The Philippines’ balance of payments (BOP) swung to a $1.47-billion deficit in July, reversing the $3.4-billion surplus recorded in June, as the country’s foreign exchange (forex) reserves fell to their lowest level in 18 months.

The July deficit brought the cumulative BOP shortfall to $5.35 billion in the first seven months of 2026, narrower than the $5.76-billion deficit in the same period last year, the latest Bangko Sentral ng Pilipinas (BSP) data released on Wednesday night, Aug. 19, showed.

The BOP summarizes the country’s economic transactions with the rest of the world during a given period.

In a statement, the BSP said the year-to-date BOP deficit reflected the continued trade-in-goods deficit and net outflows from foreign portfolio investments (FPIs) or so-called “hot money.”

“These 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.

Alongside the BOP deficit, the country’s gross international reserves (GIR) declined to $103.32 billion as of end-July from $104.74 billion at end-June, BSP data showed.

The end-July GIR was the lowest since the $103.27 billion recorded in January 2025.

The BSP attributed the decline mainly to its net forex operations, NG drawdowns on foreign currency deposits with the central bank for external debt service, downward valuation adjustments in foreign currency-denominated reserve assets, and NG net foreign currency withdrawals from its deposits with the BSP.

These were partly offset by income from the BSP’s investments abroad and upward valuation adjustments in its gold holdings due to higher gold prices in the international market.

Despite the decline, the BSP said the country’s forex reserves remained sufficient to meet import requirements and external debt obligations and provide a buffer against external economic shocks.

The $103.32-billion GIR was equivalent to 6.7 months’ worth of imports of goods and payments of services and primary income. It was also about 3.7 times the country’s short-term external debt based on residual maturity.

Personal remittances—a broader category of overseas remittances that includes informal channels and remittances in kind—reached $3.39 billion in June, up 1.8 percent from $3.33 billion in June 2025.

Cumulative personal remittances as of end-June reached $19.12 billion, up 2.4 percent from $18.67 billion a year ago.

Meanwhile, sovereign gross foreign debt for the first half of 2026 totaled ₱544.8 billion, one-third higher than the ₱402.4 billion recorded in the first half of 2025.

Offshore borrowing was heavily concentrated in two periods: January, with the issuance of ₱161.3 billion in multi-tranche global bonds, and June, which saw a ₱153.1-billion triple-tranche global bond issuance.

The latest BSP data also showed net FDI inflows into the Philippines plummeted to $210 million in May, the lowest monthly level in more than a decade. This pulled cumulative net inflows as of end-May down to $2.18 billion, a third lower than the $3.27 billion a year ago.

The BSP attributed the decline to “lower foreign net investments in debt instruments and reinvestment of earnings, which more than offset the increase in net equity capital investments (other than reinvestment of earnings).”

Rizal Commercial Banking Corp. (RCBC) chief economist Michael L. Ricafort said the July BOP deficit was the widest in three months, reflecting the country’s trade deficit, renewed volatility in global financial markets following the resumption of United States (US)-Iran hostilities in July, and some payments of foreign debts and other obligations.

Ricafort noted that the $3.4-billion BOP surplus in June was partly supported by the NG’s $2.5-billion global bond issuance during the month.

He said continued growth in overseas Filipino worker (OFW) remittances, business process outsourcing (BPO) revenues, tourism receipts, foreign investments, and other structural dollar inflows could support the country’s external position in the coming months.

However, Ricafort said geopolitical developments in the Middle East remain a key risk, as disruptions to oil supplies could raise the country’s import bill, widen the trade deficit, and consequently weigh on the BOP and GIR.