturity.

Cumulative personal remittances for the first five months reached $15.74 billion, up by 2.6 percent from the $15.34 billion recorded a year ago.

Net inflows of FDI into the Philippines declined by 26.5 percent to $1.97 billion in the first four months of 2026 from $2.68 billion in the same period last year, due to lower new foreign investments in debt instruments.