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Philippines' International Investment Position as of end-September 2015 Registers Lower Net Liability Position


The country’s preliminary International Investment Position (IIP) registered a net external liability position as of end-September 2015 at US$29.3 billion, albeit lower by US$9.1 billion than the US$38.5 billion net liability position recorded as of end-June 2015.1,2  This developed as total external financial liabilities declined (by 4.4 percent) to US$181.8 billion from US$190.1 billion while total external financial assets increased moderately (by 0.6 percent) to US$152.5 billion from US$151.7 billion.

The decline in total external financial liabilities was mainly brought about by significant downward revaluation adjustments, particularly in non-residents’ investments in equity securities amid the weak performance of the Philippine Stock Exchange Index, which fell by 8.9 percent from end-June to end-September 2015.  In addition, expectations on the US Federal Reserve rate lift-off towards the end of the year led to non-residents’ net withdrawal of their portfolio investments.  This was partly offset by an increase in loans extended by non-residents to resident banks and borrowings by corporations from their affiliates abroad.  Meanwhile, the slight increase in total external financial assets was due to residents’ direct and portfolio investments abroad, mostly in debt instruments and debt securities, respectively.

Across sectors, only the Bangko Sentral ng Pilipinas (BSP) recorded a net external asset position as of end-September 2015, due largely to its reserve assets amounting to US$80.6 billion.  Deposit-taking Corporations except the Central Bank (Banks), General Government, and Other Sectors posted net external liability positions.

The BSP continued to hold the largest share (53.3 percent) of residents’ total claims on the rest of the world amounting to US$81.3 billion as of end-September 2015, slightly lower than the US$81.4 billion registered as of end-June 2015.  The Other Sectors’ US$49.7 billion external financial assets, representing approximately one-third (32.6 percent) of the country’s total external financial assets, were up by US$1 billion from the US$48.6 billion external financial assets recorded as of end-June 2015.

More than half (52.8 percent) or US$80.6 billion of residents’ total external financial assets continued to be in the form of reserve assets held by the BSP.  Direct investments in the form of debt instruments (or intercompany loans) and equity capital placements in foreign affiliates accounted for 15.5 percent and 10.7 percent of total external financial assets, respectively.  Residents also invested in debt securities issued by non- residents (8.5 percent) and placed deposits abroad (7.9 percent).

The Other Sectors continued to hold the majority of residents’ total liabilities to non-residents at US$116.4 billion as of end-September 2015 or equivalent to 64 percent of residents’ total external financial liabilities. These were largely in the form of non-residents’ direct investments in local affiliates (48.4 percent), foreign portfolio investments (37 percent), and net availment of loans from
non-residents (11.9 percent).

The General Government’s US$35.2 billion external financial liabilities as of end-September 2015 accounted for 19.4 percent of the country’s total external financial liabilities. This level was lower by US$1.1 billion than the US$36.3 billion recorded as of end-June 2015. Non-residents’ holdings of debt securities issued by the NG represented 54.7 percent of the General Government’s external financial liabilities while 45.3 percent were loan availments from non-residents. Meanwhile, banks’ external financial liabilities as of end-September 2015 amounted to US$28.9 billion, representing 15.9 percent of the country’s total external financial liabilities. This consisted of loans from non-residents (45.5 percent), non-residents’ holdings of equity securities issued by resident banks (30.2 percent), non-residents’ placements of currency and deposits in resident banks (8.6 percent), and non-residents’ placements in resident banks’ equity capital (7.9 percent).

Outstanding financial liabilities of residents to the rest of the world consisted largely of non-residents’ holdings of equity securities issued by residents (US$44.9 billion; 24.7 percent), foreign loans
(US$42.9 billion; 23.6 percent), and non-residents’ placements in equity capital (US$42.4 billion;
23.3 percent).  Debt securities, mostly issued by the NG, comprised 15.1 percent (US$27.4 billion) of total external financial liabilities.


1 The IIP, based on the Balance of Payments and International Investment Position Manual, 6th edition (BPM6), 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 has 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.

2 On a year-on-year basis, the country’s net liability position fell by US$15.6 billion from US$45 billion as of end-September 2014 as total external financial assets increased by US$10.7 billion while total external liabilities decreased by US$4.9 billion.

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