The Philippines’ net external liability position rose by 19.2 percent to P1 trillion in the first half of 2021 compared to P873.6 billion same period last year, on the back of government’s increased net foreign liabilities, the Bangko Sentral ng Pilipinas (BSP) said.
The BSP’s second quarter Philippine Balance Sheet Approach (BSA) report noted that external exposures expanded due to the “increase in the country’s net debtor position against the rest of the world (ROW)” which was “mainly driven by the expansion of the net external liability positions of the general government (GG) and the non-financial corporations (NFCs).”
The BSA report, which helps the BSP detect financial crisis by assessing asset-liability mismatches, disclosed that the GG’s net debtor position grew by 19.6 percent to P6.1 trillion this year from P5.1 trillion same time in 2020.
“This was driven by the double-digit growth in the GG’s net financial liabilities against the ROW, other depository corporations, and the Central Bank (CB),” said the BSP.
The government’s gross liabilities stood at P11.9 trillion from P9.9 trillion last year because of increased security liabilities. Its outstanding loans also increased by 27.3 percent to P2.3 trillion from P1.8 trillion.
The BSP said loans extended by the ROW rose by 21.3 percent year-on-year to P1.4 trillion from P1.2 trillion while loans owed to the CB went up by 60.6 percent to P608.4 billion from P378.7 billion. As part of pandemic response, the BSP extended provisional advances to the National Government.
Another key component of the BSA is the NFCs’ net debtor position which also increased by 3.8 percent to P7.5 trillion from P7.2 trillion last year.
As for the households (HHs) sector, the BSP said this posted the highest net financial asset position at P9.7 trillion or 10.2 percent more than the previous year’s P8.8 trillion, due to the higher net claims of HHs on financial corporations. “This was on account of the HHs’ higher deposits with ODCs, bigger investment in equity and investment fund shares of the other financial corporations (OFCs), bigger insurance technical reserves attributed to the HHs, and increased currency holdings,” said the BSP.
The BSP also reported that the ODCs’ net creditor position rose by 18.9 percent to P2.1 trillion in the second quarter versus P1.8 trillion same time in 2020 due to ODCs’ larger net claims on the CB and GG, which rose by 23 percent to P3.8 trillion and 34.6 percent to P1.9 trillion, respectively.
The CB’s net creditor position, in the meantime, declined by 2.3 percent to P590.1 billion from P603.8 billion last year, said the BSP.
The BSA analysis which was developed by the International Monetary Fund is the country’s sectoral accounts “on a from whom-to-whom basis using the aggregate balance sheet data of each sector of the economy.”
The BSP said the report is mainly a financial stability surveillance tool to “better monitor the potential vulnerabilities of economic sectors and their relationships with one another.”