PH dollar position back to deficit in March
The Philippines experienced a dollar shortfall in March, consistent with the Bangko Sentral ng Pilipinas’ (BSP) expectation of a weaker external position this year as uncertainty in global trade policy drove outflows.
In a statement on Monday, the BSP said the Philippines’ balance of payments (BOP) position—a summary of the country’s economic dealings with the rest of the world—swung to a deficit of $2 billion during the month.
A deficit means more funds exited the country against those that entered during the period, thereby reducing the country’s resources that can be used to transact with other economies.
That said, the shortfall in March was a stark contrast to the BOP position in February, when the country saw a dollar surplus amounting to $3.1 billion.
This put the first quarter external position to a deficit of $3 billion—approaching the $4-billion BOP deficit that the BSP sees for the entire 2025 as it remains wary of a brewing trade war and its impact on the global economy.
Careful management
Explaining the shift to a BOP deficit, the central bank said the dollar outflows in March were partly due to payments made by the national government to its creditors offshore.
The BSP also said it continued to intervene in the foreign exchange market by selling some dollars from its international reserves to defend the peso from too much volatility. This, as the tariff threats from US President Donald Trump stoked capital flight to safe havens like the greenback.
Zooming out, John Paolo Rivera, a senior research fellow at state-run think tank Philippine Institute for Development Studies, said the latest data underscores the sensitivity of the Philippines’ external position to global market movements and domestic financing needs.
“It’s possible that earlier inflows such as borrowings, remittances, or investment-related receipts moderated in March,” Rivera said.
“Moving forward, careful management of external debt and trade competitiveness will be crucial to maintaining external stability,” he added.
The BSP said the BOP gap in March translated to a decrease in the final gross international reserves (GIR) to $106.7 billion, from $107.4 billion in February.
But the buffer funds were equivalent to 7.4 months’ worth of imports, way above the international standard of 3-month import cover.
