The Philippines’ net external liability position improved in the first quarter this year, it was down by 24.1 percent to $15.3 billion as of end-March from $20.2 billion of the previous quarter (end-December 2020).
“This improvement was mainly due to the 3.3 percent decrease in the country's total external financial liabilities (or non-residents' outstanding claims on Philippine residents) from $254 billion to $245.8 billion, offsetting the decline in residents' foreign financial assets (or residents' outstanding claims on non-residents) to $230.4 billion from $233.9 billion,” the BSP said in a statement.
The downward revaluation of foreign portfolio investments and foreign direct Investments in equity instruments contributed to the decline in total external financial liabilities in the first quarter.
“This reflected the decline in the Philippine Stock Exchange index towards the end of the first quarter on the back of spike in COVID-19 cases during the period, the subsequent reimposition of containment measures, and concerns that these may impact on economic growth negatively,” noted the BSP.
“Further, the repayments of maturing bond issuances by the National Government as well as foreign loans by the banks contributed to the decrease in the external financial liabilities of the country.”
The BSP said the total external financial assets decreased due to lower reserve assets in the first quarter
as the BSP diversified its foreign currency assets to include non-reserve assets. “Other investments also contracted to $28 billion (from $30 billion), emanating mainly from residents' withdrawal of their currency and deposits abroad,” it added.
On a year-on-year basis, the net external liability position was up by 10.9 percent or from $13.8 billion same period in 2020.
Total financial liabilities stood at $35.1 billion while total financial assets amounted tp $33.6 billion.
The international investment position or IIP, as explained by the BSP, is a “statistical statement that shows at a point in time the value of financial assets of residents of an economy that are claims on non-residents or are gold bullion held as reserve assets, and the liabilities of residents of an economy to non-residents.”