Global jitters push up Phl external liabilities

MANILA, Philippines -  The country’s external liabilities went up 8.1 percent in 2016 due to uncertainties arising from the uneven pace of growth in the global economy, the Bangko Sentral ng Pilipinas (BSP) reported.

Data released by the central bank showed the net liability position of the Philippines amounted to $30.6 billion in end-December last year, from $28.3 billion in end-2015.

The higher net external liability position, the BSP said, was brought about by the 5.4 percent or $9.9 billion uptick in total external financial liabilities, more than the increase in total external financial assets of 4.9 percent or $7.6 billion.

“The expansion in total external financial liabilities was due mainly to the increase in non-residents’ investments in equity securities (portfolio investments) and debt instruments (direct investments),” it added.

The BSP explained all components of external financial assets exhibited increases, notably residents’ direct investments and other investments, particularly loans and currency and deposits.

Likewise, the BSP said the country’s net liability position in December was 14.2 percent or $3.8 billion higher than the end-September level of $26.8 billion.

The higher shortfall in the country’s International Investment Position (IIP) relative to the end-September 2016 level stemmed from the 2.7 percent decline in total external financial assets, which more than offset the 0.3 percent drop in external financial liabilities.

The drop in external financial assets was due mainly to lower reserve assets held by the BSP resulting from both revaluation adjustments and changes due to actual transactions. 

Meanwhile, the BSP added external financial liabilities declined despite continued inflows arising from investment flows into the economy mainly on account of valuation adjustments to reflect exchange rate movements and changes in market prices.

The BSP continued to account for the largest share of the Philippines’ total external financial claims on the rest of the world at 49.6 percent.  Its external financial assets declined seven percent to $80.8 billion in end-December from the end-September level of $86.8 billion.

By type of instrument, almost half or 49.6 percent of residents’ total external financial assets were reserve assets held by the BSP.

Intercompany lending and equity capital issued by non-resident affiliates accounted for 16.4 percent and 11.5 percent, respectively.

In terms of external financial liabilities, the other sectors contributed 64.3 percent or $124.3 billion consisting of equity securities issued by local corporations, non-residents’ placements of equity capital in local affiliates, and residents’ availment of foreign loans.