PH external exposures up at P1.5 T end-March
The country’s net external liability position increased to P1.5 trillion in the first quarter, up by 17.3 percent compared to P1.3 trillion in the fourth quarter last year, based on the Balance Sheet Approach (BSA) report of the Bangko Sentral ng Pilipinas (BSP).
On a year-on-year basis, net external liability position rose by 115 percent from P714.5 billion same time in 2021.
The BSA, a financial stability monitoring tool, covers the National Government (NG), households, production-based institutions, all banks and non-banks, insurance firms, money-market companies and the BSP itself.
Based on the report, there was higher net external liabilities of the general government (GG) and the non-financial corporations (NFCs) on a quarter-on-quarter basis. By sector, the BSP said households (HHs) and financial corporations continued to be net creditors of the economy, while the NFCs and the GG are net debtors.
The year-on-year increase in the country’s external financial liabilities more than offset the growth in its external assets.
“In particular, the external financial liabilities grew by 17.3 percent (to P14 trillion from P11.9 trillion) due to higher liabilities of the NFCs and GGs from the ROW (rest of the world),” according to the report.
As for external financial assets, this grew by 11.1 percent to P12.4 trillion as of end-March from P11.2 trillion end-2021 with the domestic economy’s “indebtedness to external creditors was mostly in the forms of equity and investment fund shares and loans.”
NFCs, which are both public and private institutional units engaged in the production of market goods and non-financial services, reported a net debtor position of P8.4 trillion in the first quarter, up by 3.2 percent from the previous quarter of P8.2 trillion.
“The NFCs’ net debtor position widened primarily on account of higher net liabilities to the ROW and other depository corporations (ODCs). The NFCs’ net debtor position to the ROW and the ODCs expanded due mainly to the increase in cross-border borrowings and the contraction in the NFCs' deposits with the ODCs, respectively,” said the BSP.
The GG reported a net financial liability position of P6.8 trillion during the period, 0.5 percent lower than P6.9 trillion in the last quarter of 2021.
“The GG’s net financial liability position declined slightly in Q1 (first quarter) 2022 mainly on account of higher deposit placements with the central bank (CB) and the ODCs, which tempered partly the growth in its financial liabilities. The GG’s gross liabilities grew as a result of higher obligations to the CB, the ODCs, and the ROW. The GG's liabilities were predominantly in the forms of government securities held mostly by the ODCs and the ROW,” said the BSP
Meanwhile, the BSP said HHs were still the largest net creditor with a net financial position of P10.7 trillion, 2.4 percent more compared to the previous quarter’s P10.5 trillion.
“The HHs remained as the top creditor among the domestic sectors (and its expansion) stemmed from higher net claims on the ODCs and OFCs,” said the BSP. The improvement in the HHs’ net lending position were on account of the following: OFC-issued equity and investment fund shares; debt securities; and insurance, pension and standardized guarantee schemes.
On the other hand, the ODCs’ net creditor position declined during the quarter due to the increase in the ODCs’ gross financial liabilities which more than offset the growth in its financial assets, said the BSP.
The ODCs’ net creditor position decreased by 9.5 percent to P2 trillion from P2.2 trillion in the last quarter of 2022. The ODCs are banks and non-banks, non-stock savings and loan associations, money market funds and offshore banking units.
The BSA report is basically a presentation of the country’s sectoral accounts on a from whom-to-whom basis. It is developed by the International Monetary Fund and is considered by the BSP as mainly a financial stability surveillance tool. “The BSA is also useful in identifying the possible emergence of a financial crisis, specifically those arising from asset-liability mismatches and increasing balance sheet interlinkages,” said the BSP.