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BSP Releases 2007 International Investment Position; Net Position Shows Improvement

09.30.2008

The Bangko Sentral ng Pilipinas (BSP) announced today the release of the Report on the 2007 International Investment Position (IIP) of the Philippines.

The IIP is a companion framework to the Balance of Payments (BOP) statistics.  While the BOP is a statistical statement that records the country’s transactions or flows with the rest of the world for a given period, the IIP summarizes the country’s stock of financial claims on and financial liabilities to the rest of the world as of a specific reporting period.  Unlike the BOP, which is reported quarterly, the IIP is released annually with a lag of nine months.  Similar to the BOP, however, the assets and liabilities in the IIP are classified broadly as direct investments, portfolio investments and other investments.  

Preliminary IIP data as of end-December 2007 showed a significant improvement in the country’s net liability position at US$27.4 billion compared to US$31.3 billion in end-2006.  This positive development emerged as total financial assets or claims of residents from the rest of the world grew by 33.1 percent compared to the level in 2006 to reach US$67.1 billion, while total external financial liabilities rose by only 15.5 percent to US$94.4 billion. The improvement in the net IIP reflected the stronger external payments position in 2007, with the BOP posting a surplus of US$8.6 billion, or US$4.8 billion higher than the US$3.8 billion surplus registered in 2006. Higher foreign exchange receipts allowed residents to build up their financial assets and repay ahead of their maturities some foreign obligations of both public and private borrowers.

By sectoral classification, the BSP and Banks as a group recorded net external asset positions at end-December 2007. In particular, the BSP’s net external asset position improved considerably by 48.3 percent as of end-December 2007 to US$33.5 billion, from the year-ago level of US$22.6 billion.  Ample foreign exchange liquidity allowed the BSP to accumulate reserve assets and prepay some of its borrowings. Banks’ net asset position also strengthened to US$6.7 billion from the previous year’s level of US$6.3 billion.  On the other hand, the General Government and Other Sector continued to be net users of foreign resources, with net liability positions of US$29.3 billion and US$38.2 billion, respectively, from US$27.7 billion and US$32.5 billion in 2006.

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