Phl Int’l Investment position continues to improve

MANILA, Philippines - The country’s International Investment Position (IIP) continued to improve amid the tepid growth in the global economy, a report released by the Bangko Sentral ng Pilipinas (BSP) showed.

The central bank said preliminary IIP data showed the country’s net external liability position declined 15.2 percent to $27.15 billion in end-September relative to its position of $27.15 billion at end-June.

This developed as total external financial assets inched up 1.2 percent to $166.91 billion in end-September from $164.89 billion in end-June, while external financial liabilities declined 1.5 percent to $194.06 billion from $196.92 billion.

The central bank said the improvement in the IIP reflected stronger balance of payments (BOP) position with a surplus of $1 billion in the third quarter.

IIP is a stock estimate of the country’s foreign financial assets and foreign financial liabilities outstanding as of a certain period while BOP is a summary of the economic transactions of the country with the rest of the world.

The increase in total external financial assets during the quarter was driven mainly by the 3.8 percent increase in direct investments, particularly residents’ net placements in equity and investment fund shares and debt instruments issued by non-resident affiliates.

Meanwhile, the country’s reserve assets inched up one percent from end June.

On the other hand, the BSP attributed the decline in external financial liabilities in the third quarter to the 1.4 percent decrease in loans as well as 18.1 percent drop in trade credits and advances.

Likewise, foreign portfolio investments or hot money decreased by 1.3 percent due mainly to the negative price revaluation of non-residents’ holdings of domestic equity securities as the Philippine Stock Exchange Index (PSEi) declined 2.1 percent during the quarter.

Across sectors, only the Bangko Sentral ng Pilipinas (BSP) exhibited a net external asset position of $85.47 billion as of end-September. It continued to account for the largest share of the Philippines’ total external financial claims on the rest of the world at 52 percent.

The BSP’s external financial assets increased one percent to $86.8 billion in end-September from $86 billion in end-June. The central bank’s gross international reserves also grew by one percent to reach $86.1 billion as of end-September due mainly to higher net foreign currency deposits by the national government, foreign exchange operations of the BSP, and income from the BSP’s investments abroad.

Meanwhile, the BSP reported other major sectors including deposit-taking corporations except the central bank, the general government, and other sectors posted net external liability positions as they remained net users of foreign resources.

The country’s total external financial liabilities to the rest of the world consisted mostly of non-residents’ investments in equity securities issued by local corporations accounting for 25.7 percent, non-residents’ placements of equity capital in resident affiliates with 23.2 percent, and residents’ availment of foreign loans with 22.5 percent.