PH net external liability increases


The Philippines’ international investment position (IIP) as of end-September worsened, in relative terms, given the country’s higher net external liability, the Bangko Sentral reported last week.

The IIP is used as an accompanying framework for the country’s balance of payments (BOP) statistics. At $166.6 billion, the country’s external financial assets remained below the $201.8 billion in external liabilities.

The resulting net external liability of $35.2 billion was 5.1 percent higher compared to the $33.5 billion recorded as of end-June and a 23.8-percent rise from the $28.4 billion posted at the end of September last year.

External financial liabilities grew mainly on account of a 4-percent increase in foreign direct investments and a 1.5-percent growth in foreign portfolio investments.

“The build-up was reflective of the significant investment inflows and positive price revaluation of non-residents’ holdings of local equity capital and equity securities on the back of the country’s sustained positive economic performance and growth prospects,” the Bangko Sentral said.

Meanwhile, the improvement in external financial assets during the quarter was attributed to the accumulation of portfolio (6 percent growth), direct (1.9 percent growth), and other investments (1.6 percent growth) abroad by residents despite a drop in the country’s reserve assets.

Under the IIP account, investments in the country are considered liabilities given that foreigners own the funds. They are assumed to eventually cash in on gains and pull their money out the country.

Compared with accounts under the country’s overall balance of payments, which is a statistical statement that records the country’s transactions with the rest of the world for a given period, the IIP summarizes the country’s stock of financial claims on and financial liabilities.|

Similar to the payments balance’s financial accounts, assets and liabilities in the IIP are classified as direct investments, portfolio investments, financial derivatives, and other investments.


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