PH a net borrower again, says BSP

All major sectors of the Philippine economy—financial corporations, nonfinancial corporations, the government and households—have been generating savings in recent years despite headwinds and uncertainties in the external front, according the central bank.

A statement by the Bangko Sentral ng Pilipinas, however, said the country ended its 13-year streak as a net lender to the rest of the world in 2016 and became a net borrower that year.

The domestic economy’s net borrowing from the rest of the world hit P53.4 billion in 2016 (the latest complete year available for the data gathering-intensive “flow of funds” report) as the saving-investment deficit in the general government and household sectors outweighed the surplus in the financial and nonfinancial corporations sectors.

The government continued to be a net borrower at P261.6 billion. The sector met its net funding requirements mainly through currency and deposit withdrawals (P88.5 billion); debt securities issuances (P21 billion), and loans P75.5 billion).

The household sector became a net borrower, with P52.9 billion in 2016, after being a net lender since 2000. Its net loan financing reached P379.3 billion.

The flow of funds presents a summary of financial transactions among the different institutions of the economy, and between these institutions and the rest of the world. It identifies which institutions are net borrowers and net lenders after a series of financial transactions for the year.

In 2016, the financial and nonfinancial corporations sectors sustained their net lender position at P214.7 billion and P46.5 billion, respectively. The financial sector’s net acquisition of assets were dominated by loans (P1.43 trillion) and currency and deposits (P574.2 billion), while those of the nonfinancial corporations sector were largely in the form of accounts receivables (P601.6 billion) and currency placements (P305.8 billion).

The volume of transactions in currency and deposits soared to P1.61 trillion, more than twofold its level in 2015. This is primarily attributed to the increase in the BSP’s foreign currency reserve deposits with the rest of the world, as well as the surge in the household sector’s deposit placements and currency holdings.
During the period under review, total volume of loan transactions climbed by 30.4 percent to P1.56 trillion.

The BSP said the domestic economy’s saving hit P3.46 trillion in 2016, higher by 9.7 percent than the level in 2015. —DAXIM L. LUCAS