The country’s net external liability position went up by 137.47 percent year-on-year to P998.8 billion in the third quarter 2021 more than double the P420.6 billion same period in 2020, based on the latest central bank's Balance Sheet Approach (BSA) report.
The Bangko Sentral ng Pilipinas (BSP) said that net external liabilities increased “mainly driven by the expansion of the net external liability positions of the non-financial corporations (NFCs) and the general government (GG).”
The BSP’s third quarter preliminary BSA report, which is a presentation of the country’s sectoral accounts on a from whom-to-whom basis, also noted that external exposure expanded due to the continued rise in the net debtor position against the rest of the world (ROW).
The BSA analysis, developed by the International Monetary Fund, is considered by the BSP as mainly a financial stability surveillance tool to “better monitor the potential vulnerabilities of economic sectors and their relationships with one another.”
As of end September 2021, NFCs’ net debtor position rose by 17.1 percent year-on-year to P7.9 trillion due to higher net liabilities against the other financial corporations (OFCs) and the ROW as both sectors, along with other depository corporations (ODCs), remained major sources of NFC’s financing, explained the BSP.
Against OFCs, the NFCs’ net debtor position grew by 31 percent year-on-year to P2.5 trillion while against the ROW, it went up by 18.8 percent to P3.5 trillion. NFCs’ net debtor position against the ODCs was steady at P1.6 trillion.
The BSP said the net debtor position of the GG increased by 24 percent year-on-year to P6.6 trillion and this was because of the National Government’s higher financing needs amid the pandemic and recovering economy. The GG’s net financial liabilities against the ODCs stood at 45.7 percent and the ROW at 24.5 percent.
The central bank noted that the GG’s gross liabilities expanded by 25.1 percent to P12.7 trillion in the third quarter last year. It said its indebtedness to ODCs and non-residents or ROW rose by 31.6 percent to P3.9 trillion and 24.3 percent to P3 trillion, respectively.
The BSP also said that the GG’s debt security liabilities increased by 20.3 percent to P10.3 trillion. The debt security liabilities is the government’s main source of financing with 81.1 percent of the total.
“The rise in the GG’s debt securities was due to net issuances of government securities, which were purchased by and reflected in the higher debt securities holdings of the ODCs (32.7 percent), non-residents (27.6 percent), and the CB (or central bank, 10.6 percent),” said the BSP.
The GG has an outstanding loan of P2.4 trillion which was 52.2 percent more than the previous year’s P1.6 trillion. The increase was attributed to the GG’s higher loans from the central bank and ROW.
The BSA report said the households sector or HHs was still the highest net creditor among domestic sectors with P10.1 trillion, up by 13.8 percent year-on-year. “The expansion of the HHs’ net financial claims was reflected in HHs’ higher deposits with the ODCs, holdings of equity and investment fund shares issued by the OFCs, insurance technical reserves attributed to the HHs, and currency holdings,” said the BSP.
Meantime, the ODCs’ net creditor position also increased by 17.1 percent year-on-year to P2.3 trillion in the third quarter 2021 while the central bank’s net creditor position went up by 14.9 percent to P777.3 billion.