Fresh debts boosted FDI inflows in May

Fresh debts from foreign lenders boosted the net inflows of foreign direct investments (FDI) into the Philippines, which surged at double digits for the second month in a row by 64.1 percent last May to $742 million from $452 million in the same month last year.

The Bangko Sentral ng Pilipinas (BSP) said the May results brought the net inflows of FDI for January to May to $4.2 billion, an 18.8-percent leap from $3.5 billion recorded in the same five months of 2021.

“The year-to-date growth was mainly on account of the increase in non-residents’ net investments in debt instruments, which muted the decline in net equity capital placements other than reinvestment of earnings,” the BSP said.

The BSP’s FDI data records actual movement of capital in a given period, rather than mere investment commitments which may not necessarily be realized fully.

During the five months to the end of May, net equity placements other than reinvestment of earnings fell by 31.3 percent to $607 million from $885 million.

There was barely a change in reinvestment of earnings, with $435 million in January-May this year from $434 million in the same period last year.

On the other hand, nonresidents’ net investments in debt instruments swelled by 42.7 percent to $3.13 billion from $2.19 billion.

Net investments in debt instruments consist mainly of inter-company lending between foreign direct investors and their subsidiaries or affiliates in the Philippines.

These also include investments made by nonresident subsidiaries or associates in their resident direct investors—that is, reverse investment.