The country’s preliminary IIP improved to a net external liability position of US$39.5 billion as of end-June 2019 from US$41.3 billion in end-March 2019. This development emanated primarily from the 2.7 percent increase in the country’s total external financial assets (or residents’ investments of financial assets with the rest of the world) from US$183.7 billion to US$188.6 billion, outpacing the 1.4 percent growth in total external financial liabilities (or investments of non-residents in the Philippines) from US$225 billion to US$228.1 billion.
The country’s total external financial assets grew mainly on account of the US$2.2 billion (9.4 percent) increase in residents’ other investments, specifically loans extended to non-residents. This was complemented by the US$1.4 billion (2.6 percent) additional direct investments and US$1.3 billion (1.6 percent) increase in the country’s reserve assets.
Likewise, the country’s external financial liabilities or non-residents’ investments increased, reflecting fresh investment inflows, as well as the appreciation of the peso against the US dollar during the quarter. In particular, foreign direct investments (FDI) rose by US$3 billion (3.4 percent) to reach US$89.6 billion as of end-June 2019 from US$86.6 billion in end-March 2019.
By sector, only the BSP registered a net external asset position, which stood at US$83.8 billion as of end-June 2019 due mainly to the increase in the country’s reserve assets. Meanwhile, the other major sectors � Deposit-taking Corporations (Banks except the BSP), General Government, and Other Sectors � remained net users of foreign resources as they posted net external liability positions as of end-quarter.
On the assets side, the BSP continued to register the largest share of the country’s total external claims on the rest of the world at 45.1 percent or US$85.1 billion as of end-June 2019. This was followed by Other Sectors at 38.2 percent (US$72 billion) and the Banks at 16.7 percent (US$31.5 billion).
By type of instrument, almost half (45 percent) of residents’ external financial assets were reserve assets held by the BSP as of end-June 2019 at US$84.9 billion. Direct investments in the form of debt instruments (or intercompany lending) and equity capital placements in foreign affiliates comprised 16.8 percent and 12.6 percent of the country’s total external assets, respectively. Other assets were mostly in the form of debt securities that were issued by non-residents (10.7 percent), residents’ holdings of foreign currency and deposits (7.1 percent), and outstanding loans extended to
non-residents (5.9 percent).
On the liabilities side, the Other Sectors accounted for the majority (65.7 percent) of the country’s total external financial liabilities as of end-June 2019 at US$150 billion. The General Government’s external liabilities totaled US$40.2 billion while the Banks’ amounted to US$36.6 billion, representing 17.6 percent and 16.1 percent of the country’s total external liabilities, respectively. Meanwhile, the BSP’s share of the country’s total external financial liabilities was a modest 0.6 percent, which stood at US$1.3 billion.
By type of instrument, the country’s total outstanding external financial liabilities as of end-June 2019 consisted largely of non-residents’ holdings of equity securities issued by local entities totaling US$54 billion (23.7 percent), non-residents’ placements of equity capital in resident affiliates at US$53.2 billion (23.3 percent), and residents’ availments of foreign loans amounting to US$46.8 billion (20.5 percent). Other external financial liabilities include non-residents’ investments in debt instruments issued by resident affiliates at US$36.4 billion (15.9 percent) and placements in debt securities issued by resident corporations at US$29.1 billion (12.8 percent).
The IIP is a companion framework to the 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. The stock also reflects the effect of exchange rate movements to account for the value of the financial asset/liability as of date of reporting. The assets and liabilities in the IIP are classified broadly as direct investments, portfolio investments and other investments.
Other Sectors cover private non-banks and public corporations except some Government-Owned and Controlled Corporations (GOCCs) which are considered as General Government.
Source: Bangko Sentral ng Pilipinas (BSP)