THE net international investment position (IIP) of the Philippines indicated a net liability position of $40.1 billion as of December 2022, based on preliminary data from the Bangko Sentral ng Pilipinas (BSP).
The data showed that this was 30.3 percent higher than the $30.8 billion in the end-September period in 2022.
“This development was primarily driven by a 7-percent increase in the country’s total external financial liabilities, offsetting the 3.8 percent growth in its total external financial assets,” the BSP said.
As of end-December 2022, total outstanding external financial assets recorded $229.1 billion, while total outstanding external financial liabilities amounted to $269.3 billion.
The BSP also said the expansion in the country’s external financial liabilities quarter-on-quarter came amid an 8-percent growth in foreign direct investments (FDI) to $113.0 billion from $104.6 billion and 10.8 percent growth in foreign portfolio investments (FPI) to $82 billion from US$74.1 billion.
The data showed non-residents’ placements of equity capital (FDI) and their holdings of equity securities (FPI) grew by 13.4 percent and 18 percent, respectively.
“This was due mainly to the positive price revaluations, which reflected the rise in the Philippine Stock Exchange Index (PSEi) in end-December 2022,” the BSP said.
The BSP noted that the Philippine Stock Exchange index (PSEi) rose to 6,566.39 in the fourth quarter of 2022 from 5,741.07 in the third quarter of 2022.
Assets
Meanwhile, BSP said the country’s stock of external financial assets expanded during the quarter, driven mainly by the increase in reserve assets. In particular, reserve assets rose to $96.1 billion from $93 billion.
This was due to the National Government’s (NG) net foreign currency deposits with the BSP, which included proceeds from its issuance of ROP Global Bonds, and upward adjustments in the BSP’s foreign currency-denominated reserves and gold holdings.
Increases in direct investments and other investments, particularly residents’ placements in debt instruments to $40 billion from $38.3 billion, and deposits abroad to $15.9 billion from $14.5 billion, also contributed to the rise in total external financial assets.
On a year-on-year basis, the country’s net external liability position grew by 42.3 percent from $28.2 billion in end-December 2021.
This was on account of the 5.3- percent decrease in total external financial assets to $229.1 billion from $242.1 billion, which more than offset the 0.4-percent decline in total external financial liabilities to $269.3 billion from $270.3 billion.
The contraction in the country’s external financial assets reflected the reduction in the outstanding level of reserve assets by 11.6 percent from $108.8 billion.
“This is due to BSP’s net foreign exchange operations, downward adjustments in its foreign currency-denominated reserves or non-gold reserves, and the NG’s payments of its foreign currency debt obligations,” BSP said.
Meanwhile, total external financial liabilities declined by 0.4 percent due to the decrease in FPI by 10.5 percent, notwithstanding the rise in other investments by 10.5 percent and direct investments by 1.3 percent.
The data also showed the BSP held the highest share of residents’ total external financial claims at 43.9 percent, valued at $100.6 billion as of end-December 2022.
BSP said this was 3.8 percent higher than the $96.9-billion asset holdings registered in the previous quarter.
The Other Sectors accounted for 40.4 percent of the country’s total stock of financial assets, equivalent to $92.6 billion as of end-December 2022. The remaining 15.7 percent were held by the Banks, amounting to $36 billion.
Meanwhile, the Other Sectors accounted for the largest share of the country’s total external liabilities at 62.4 percent or equivalent to $168 billion as of end-December 2022.
The data showed this was 8.4 percent higher than the outstanding liabilities recorded in the previous quarter at $154.9 billion.
The national government’s total external financial liabilities stood at $64.1 billion, representing 23.8 percent of the Philippines’s total external financial liabilities.
Philippine banks accounted for 12.4 percent of the country’s total external financial liabilities at $33.4 billion, while the BSP held a marginal share of 1.4 percent at $3.8 billion.