Net external liability of the Philippines posiThe situation worsened in late September, data from the Bangko Sentral ng Pilipinas (BSP) showed.
The country’s international investment position (IIP) stood at a net external liability of US$74.2 billion at the end of September, 33.3% larger than the net external liability of US$55.7 billion at the end of June.
Year on year, the net external debt position was also 60.1% higher than the $46.4 billion in the same period a year ago.
The IIP is an indicator of the value and composition of a country’s financial assets and liabilities. It measures the external exposure of an economy.
“This development was driven by the 10.1% growth in the country’s external financial liabilities, which exceeded the 4.8% growth in external financial assets,” the BSP said in a statement.
Total outstanding external financial assets increased 4.8% to $254.7 billion at the end of the third quarter, compared to $243.1 billion in the previous quarter. Year over year it increased by 9.5%.
“The country’s total stock of external financial assets grew mainly due to the country’s accumulation of reserves, which amounted to $112.7 billion at the end of September 2024 (or an increase of 7.1% from $105.2 billion)” , the BSP said.
The expansion of external financial assets was also driven by the growth of residents’ net portfolio investments in foreign debt securities, which grew 7.2% quarter-on-quarter from $31.4 billion to $33.7 billion.
It also mentioned the growth of net direct investment in debt instruments (3.3%) and equity from their foreign onesFiliates (1.7%).
Nearly half or 46.2% of external financial assets are reserves held by the BSP, amounting to US$117.8 billion. Other sectors accounted for 39.7% of the total, or $101.1 billion, in the same period, while banks retained $35.8 billion (14.1%).
Meanwhile, total external financial liabilities also rose 10.1% to $328.9 billion at the end of September, from $298.8 billion at the end of June. It also rose 17.9% year over year.
“The total size of the country’s external financial liabilities increased at the end of September 2024, as most components showed an increase, led by foreign portfolio investments.”
Net foreign portfolio investments rose 18.7% to $104.4 billion during the period.
The BSP said this was caused by the “notable increase in outstanding investments of non-residents in debt securities, especially government bonds and shares of local companies.”
“The strong demand for newly issued government bonds at competitive prices reflected continued investor confidence in the country’s economic resilience despite global challenges.”
“Meanwhile, non-residents’ outstanding investments in equities increased due to upward valuations and additional inflows, reflecting the rise in the Philippine Stock Exchange index,” it added.
Other sectors accounted for 58.7% or $193 billion of the country’s total external financial obligations at the end of September.
The rest was held by the national government and banks, with financial liabilities worth $88.6 billion and $43.4 billion respectively.
The BSP held 1.2% of all external financial liabilities worth $3.9 billion, largely in the form of Special Drawing Rights. — Luisa Maria Jacinta C. Jocson