PHL net liability position remains modest

It is the season for fruits again, rounded ones especially, as homes across the country prepare to welcome the New Year. Round shaped fruits, most households believe, are associated with plenty and prosperity. YUMMIE DINGDING

The country’s international investment position (IIP), or what’s left after so-called external financial liabilities are removed from its assets, improved in the quarter ending September 2019, the Bangko Sentral ng Pilipinas (BSP) said.

“The country’s IIP registers a lower net liability position of $33.9 billion as of end-September 2019 from $39.3 billion in end-June 2019,” the BSP said.

This translates to the third consecutive quarter improvement for this item since this stood at $42.2 billion at end-March against the $48.8 billion at end-December 2018.

According to the central bank, the 13.7 percent decline in the net external liability position was owed to the 2.1 percent growth in the country’s assets to $192.8 billion from only $188.8 billion a quarter earlier and a 0.7 percent decline in total external financial liabilities amounting to $226.7 billion.

“The increase in the country’s external financial assets during the quarter by $3.9 billion was underpinned by the expansion in all asset components led by residents’ portfolio (8.8 percent) and direct investments (1.3 percent) abroad,” the BSP said.

“The modest decline in total external financial liabilities by $1.5 billion at end-September 2019 was driven mainly by lower outstanding foreign portfolio investments (2.3 percent), particularly in equity securities issued by residents (5.9 percent),” it added.

On a sectoral basis, only the BSP registered as a net creditor with other major sectors remaining as net users of foreign resources. The central bank’s net external asset position stood at $84.5 billion in the third quarter period this year.

The BSP continued to hold the bulk of the country’s external financial assets and took the lion’s share of 44.5 percent followed by other sectors with 38.2 percent and banks at 17.2 percent.

“On the liabilities side, the other sectors accounted for about two-thirds or 64.4 percent of the country’s total external financial liabilities, which stood at $146 billion as of end-September 2019,” the central bank said.

“By type of instrument, the country’s total external outstanding financial liabilities to the rest of the world comprised of non-residents’ placements of equity capital in resident affiliates (23.1 percent), non-residents’ holdings of equity securities issued by local corporations (22.4 percent) and residents’ outstanding foreign loans (20.9 percent),” the BSP said.