PH net external liability drops 24%

Published September 27, 2020, 5:00 AM

by Lee C. Chipongian

The local economy’s external exposure as net external liability position was better in the last quarter of 2019 at P1.7 trillion or 24 percent lower than P2.2 trillion in 2018, the Bangko Sentral ng Pilipinas (BSP) said in its first Philippine Balance Sheet Approach (BSA) report.

The BSP said the 24 percent improvement in the country’s net debtor position against the rest of the world (ROW) was because of the growth in the economy’s external financial assets which increased by 9.8 percent in the fourth quarter 2019 to P10.2 trillion from P9.3 trillion and outpacing the 3.3 percent expansion in the external liabilities growth of P11.9 trillion from P11.5 trillion.

In terms of net financial position, the BSP said the household sector had the highest net financial asset position at P8.1 trillion from the previous year’s P7.4 trillion because of “sustained accumulation of deposits.”

The other depository corporations, in the meantime, had P1.6 trillion from P1.3 trillion a year ago mostly deposits with the central bank and loans extended to non-financial corporations (NFCs).  

The BSP and other financial corporations’ net financial asset positions dropped to P583.6 billion last year from P680.4 billion in 2018, and to P490.2 billion from P578.7 billion, respectively. Net debtors NFCs and the general government had P7.7 trillion and P4.7 trillion in 2019 compared to P8.1 trillion and P4.2 trillion in 2018.

As for gross financial asset position, the BSP said financial assets of P57.7 trillion was higher by 8.9 percent compared to P53 trillion in 2018. These are made up of currency and deposits, loans, debt securities, and equity and investment fund shares.

The financial liabilities, on the other hand, increased by 7.6 percent year-on-year to P59.4 trillion from P55.2 trillion.

The BSP said the BSA represents the Philippines’ sectoral accounts on a from whom-to-whom basis and it was developed by the International Monetary Fund (IMF).

It said the report is useful in “identifying the possible emergence of a financial crisis, specifically those arising from asset-liability mismatches and increasing balance sheet interlinkages.”

“It is a financial stability surveillance tool developed by the IMF that is used to better monitor the potential vulnerabilities of economic sectors and their relationships with one another,” said the BSP.