PH net external liabilities rose in Q2

MANILA  -The Philippines’ international investment position (IIP) was pegged at a net external liability of $48.5 billion at the end of June, slightly higher than the $47.4 billion in March as the decrease in assets outpaced that of liabilities.

When compared with the level seen a year earlier, the net external liability surged by 73.3 percent from $28 billion.

IIP, which the Bangko Sentral ng Pilipinas (BSP) records every quarter, 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 the end of the second quarter of 2023, total outstanding external financial liabilities stood at $280.2 billion, while total outstanding external financial assets amounted to $231.6 billion.

According to the BSP, the increase in net external liability was driven mainly by a 1-percent dip in the country’s total external financial assets over the second quarter, from $234 billion at end-March. This outpaced a 0.4-percent decline in total external financial liabilities from $281.4 billion.

Decline in reserve assets

The central bank said the quarter-on-quarter contraction in the country’s stock of external financial assets had been caused mainly by the decline in reserve assets (to $99.4 billion from $101.5 billion) and “other investments” (to $26.8 billion from $27.4 billion).

“The level of reserves declined due to the national government’s net foreign currency withdrawals from its deposits with the [BSP] to settle its foreign currency debt obligations and pay for its various expenditures, and downward adjustments in the valuation of the BSP’s foreign currency-denominated reserves (or nongold reserves) and gold holdings,” the central bank said.

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“In addition, the residents’ net withdrawal of their currency and deposits in foreign banks also contributed to the lower total outstanding level of external financial assets of the country during the review period,” it added.

Also, the slight decrease in the stock of the country’s external financial liabilities was mainly due to a contraction in foreign portfolio investments or “hot money”—to $85.2 billion from $87.4 billion—on account of downward valuation adjustments. INQ