The country's International Investment Position (IIP) continued to improve in end-2008, even as risk aversion dominated the financial landscape following the global financial crisis and economic downturn that unfolded in the last quarter of the year. Preliminary IIP data as of end-December 2008 showed that the country remained in a net liability position at US$26.9 billion, but the level was lower compared to the revised end-2007 net liability position of US$28.5 billion. This came about as the decline in total external financial liabilities compensated for the slight drop in total external financial assets. The total external financial assets or claims of residents from the rest of the world amounted to US$65.1 billion, down by 2.6 percent relative to its year-ago level of US$66.8 billion, while total external financial liabilities decreased by 3.6 percent to US$92.0 billion.
By sectoral classification, the Bangko Sentral ng Pilipinas (BSP) and the Banks maintained their net external asset positions at end-December 2008. Specifically, the BSP's net external asset position improved by 6.9 percent as of end-December 2008 to reach US$35.8 billion, from the year-ago level of US$33.5 billion. Ample foreign exchange liquidity during the first half of the year allowed the BSP to build up its reserves level as a buffer against external shocks, given increasing global commodity prices up to the third quarter of the year and the recessionary pressures in advanced economies. Banks' net asset position, however, weakened by 31.1 percent to reach US$2.4 billion, compared to the previous year's level of US$3.5 billion as banks used part of their asset holdings to repay their foreign loans, as well as their issuances of debt securities. On the other hand, the General Government and Other Sector remained to be net users of foreign resources, with net liability positions posted at US$30.0 billion and US$35.1 billion, respectively, compared to US$29.3 billion and US$36.2 billion in 2007.
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's financial account, however, the assets and liabilities in the IIP are classified broadly as direct investments, portfolio investments and other investments.
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