PH’s int’l investment position better in Q3

The Philippines’ international investment position (IIP) improved in the third quarter of 2020 on the back of financial asset growth, according to the Bangko Sentral ng Pilipinas (BSP).

In a report, the central bank said the country’s IIP posted a net external liability position of $4.77 billion at end-September, down 64.9 percent from $13.58 billion at end-June.

“The steep decline in the net external liability position quarter-on-quarter was supported mainly by the 6.3-percent growth in the country’s total financial assets (or residents’ outstanding claims on nonresidents) to $222.9 billion,” the BSP explained.

This growth, it said, “more than offset the 2-percent increase in the total external financial liabilities (or nonresidents’ outstanding claims on Philippine residents) to $227.7 billion.”

The Bangko Sentral credited the asset increase to the buildup of international reserve assets, which climbed by 7.5 percent to $100.4 billion as of the third quarter from $93.5 billion three months earlier.

It said the 13.5-percent increase in residents’ portfolio investments, particularly in debt securities issued by nonresidents, supported the asset expansion.

Residents’ direct investments and other investments abroad gained 3.2 percent and 3.1 percent, respectively, in July to September.

Meanwhile, the BSP traced the growth in liabilities to other investments accelerating by 4.8 percent quarter-on-quarter to $57.9 billion from $55.3 billion.

“These were driven largely by the national government’s (NG) foreign borrowings (in the form of loan availments) as budgetary support to finance its Covid-19 (coronavirus disease 2019) pandemic response programs, as well as various infrastructure projects,” it explained.

Foreign direct investments and foreign portfolio investments also expanded to $95.2 billion and $73.9 billion, respectively, in the period.

“Positive revaluation adjustments on the NG’s foreign borrowings, in the form of loans and debt securities due to the weakening of the US dollar against other currencies during the quarter, likewise contributed to the increase in the country’s external liabilities,” the central bank said.

Year-on-year, the country’s net external liability position eased by 86.2 percent from $34.70 billion after external financial assets grew by 15.3 percent and liabilities dipped by 0.2 percent.

According to the BSP, the improvement in the IIP reflects the country’s $2.8-billion balance of payments surplus in the third quarter.

The IIP is a statistical statement that shows at a point in time the value of financial assets of the residents of an economy that are claims on nonresidents or are gold bullion held as reserve assets; and the liabilities of residents of an economy to nonresidents.

The difference between the assets and liabilities is the net position in the IIP and represents either a net claim on or net liability to the rest of the world.