PH net external liability narrowed in Q2 2020 as pandemic hit

The country’s net external liability position—a key component of the Philippine economy’s balance sheet—declined to P670.5 billion in the second quarter of 2020 from the P1.8 trillion recorded during the same period of the previous year, according to the central bank.

Data released by the Bangko Sentral ng Pilipinas (BSP) indicated this 62.3-percent improvement in the country’s net debtor position against the rest of the world was attributed to the 7.4-percent expansion in the domestic economy’s external financial assets to P10.4 trillion along with the 3.4-percent contraction in its external financial liabilities to P11.1 trillion.

The same data showed the local household sector recorded the highest net financial asset position at P9 trillion, 19.7-percent higher than the P7.5 trillion a year ago.

These financial assets were mainly deposits placed with other depository corporations as well as equity and investment fund shares and insurance, pension, and standardized guarantee schemes with other financial corporations.

The other depository corporations’ net financial asset position increased 38.3 percent to reach P1.7 trillion in the second quarter of 2020 from P1.3 trillion in the second quarter of the previous year, mostly with the central bank in the form of currency and deposits.

The net financial asset position of both the central bank and other financial corporations declined to P598.6 billion and P292.3 billion from P641.9 billion and P673.7 billion, respectively.

Meanwhile, nonfinancial corporations and the general government sectors remained net debtors at P7.2 trillion and P5.1 trillion, respectively.

Nonfinancial corporations’ net liability position was 10.1-percent lower compared to the previous year’s P8 trillion.

Meanwhile, the general government’s net liability position widened by 31.7 percent in the second quarter of 2020 from P3.9 trillion in the same period of 2019 due to higher issuance of government securities and loans, both from domestic and foreign sources, to fund its programs against COVID-19.

According to the BSP, the domestic economy’s total financial assets grew 11.4 percent to reach P61.3 trillion during this period from P55 trillion in the comparable 2019 period, comprised mainly of currency and deposits, loans, and debt securities. INQ