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Philippines' Net Liability Position as of end-December 2013 and end-June 2014 Slightly Increases, Driven by Higher Foreign Direct and Portfolio Investments

09.30.2014

The country’s International Investment Position (IIP) based on the Balance of Payments and International Investment Position Manual, 6th edition (BPM6) continued to post a net liability position at end-December 2013 and end- June 2014 on the back of increased inflows of foreign direct investments and higher non-residents’ holdings of equity securities.

End-December 2013

Preliminary IIP data showed the country’s net liability position at US$40.7 billion as of end-December 2013. This developed as the US$175.4 billion total stock of external liabilities exceeded the US$134.7 billion total stock of external assets.  The country’s net liability position as of end-December 2013 was higher by US$0.09 billion (or by 0.2 percent) than the revised end-December 2012 level of US$40.6 billion due largely to the inflows of foreign direct investments. The US$5.5 billion increase in total external financial assets was offset by the US$ 5.6 billion increase in total external liabilities. 

Amid volatilities in the global environment, the confidence of foreign investors in the country’s macroeconomic fundamentals remained strong as the country received a credit rating upgrade by Moodys’ from Baa3 to investment grade status (Ba1) in October 2013.  This reflected in the expansion in the stock of liabilities, particularly foreign direct investments and equity securities which increased by 14.3 percent and 5.7 percent, respectively.

Across sectors, only the Bangko Sentral ng Pilipinas (BSP) recorded a net external asset position at end-December 2013. Deposit-taking Corporations (or Banks), General Government, and Other Sectors were net users of foreign resources.

The BSP continued to hold the largest financial claims on the rest of the world amounting to US$83.2 billion (61.8 percent). The Other Sectors accounted for US$35.2 billion (26.1 percent) of the total assets mainly in the form of residents’ holdings of direct investments.  The remaining US$16.2 billion (12.0 percent) were held by deposit-taking corporations, primarily in the form of placements in debt securities.

The Other Sectors held majority (61.1 percent share) of residents’ total liabilities to non-residents as of end-December 2013. These liabilities consisted largely of non-residents’ placements in equity capital, placements in equity securities, foreign loans, and investments in debt instruments.  The General Government’s outstanding external liabilities amounted to US$39.2 billion, lower by 8.4 percent than the end-December 2012 level.  These comprised mainly of issuances of debt securities, and loans.  Total foreign liabilities of Deposit-taking Corporations, amounting to US$27.6 billion, represent 15.7 percent, which were mostly in the form of foreign loans, equity securities, and non-residents’ deposits in domestic banks. 

End June-2014

Preliminary IIP data as of end-June 2014 showed an overall net liability position for the country of US$48.2 billion, higher by US$3.8 billion than the end-March 2014 level of US$44.5 billion. This developed as the increase in the country’s total external financial liabilities (US$7.7 billion) exceeded the increase in total external financial assets (US$3.9 billion).  Total outstanding external financial liabilities reached US$187.1 billion as of end-June 2014 from US$179.5 billion as of end-March 2014, while total outstanding external financial assets reached US$138.9 billion from US$135.0 billion.

Only the BSP recorded a net external asset position as of end-June 2014. Deposit-taking Corporations (or Banks), General Government, and Other Sectors were net users of foreign resources, posting higher net external liability position.

The BSP held the largest share of the total financial assets amounting to US$81.2 billion (58.4 percent).  The Other Sectors accounted for 27.6 percent at US$ US$38.4 billion mainly in the form of residents’ direct investments abroad. Deposit-taking corporations held 13.9 percent at US$19.3 billion, and the General Government maintained its total external financial asset holdings at nil.

The Other Sectors continued to hold the majority of residents’ total liabilities to non-residents, with 63.6 percent share.  These were comprised mainly of foreign direct investments and portfolio investments.  The General Government recorded US$37.3 billion external liabilities (19.9 percent) which consisted of debt securities and loans.  Total external liabilities of Deposit-taking Corporations amounted to US$29.3 billion (15.4 percent), mostly in the form of loans, equity securities, and non-residents’ deposits in domestic banks.

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.  Similar to the BOP’s financial account, the assets and liabilities in the IIP are classified as direct investments, portfolio investments, financial derivatives, and other investments.  The BSP started releasing quarterly IIP statistics in 2014 in compliance with the International Monetary Fund’s (IMF) recommendation of enhancing the Special Data Dissemination Standard (SDDS) to improve the availability and timeliness of compiling and disseminating IIP data.

Read Full Report
View  Table 1a  |  Table 1b  |  Table 1c | Table 2a  |  Table 2b  |  Table 2c | Table 3a  |  Table 3b  |  Table 3c


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