PH net external liability position up

May 18, 2020

The country’s international investment position  as of end-December 2019 posted a higher net external liability position of 34.8 billion compared to  33.5 billion in end-September 2019.

The four- percent increase in the NELP developed as the rise in total external financial liabilities (or non-residents’ outstanding investments in the country) at 2.2 percent to $231.9 billion, outpaced that of total external financial assets (or residents’ outstanding investments abroad) at 1.9 percent to $197.1 billion.  

The increase in the country’s net external liability position reflected continued inflows on the back of investor confidence in the Philippine economy.

By contrast, on a year-on-year basis, the country’s NELP as of end-2019 was considerably lower by 28.3 percent from $48.6 billion posted in end-2018.

During the year, the country’s external financial assets expanded by 11.9 percent, while external financial liabilities grew only by 3.2 percent.

On a quarterly basis, the country’s total external financial liabilities rose by $5.1 billion as of end-December 2019 due to transaction inflows, particularly in the form of foreign direct investments in equity capital and debt instruments, coupled with positive exchange rate and other valuation adjustments.   

The country’s total external financial assets also increased by $3.7 billion from the previous quarter mainly on account of accumulation of reserve assets, combined with the increase in the amount of residents’ direct investments abroad.

By sector, only the Bangko Sentral registered a net external asset position during the quarter, ending the year at $86.8 billion.

Meanwhile, the remaining sectors, i.e., the General Government, Deposit-taking Corporations except the BSP (banks), and Other Sectors, recorded a net external liability position.

On the assets side, the BSP continued to hold the largest stock of the country’s external financial assets at 44.7 percent or $88.1 billion as of end-December 2019. 

This was followed by Other Sectors[] comprising 38.5 percent or $75.8 billion of the country’s external financial assets.

Banks held the remaining 16.8 percent or $33.1 billion of the country’s total external financial assets.

By type of instrument, almost half (44.6 percent) of residents’ total external financial assets were reserve assets held by the BSP at $87.8 billion.

Direct investments accounted for about a third of the country’s external financial assets in the form of debt instruments amounting to

$32.7 billion (16.6 percent) and equity capital and investment fund shares totaling $25.2 billion (12.8 percent).

On the liabilities side, the Other Sectors accounted for 64.9 percent or $150.6 billion of the country’s total external financial liabilities as of end-December 2019.

The General Government’s external liabilities stood at $41.2 billion, while that of the Banks’ amounted to $38.8 billion, comprising 17.8 percent and 16.7 percent of the country’s total external financial liabilities, respectively.

The BSP, on the other hand, held a relatively marginal portion of the country’s total external financial liabilities at 0.6 percent totaling $1.3 billion.

By instrument, the country’s total external outstanding financial liabilities to the rest of the world consisted mostly of investments in equity and investment fund shares under direct investments (23.6 percent) and portfolio investments (22.3 percent).

These were followed by foreign loans availed by residents (20.2 percent), and non-residents’ investments in debt instruments (16.7 percent) and debt securities (13.3 percent) issued by residents.