Manila: The country's balance of payments (BOP) rose to a 21-month high, recording a surplus of USD3.4 billion, data from the Bangko Sentral ng Pilipinas (BSP) showed. This notable increase marks the highest surplus since the USD3.54 billion recorded in September 2024.

According to Philippines News Agency, the BSP reported that this surplus has helped to narrow the January-to-June BOP deficit to USD3.9 billion, down from USD7.3 billion in the preceding January to May period. The BSP attributed this improvement to various economic factors, including the continued trade-in-goods deficit and net outflows from foreign portfolio investments.

The current situation was somewhat counterbalanced by sustained net inflows from personal remittances of overseas Filipinos, along with foreign borrowings by the national government, trade in services, and foreign direct investment. These elements contributed positively to the BOP figures.

In addition to the BOP surplus, the gross international reserves (GIR) rose to USD104.7 billion in June, up from USD103.9 billion in May. This increase was driven by the national government's net foreign currency deposits with the BSP and the BSP's net income from its investments abroad. However, these gains were partly offset by downward valuation adjustments, primarily due to changes in prices of the BSP's gold holdings and foreign currency-denominated reserve assets, as well as the national government's drawdowns on its foreign currency deposits with the BSP for external debt service.

The BSP emphasized that the GIR provides ample foreign currency to meet the country's import requirements, service its external debt obligations, and act as a buffer against external economic shocks. The GIR is composed of foreign-denominated securities, foreign exchange, and other assets, including gold, which are crucial in financing imports and foreign debt, stabilizing the currency, and protecting the economy against external disruptions.