PH net external liability up 20%
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Mon, 31 Dec 2018 16:18:26 +0000
The Philippines’ international investment position (IIP) worsened as of end-September 2018 in relative terms given higher net external liabilities, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.
At $170.92 billion, external financial assets were smaller than external liabilities of $205.33 billion. The resulting $34.41-billion net liability was 20.5 percent higher compared to the $28.54 billion posted three months earlier but marginally eased — by 0.7 percent — from the $34.65 billion seen as of end-September last year.
On a quarter-on-quarter basis, the rise in total external financial liabilities was due to other investments (up 6.8 percent), foreign portfolio investments (3 percent) and foreign direct investments (2.2 percent).
“In particular, residents’ outstanding loans from non-resident creditors, outstanding intercompany borrowings from their non-resident-related parties, and outstanding non-residents’ investments in debt and equity securities issued by residents rose during the period,” the BSP said.
External financial assets, meanwhile, registered modest growth despite a $2.6-billion decline in the Bangko Sentral’s reserve assets.
“The decline in reserve assets was more than compensated by the $3.9-billion collective growth across other investments (6.8 percent), portfolio investments (6 percent), and direct investments (2.5 percent),” the central bank said.
Net IIP improved on a year-on-year basis as growth in external financial assets (1.8 percent) outpaced that of external financial liabilities (1.4 percent).
Under the IIP account, investments in the country are considered liabilities given that foreigners own the funds. They are assumed to cash in eventually and take their money out of the country.
Compared with accounts under the country’s overall balance of payments, which is a statistical statement that records the country’s transactions with the rest of the world for a given period, the IIP summarizes the country’s stock of financial claims and liabilities.
Similar to the payments balance’s financial accounts, assets and liabilities in the IIP are classified as direct investments, portfolio investments, financial derivatives and other investments.
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