Philippines’ net external liabilities rose in Q3

The Philippines’ international investment position (IIP) was pegged at a net external liability of $30.1 billion at the end of the third quarter or September, expanding by 8 percent from $27.9 billion three months earlier in June as a decrease of assets continued to outpace a decrease of liabilities.

Recorded every end of a quarter, the IIP shows the difference between the value of financial assets of the country’s residents that are claims on nonresidents or are gold bullion held as reserve assets, from the liabilities of residents to nonresidents.

As of end-September 2022, total outstanding external financial liabilities was pegged at $251.6 billion, while total outstanding external financial assets amounted to $221.5 billion.

This development was driven mainly by a 3.5-percent contraction in the country’s total external financial assets, which outpaced a 2.3-percent decline in its total external financial liabilities.

Comparing the third quarter with the second quarter in 2022, external financial liabilities shrank from $257.4 billion while external financial assets decreased from $229.5 billion.

The Bangko Sentral ng Pilipinas (BSP) said the quarter-on-quarter contraction in the country’s stock of external financial assets was attributed primarily to the decline in reserve assets held by the central bank and other investments.

“Reserve assets decreased due to the BSP’s net foreign exchange operations, downward valuation adjustments in foreign currency-denominated reserves or nongold reserves, and the national government’s payments of its foreign currency debt obligations,” the regulator said.

Also, the decrease in the stock of the country’s external financial liabilities was mainly on account of the decline in foreign portfolio investments or hot money as well as the decrease in foreign direct investments.

During the third quarter or 2022, the BSP refreshed the database software developed by the United Nations Conference on Trade and Development, which it is using to improve external debt management at a time when the country’s net external liabilities has been widening. INQ