PHL net external liability position wider at end-March
THE PHILIPPINES’ net external liability position widened as of end-March, data from the Bangko Sentral ng Pilipinas (BSP) showed.
The country’s international investment position (IIP) stood a net external liability of $59.3 billion at the end of March, 15.5% bigger than the net liability of $51.3 billion at the end of December 2023, the BSP said in a statement over the weekend.
“This development was driven by the 3.8% expansion in the country’s external financial liabilities, outpacing the 1.3% growth in external financial assets,” the central bank said.
The IIP is an indicator of the value and composition of a country’s financial assets and liabilities. It gauges an economy’s external exposure.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the wider net external liability position came amid increased lending and foreign investment flows into the country.
“This is also an inevitable part of a growing economy with more foreign investments and loans or credit, especially to finance various major infrastructure projects that have a bigger return to the country on an investment and developmental perspective,” he added.
Total outstanding external financial assets inched up by 1.3% to $244.5 billion from $241.4 billion in the previous quarter, central bank data showed.
“The country’s total stock of external financial assets rose due to the increase in the residents’ net portfolio investments, particularly in debt securities to $33.5 billion and direct investments in equity capital to $29.8 billion as of end-March 2024,” the BSP said.
Some 44% of the external financial assets are reserve assets held by the BSP, equivalent to $108.6 billion. Other sectors held $100.9 billion (41.2%) during the same period while banks kept $35.1 billion (14.3%).
Meanwhile, total external financial liabilities rose by 3.8% to $303.8 billion as of end-March from $292.8 billion in the quarter ago.
The BSP said the stock of external financial liabilities rose amid an increase in all components except for financial derivatives.
Net foreign portfolio investments (FPI) went up by 5.3% to $90.3 billion in the period, while net foreign direct investments (FDI) edged higher by 3.3% to $126.6 billion.
“The expansion in net FDI and FPI reflects investor confidence in the Philippine economy on the back of the country’s growth and improved domestic inflation dynamics,” the BSP said.
“Further, other investments, in the form of loans, rose by 3% to $74.7 billion from $72.5 billion, contributing to the rise in the total external financial liabilities of the country,” it added.
Other sectors accounted for 60.3% or $183.2 billion of the country’s total external financial liabilities at the end of March.
The rest were held by the National Government and banks, with financial liabilities worth $77.4 billion (25.5%) and $39.4 billion (13%), respectively.
The BSP held 1.3% of all external financial liabilities at $3.8 billion, which were mostly in the form of special drawing rights. — Luisa Maria Jacinta C. Jocson