The Bangko Sentral ng Pilipinas said the country’s net external liability position as of end-June reached $23 billion, 54.3 percent higher than its previous report of $14.9 billion level in the first quarter this year.
Based on the central bank’s preliminary data on the country’s net international investment position (IIP), the net external liability position was higher due to the five percent growth in the total external financial liabilities or non-residents’ outstanding claims on Philippine residents, to $258 billion from $245.7 billion. This growth outpaced the 1.8 percent in residents’ foreign financial assets or residents’ outstanding claims on non-residents to $235 billion from $230.8 billion.
The BSP cited the following transactions for the increase in the external financial liabilities: net transaction inflows from foreign portfolio investments; foreign direct investments; and other investments on the back of continued foreign investor confidence in the country. These were mostly placements in Philippine Treasury bonds such as Samurai and Euro-denominated bonds, intercompany borrowings, and long-term loans of the National Government (NG).
The BSP said external financial assets also expanded in the second quarter because of the increase in the country’s gross international reserves and the increase in residents’ net placements in foreign debt securities.
On a year-on-year basis, net external liability position rose by 22.1 percent to $23 billion from $18.8 billion in 2020.
The total external liabilities was up by 14.8 percent to $258 billion from $224.8 billion which the BSP said more than offset the 14.1 percent growth in total external financial assets to $235 billion from $206 billion.
The BSP has the biggest share of the country’s total external financial claims at 47.1 percent or $110.8 billion. The “other sectors” accounted for 37.4 percent or $87.9 billion and banks have 15.5 percent or $36.6 billion. These sectors include other financial corporations, insurance corporations, holding companies, government financial institutions, investment companies, other financial intermediaries except insurance, trust institutions/corporations, among others.
Under external financial liabilities, the “other sectors” accounted for the largest share of the country’s total external financial liabilities at 63.9 percent or $165 billion, followed by the NG with 22.7 percent or $58.5 billion. Banks accounted for 12.9 percent of the total liabilities at $33.2 billion.
The IIP, as defined by the BSP using IMF description, 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.”