Int’l investment position yields net liability of $31.6B as of end-March — BSP

The country’s net international investment position (IIP) yielded a net liability of $31.6 billion as of end-March, according to data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday.

Data showed that the Philippines’ IIP net liability as of the first quarter of 2022 was 14.4% higher than the $27.6 billion recorded in December 2021.

The BSP defines IIP as a statistical statement that shows, at a point in time, the value of financial assets of residents of an economy that are claims on non-residents or are gold bullion held as reserve assets and the liabilities of residents of an economy to non-residents. 

The central bank explained that the difference between the assets and liabilities is the net position in the IIP and represents either a net claim on or a net liability to the rest of the world.

The higher net external liability position of the country resulted from “the decline in total external financial assets by 1.1%, coupled with the increase in total external financial liabilities by 0.5%," it said. 

The BSP said that as of March 31, 2022, total outstanding external financial assets amounted to $238.4 billion, while total outstanding external financial liabilities totaled $269.9 billion.

“The quarter-on-quarter contraction in the country’s total stock of external financial assets was due primarily to the decline in other investments by 7% (from $30.5 billion to $28.4 billion), resulting from residents’ net withdrawal of their currency and deposits in foreign banks and net repayment of loans by non-resident debtors,” the central bank said.

“In addition, the decrease in reserve assets by 1.4% from $108.8 billion to $107.3 billion as of end-March 2022 due mainly to valuation adjustments also contributed to the lower total outstanding external financial assets of the country during the review period,” it added.

Meanwhile, the BSP said that the slight increase in the country’s total stock of external financial liabilities during the quarter was due to the expansion in other investments by 3.3%, from $66.9 billion to $69.1 billion, following the increase in outstanding loans extended by non-resident creditors.

It added that the rise in foreign direct investments (FDI) by 1.8%, from $110 billion to $112 billion, on account of the upturn in net investments in debt instruments—which consists mainly of intercompany borrowing and lending between direct investors and their subsidiaries/affiliates—also supported the increase in the total outstanding external financial liabilities.

“However, the uptick in the country’s total outstanding external financial liabilities was muted partly by the 3% drop (from $91.4 billion to $88.6 billion) in foreign portfolio investments (FPI) due to revaluation losses,” the BSP said, noting that the downward revaluation in equity securities mirrored the drop in the Philippine Stock Exchange index (PSEi) from 7,180.73 points to 7,118.57 points in the first quarter of 2022.

On a year-on-year basis, the BSP said the country’s net liability position increased by 94.8% from $16.2 billion as total outstanding liabilities for the period increased by 9.8% from $245.9 billion, which outpaced the 3.8% growth in the total stock of financial assets from $229.7 billion.

“The surge in total external financial liabilities stemmed mainly from the growth in outstanding FDI in the form of debt instruments, foreign loans availed by residents, and non-residents’ holdings of equity securities issued by residents,” the central bank said. —VBL, GMA News