PH net external liability rose to $36.1 B in March

Published June 30, 2022, 5:17 PM

by Lee C. Chipongian

The country’s net external liability position based on the net international investment position (IIP) as of end-March went up by 14.4 percent to $31.6 billion from $27.6 billion in end-December.

The Bangko Sentral ng Pilipinas (BSP) said continued IIP liability level was due to the decline in the total external financial assets by 1.1 percent while total external financial liabilities rose by 0.5 percent. As of end-March, total outstanding external financial assets stood at $238.4 billion, while total outstanding external financial liabilities was at $269.9 billion.

US dollar/Manila Bulletin file photo

On a year-on-year basis, Philippines’ net external liability position increased by 94.8 percent from $16.2 billion same time in 2021. This is as total outstanding liabilities rose by 9.8 percent which outpaced the 3.8 percent growth in the total stock of financial assets.

“The surge in total external financial liabilities stemmed mainly from the growth in outstanding FDI (foreign direct investments) in the form of debt instruments, foreign loans availed by residents, and non-residents’ holdings of equity securities issued by residents,” said the BSP.

The IIP, as defined by the BSP using International Monetary Fund (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. The difference between the assets and liabilities is the net position in the IIP which represents either a net claim on or a net liability to the rest of the world.

In the external financial assets report, the BSP still has the largest share of the country’s total stock of external financial claims on the rest of the world at 47 percent or $111.9 billion. The “other sectors” had 37.5 percent or $89.4 billion while banks accounted for 15.5 percent or $37 billion of the country’s total external financial assets. Other sectors include other financial corporations such as private and public insurance corporations, holding companies, government financial institutions, investment companies, other financial intermediaries except insurance, trust institutions/corporations, financing companies, securities dealers/brokers, lending investor, among others.

The BSP said majority of the country’s stock of external financial assets were reserve assets with BSP accounting for 45 percent. Other major types of external financial assets are divided as: 16 percent investments in debt instruments issued by foreign affiliates; 13.4 percent debt securities issued by non-residents; 11.8 percent equity capital; 6.3 percent currency and deposits; and 4.9 percent loans extended to non-residents.

As for external financial liabilities, the “other sectors” had $173.3 billion or 64.2 percent of the country’s outstanding external financial liabilities. The National Government had 22.7 percent at $61.4 billion. Banks accounted for 11.6 percent of the total liabilities at $31.3 billion while BSP only had 1.5 percent of total external financial liabilities at $4 billion.

The BSP said the outstanding external financial liabilities of residents to the rest of the world were mostly in FDI as equity capital at 22.3 percent, and 19.2 percent in debt instruments. Another 21.1 percent were loans from non-resident creditors, 16.9 percent were foreign portfolios in equity securities and 16 percent in debt securities.

 
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