PH net foreign liabilities declined in Q3
The country’s international investment position—the financial statement setting out the value and composition of the country’s external financial assets and liabilities—registered a lower net liability position of $33.9 billion as of end-September 2019 from $39.3 billion in the previous quarter.
In a statement, the Bangko Sentral ng Pilipinas said the 13.7-percent decline in net external liability position resulted from the 2.1-percent growth in the country’s total external financial assets or residents’ investments abroad to $192.8 billion, alongside a 0.7-percent decline in total external financial liabilities or nonresidents’ investments in the Philippines amounting to $226.7 billion.
A positive international investment position value indicates that the country is a creditor nation, while a negative value indicates it is a net debtor.
According to the central bank, the increase in the country’s external financial assets during the quarter by $3.9 billion was underpinned by the expansion in all asset components led by residents’ portfolio (8.8 percent) and direct (1.3 percent) investments abroad.
The modest decline in total external financial liabilities by $1.5 billion in end-September 2019 was driven mainly by lower outstanding foreign portfolio investments (2.3 percent), particularly in equity securities issued by residents (5.9 percent).
By sector, only the BSP remained a net creditor with a net external asset position of $84.5 billion in end-September 2019. Meanwhile, the other major sectors remained net users of foreign resources.
On the assets side, the BSP continued to hold the highest stock of the country’s external financial assets at 44.5 percent or $85.8 billion in end-September 2019. This was followed by other sectors at 38.2 percent ($73.7 billion) and banks at 17.2 percent ($33.2 billion).
By type of instrument, 44.4 percent of residents’ external financial assets were reserve assets held by the BSP at $85.6 billion. Direct investments in the form of debt instruments or intercompany lending and equity capital placements in foreign affiliates accounted for 16.8 percent and 12.3 percent, respectively.
The rest were residents’ holdings of debt securities issued by nonresidents (11.9 percent), currency and deposits abroad (6.7 percent), and other assets (7.9 percent).
On the liabilities side, other sectors accounted for 64.4 percent of the country’s total external financial liabilities, which stood at $146 billion as of end-September 2019.
The government’s external liabilities amounted to $40.7 billion, while that of the banks reached $38.7 billion, comprising 18 percent and 17.1 percent of the country’s total external liabilities, respectively.
Meanwhile, the BSP’s share of the country’s total external financial liabilities was a modest 0.6 percent, which stood at $1.3 billion.
By type of instrument, the country’s total external outstanding financial liabilities to the rest of the world comprised of nonresidents’ placements of equity capital in resident affiliates (23.1 percent), nonresidents’ holdings of equity securities issued by local corporations (22.4 percent), and residents’ outstanding foreign loans (20.9 percent).
The rest were in the form of nonresidents’ investments in debt instruments issued by resident affiliates (16.6 percent), holdings of debt securities issued by residents (13.4 percent), and other liabilities (3.6 percent).
