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Philippines' Net External Liability Position as of end-December 2016 Up

03.31.2017

The country’s net liability position increased from US$26.8 billion as of end-September 2016 to US$30.6 billion as of end-December 2016 given the uncertainties arising from the uneven pace of global economic growth.  The higher shortfall in the country’s International Investment Position (IIP) relative to the end-September 2016 level stemmed from the 2.7 percent decline (or by US$4.4 billion) in total external financial assets, which more than offset the 0.3 percent drop (or by US$0.7 billion) in external financial liabilities.

The drop in external financial assets was due mainly to lower reserve assets held by the Bangko Sentral ng Pilipinas (BSP) resulting from both revaluation adjustments and changes due to actual transactions.  Meanwhile, external financial liabilities declined despite continued inflows arising from investment flows into the economy (particularly foreign direct investments) mainly on account of valuation adjustments to reflect exchange rate movements and changes in market prices.

The BSP continued to account for the largest share of the Philippines’ total external financial claims on the rest of the world at 49.6 percent. The BSP’s external financial assets totaled US$80.8 billion, lower by 7 percent than the US$86.8 billion recorded as of end-September 2016. 

By type of instrument, 49.6 percent of residents’ total external financial assets were reserve assets held by the BSP. Investments in debt instruments (or intercompany lending) and equity capital issued by non-resident affiliates accounted for 16.4 percent and 11.5 percent, respectively.

In terms of external financial liabilities, the Other Sectors contributed 64.3 percent (at US$124.3 billion) of the total as of end-December 2016. These mostly consisted of equity securities issued by local corporations (33.7 percent), non-residents’ placements of equity capital in local affiliates (31.7 percent), and residents’ availment of foreign loans (10.4 percent).

The country’s total external financial liabilities to the rest of the world consisted mostly of non-residents’ investments in equity securities issued by local corporations (26.7 percent), residents’ availment of foreign loans (22.3 percent) and non-residents’ placements of equity capital in resident affiliates (21.9 percent).

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