THE PHILIPPINES’ net external liability position went up at end-June from a quarter ago amid the decline in external financial assets, the Bangko Sentral ng Pilipinas (BSP) said late on Friday.   

Preliminary data released by the BSP showed the country’s international investment position (IIP) stood at a net external liability of $48.5 billion as of June, a 2.5% increase from the $47.4 billion seen at end-March.   

Year on year, the country’s IIP was also 73.3% wider than the $28 billion seen as of June 2022.

“This development was driven mainly by the contraction in the country’s external financial assets (by 1%), which outpaced the decline in external financial liabilities (by 0.4%),” the central bank said in a statement.   

The IIP is a financial statement of the value and composition of a country’s financial assets and liabilities. It is an indicator of an economy’s external exposure in financial assets and liabilities compared with the rest of the world.   

BSP data showed the country’s external financial assets contracted by 1% to $231.6 billion as of June from $234 billion at end-March. Annually, it went up by 1% from $229 billion.

“The quarter-on-quarter contraction in the country’s total stock of external financial assets emanated mainly from 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 BSP said.   

It added that the annual expansion in external financial assets reflected the direct investments abroad, particularly in debt instruments and equity capital.   

The BSP held 44.8% or $103.8 billion of the country’s total external financial claims as of end-June. Other sectors held $94.1 billion (40.6%) during the same period, while banks kept $33.7 billion (14.6%).   

Among these financial assets, 42.9% or $99.4 billion were in the form of reserves. The claims also include debt instruments of $40.6 billion (17.5%), debt securities of $31.4 billion (13.5%), and equity capital of $28.5 billion (12.3%).

Meanwhile, the country’s external financial liabilities slipped by 0.4% to $280.2 billion as of June from $281.4 billion at end-March. However, it rose by 8.8% from the $257.4 billion logged at end-June 2022.

Other sectors accounted for the largest share of 60.5% or $169.4 billion of the country’s total external financial liabilities.

The rest were held by the National Government and banks, with financial liabilities worth $71.4 billion (25.5%) and $35.5 billion (12.7%), respectively.

The BSP said the decrease in external financial liabilities in the second quarter was due to the contraction in foreign portfolio investments (FPI), which was offset by the growth in foreign direct investments (FDI).

Short-term portfolio investments dipped by 2.6% to $85.2 billion in the second quarter of 2023, the central bank said. Meanwhile, net FDI inflows inched up by 0.8% to $117.5 billion in the same period.   

“The 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,” the BSP said. — Keisha B. Ta-asan