Net external liabilities fall 6.5% quarter on quarter at end-June

THE Philippines’ net external liability position declined 6.5% at the end of June, the Bangko Sentral ng Pilipinas (BSP) said.

Citing preliminary data, the BSP said the international investment position (IIP) was a net external liability of $55.2 billion at the end of June, down 6.5% from the $59.1 billion net liability at the end of March.

“This development was driven by the 1.7% contraction in the country’s external financial liabilities, which outpaced the 0.5% decline in external financial assets,” the BSP said.

The IIP is an indicator of the value and composition of a country’s financial assets and liabilities. It gauges an economy’s external exposure.

External financial liabilities dropped 1.7% to $298.7 billion at the end of June, from $303.9 billion a quarter earlier.

“This development was primarily attributable to the recorded declines in net foreign portfolio investments (FPI) in the form of equity securities to $34.8 billion (by 11.3% from $39.2 billion) and net foreign direct investment (FDI) in the form of equity capital to $58.2 billion (by 6.5% from $62.2 billion), mainly on account of downward valuation adjustments.”

Year on year, external financial liabilities rose 6.4% from $280.7 billion.

The BSP attributed this to the “collective increases in the nonresidents’ net outstanding loans extended to residents by 16.1%, nonresidents’ net outstanding direct investments in debt instruments by 10.9%, and nonresidents’ net outstanding investment in portfolio debt securities by 11.2%.”

Other sectors accounted for 59% or $176.3 billion of total external financial liabilities at the end of June. The rest were held by the National Government and banks, with financial liabilities worth $78.9 billion (26.4%) and $39.8 billion (13.3%), respectively.

The BSP held 1.3% of all external financial liabilities at $3.8 billion.

Meanwhile, external financial assets dipped 0.5% to $243.5 billion at the end of June from $244.8 billion at the end of March.

The BSP attributed the decline in financial assets to the combined decreases in the outstanding value of residents’ net portfolio investments in foreign debt securities to $31.4 billion (by 6.2% from $33.4 billion), net direct investments in debt instruments to $41.9 billion (by 1.7% from $42.6 billion), and residents’ net placements of foreign currency and deposits in foreign banks to $14.4 billion (by 3.1% from $14.9 billion). — Luisa Maria Jacinta C. Jocson