Philippines’ International Investment Position Improved for the Third Consecutive Quarter

The country's international investment position (IIP) registers a lower net liability position of US$33.9 billion as of end-September 2019 from US$39.3 billion in end-June 2019. The 13.7 percent decline in net external liability position resulted from the 2.1 percent growth in the country's total external financial assets (or residents' investments abroad) to US$192.8 billion, alongside a 0.7 percent decline in total external financial liabilities (or non-residents' investments in the Philippines) amounting to US$226.7 billion.

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

The modest decline in total external financial liabilities by US$1.5 billion in 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).

By sector, only the Bangko Sentral ng Pilipinas (BSP) remained a net creditor with a net external asset position of US$84.5 billion in end-September 2019. Meanwhile, the other major sectors remained net users of foreign resources.

On the assets side, the BSP continued to hold the highest stock of the country's external financial assets at 44.5 percent or US$85.8 billion in end-September 2019. This was followed by Other Sectors at 38.2 percent (US$73.7 billion) and the Banks at 17.2 percent (US$33.2 billion).

By type of instrument, almost half (44.4 percent) of residents' external financial assets were reserve assets held by the BSP at US$85.6 billion. Direct investments in the form of debt instruments (or intercompany lending) and equity capital placements in foreign affiliates accounted for 16.8 percent and 12.3 percent, respectively. The rest were residents' holdings of debt securities issued by non-residents (11.9 percent), currency and deposits abroad (6.7 percent), and other assets (7.9 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 US$146 billion as of end-September 2019. The General Government's external liabilities amounted to US$40.7 billion, while that of the Banks' reached US$38.7 billion, comprising 18 percent and 17.1 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 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 rest were in the form of non-residents' investments in debt instruments issued by resident affiliates (16.6 percent), holdings of debt securities issued by residents (13.4 percent), and other liabilities (3.6 percent).

Source: Bangko Sentral ng Pilipinas (BSP)