Net external liability position reaches $50 billion as of end-September
Preliminary data on net international investment position (IIP) indicated a net liability position of $50 billion as of end-September, slightly higher by 0.7 percent than the $49.6 billion recorded in end-June 2023.
This development was driven mainly by the 1 percent contraction in the country’s external financial assets, offsetting the 0.7 percent decline in external financial liabilities.
As of end-September, total outstanding external financial assets stood at $227.9 billion, while total outstanding external financial liabilities amounted to $277.9 billion.
The decline in the country’s total stock of external financial assets during the quarter was driven mainly by the combined decreases in the outstanding value of reserve assets to $98.1 billion (from $99.4 billion), portfolio investments to $32.5 billion (from $33.5 billion), and other investments to $26.9 billion (from $27.5 billion).
The lower level of reserves was attributed to the National Government’s (NG) payments of its foreign currency debt obligations, coupled with the downward adjustments in the valuation of the BSP’s foreign currency-denominated reserves (or non-gold reserves) and gold holdings.
In addition, the residents’ net withdrawal of their investments in foreign debt securities, and net repayment of loans by nonresidents to the local banks also contributed to the lower total outstanding level of external financial assets during the review period.
Meanwhile, the slight decrease in the total stock of external financial liabilities during the quarter was due mainly to the 5.2 percent contraction in the residents’ outstanding foreign portfolio investments (FPI) to $80.7 billion (from $85.2 billion).
This development emanated mainly from the decline in nonresidents’ net investments in equity securities (by 6.2 percent) and debt securities (by 4.5 percent) amid global slowdown and high interest rate environment, which weighed down on investment activity, coupled with downward valuation adjustments during the period.
This decline, however, was muted partly by the 3.8 percent growth in residents’ outstanding foreign loans to $67.2 billion from $64.7 billion.
On a year-on-year basis, the country’s net external liability position rose by 62.1 percent from $30.8 billion in the previous year, with the increase in total external financial liabilities of $26.3 billion outpacing that of the $7.1 billion increment in total external financial assets.
The 10.4 percent annual growth in the total external financial liabilities emanated mainly from the combined increases in the outstanding value of all components of the liability account apart from financial derivatives.
Foreign direct investments (FDI) grew by 12.3 percent (to $117.5 billion from $104.6 billion) as nonresidents’ net placements in equity capital and intercompany borrowings from affiliates abroad increased by 13.2 percent and 11.4 percent, respectively.
Other investments rose by 9.4 percent (to $79.4 billion from $72.5 billion) following the 11.4 percent growth in residents’ outstanding loans. Further, FPI also increased by 9 percent (to $80.7 billion from $74.1 billion) as nonresidents’ net investments in debt and equity securities during the review period grew by 8.7 percent and 9.4 percent, respectively.
Likewise, the total external financial assets grew by 3.2 percent from the previous year mainly on account of the country’s accumulation of reserve assets (to $98.1 billion from $93.0 billion), combined with the increase in residents’ net direct investments abroad, particularly in the form of debt instruments (to $41.1 billion from $38.4 billion) and equity capital (to $28.5 billion from $26.4 billion).
The BSP continued to hold the largest share of residents’ total claims on the rest of the world at 44.9 percent, amounting to $102.4 billion as of end-September.
This, however, was 1.3 percent lower than the $103.8 billion asset holdings registered in the previous quarter.
The Other Sectors accounted for 40.6 percent of the country’s outstanding external financial assets at $92.6 billion as of end-Q3 2023.
The Banks held the remaining 14.4 percent of the country’s total external financial assets, amounting to $32.9 billion.
The Other Sectors accounted for $169.3 billion or 60.9 percent of the country’s total external financial liabilities as of end-September.
The level, however, was slightly lower by 0.1 percent than the end-June 2023 level of $169.4 billion. The NG, likewise, recorded a 1.4 percent decrease in its outstanding external financial liabilities to $70.4 billion, which represents 25.3 percent of the Philippines’ total external financial liabilities.
The Banks’ share accounted for 12.4 percent of the country’s total external financial liabilities at $34.5 billion. Meanwhile, the BSP held a marginal portion or 1.4 percent of the country’s total external financial liabilities at $3.8 billion, which were mostly in the form of Special Drawing Rights (SDRs). BSP
