PH net liabilities hit $30.6B

The country’s net liabilities rose to $30.6 billion at end-2016 as both external assets and liabilities declined amid global economic uncertainty, according to the Bangko Sentral ng Pilipinas (BSP).

The international investment position (IIP) as of December last year was 12.4-percent higher than end-September’s $26.8 billion, the BSP said in a statement.

The BSP attributed the increase in the country’s net liability position to “uncertainties arising from the uneven pace of global economic growth.”

The IIP is the difference between external assets and liabilities. External assets refer to investments made by Filipinos overseas.

Foreign investments in the Philippines, meanwhile, are counted as liabilities because sooner or later, these investors will pull out to pocket their profits.

A net liability position means more foreign money is invested in the country than the total amount of investments made by Filipinos abroad.

“The higher shortfall in the country’s IIP relative to the end-September 2016 level stemmed from the 2.7- percent decline (or by $4.4 billion) in total external financial assets, which more than offset the 0.3-percent drop (or by $700 million) in external financial liabilities,” the BSP said.

External liabilities totaled $193.3 billion at end-December, down from $193.9 billion a quarter ago.

Total external assets, meanwhile, declined to $162.7 billion from the previous quarter’s $167.1 billion.

“The drop in external financial assets was due mainly to lower reserve assets held by the BSP resulting from both revaluation adjustments and changes due to actual transactions. Meanwhile, external financial liabilities declined despite continued inflows arising from investment flows into the economy (particularly foreign direct investments) mainly on account of valuation adjustments to reflect exchange rate movements and changes in market prices,” the BSP explained.

The BSP said the decline in total external financial assets was also due to lower reserve assets and portfolio investments, particularly residents’ net investments in debt securities issued by nonresidents even if other investments increased. —BEN O. DE VERA