Philippines International investment position continues to improve

MANILA, Philippines – The country’s preliminary International Investment Position (IIP) continued to improve as total external financial assets increase while liabilities decline further, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Data released by the central bank showed the country’s net external liability position continued to improve to $29.34 billion in September last year from a net liability position of $38.43 billion in end June and $44.95 billion in end September 2014.

The BSP said the country’s total external financial liabilities continued to decline to $181.84 billion in end September last year from $190.12 billion in end June and from $186.77 billion in end September 2014.

On the other hand, the country’s total external financial assets increased to $152.49 billion in end September last year from $151.66 billion in end June and $141.82 billion in end September 2014.

The BSP said the decline in total external financial liabilities was mainly brought about by significant downward revaluation adjustments, particularly in non-residents’ investments in equity securities amid the weak performance of the Philippine Stock Exchange Index (PSEi).

The country’s stock market fell 8.9 percent to end-September 2015 from end-June.

In addition, the central bank said expectations on the US Federal Reserve rate increase toward the end of the year led to non-residents’ net withdrawal of their portfolio investments.

This was partly offset by an increase in loans extended by non-residents to resident banks and borrowings by corporations from their affiliates abroad.

On the other hand, the BSP said the slight increase in total external financial assets was due to residents’ direct and portfolio investments abroad, mostly in debt instruments and debt securities, respectively.

Across sectors, only the BSP recorded a net external asset position as of end-September 2015, due largely to its reserve assets amounting to $80.6 billion. Deposit-taking corporations except the central bank (banks), general government, and other sectors posted net external liability positions.

The BSP continued to hold the largest share with 53.3 percent of residents’ total claims on the rest of the world amounting to $81.3 billion as of end-September 2015, slightly lower than the $81.4 billion registered as of end-June 2015.

It added the other sectors’ $49.7 billion external financial assets, representing approximately one-third or 32.6 percent of the country’s total external financial assets, were up $1 billion from the $48.6 billion external financial assets recorded as of end-June 2015.