PH int’l investment position improves in Q3
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Sun, 29 Dec 2019 16:10:41 +0000
THE Philippines’ international investment position (IIP) improved as of the third quarter in relative terms, as external assets grew amid lower liabilities, according to the Bangko Sentral ng Pilipinas (BSP).
In a report, the central bank said the IIP improved “as the net external liability position in end-September 2019 further declined to $33.9 billion from $39.3 billion in end-June 2019.”
The 13.7-percent decline in the net external liability position resulted from the 2.1-percent growth in the country’s total external financial assets (or residents’ investments abroad) to $192.8 billion, alongside a 0.7-percent decline in total external financial liabilities (or non-residents’ investments in the Philippines) amounting to $226.7 billion, it explained.
The BSP said the country’s external financial assets was underpinned by the expansion in all the asset components led by residents’ portfolio investments abroad (8.8 percent), particularly debt securities issued by non-residents.
“Residents’ direct investments abroad also rose by 1.3 percent as intercompany borrowings and equity capital placements increased,” the Bangko Sentral also noted.
The modest decline in total external financial liabilities, meanwhile, was driven mainly by lower outstanding foreign portfolio investments (2.3 percent), particularly in equity securities issued by residents (5.9 percent).
Year-on-year
On a year-on-year basis, the country’s net external liability position in end-September 2019 decreased by 3.2 percent from the $35 billion posted in the same period last year.
The BSP said improvement in the net IIP during the period was due mainly to the $22-billion expansion in external financial assets, which outpaced the $20.9 billion increase in external financial liabilities.
“The increase in assets stemmed largely from the 14.2-percent increase in reserve assets, followed by the 28.8-percent rise in portfolio investments, particularly debt instruments held by residents,” it highlighted.
On the other hand, the 10.1-percent growth in the country’s total external financial liabilities was due to the 12.7-percent increase in foreign direct investments, mainly equity capital placements.
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 in 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.