Manila—(PHStocks)—Bangko Sentral ng Pilipinas (BSP)—The country’s net liability position decreased from $30.6 billion in end-December 2016 to $27.5 billion as of end-March 2017 following an increase (1.3 percent) in total external financial assets and a marginal decrease (0.5 percent) in external financial liabilities. The country’s net liability position improved notwithstanding the lingering volatility in the external environment and the uneven pace of growth in the global economy. Total external financial assets amounted to $164.7 billion, while external financial liabilities totaled $192.2 billion.
External financial assets increased by $2 billion from the year-ago level due primarily to the (a) $1 billion increase in direct investments, largely on account of placements of equity capital and positive price revaluation; (b) $545 million additional flows of portfolio investments which comprised mainly of residents’ holdings of long-term debt securities issued by non-residents; and (c) $369 million increase in other investments, stemming mostly from non-residents’ availment of loans from residents.
Meanwhile, the modest decline in total external financial liabilities was driven mainly by lower portfolio investments, particularly non-residents’ net holdings of debt securities issued by residents. This more than compensated for the increase in foreign direct investments (FDI) arising from non-residents’ investments in debt instruments issued by local affiliates and net equity capital inflows as well as stock price valuation adjustments, on the back of the country’s sustained positive economic performance and growth prospects.
All sectors registered improvements in their net external positions in end-March 2017. In terms of financial assets by sector, the BSP remained as the holder of the highest stock at 49.2 percent, amounting to $81 billion, slightly higher by $203 million than the stock recorded in end-December 2016.
By type of instrument, 49.1 percent of residents’ total external financial assets were reserve assets held by the BSP. Direct investments in the form of debt instruments (or intercompany borrowings) and equity capital placements in foreign affiliates accounted for 16.3 percent and 11.9 percent of total external financial assets, respectively.
Meanwhile, the Other Sectors accounted for almost two-thirds (64.9 percent) of the total external financial liabilities at $124.7 billion as of end-March 2017. These comprised mostly of non-residents’ placements in equity capital in local affiliates (32.6 percent), equity securities issued by local corporations (32.4 percent), and debt instruments issued by local affiliates to foreign affiliates (18.6 percent).
The country’s total external financial liabilities, by instrument, consisted mostly of non-residents’ holdings of equity securities issued by local corporations (26.0 percent), non-residents’ placements of equity capital in resident affiliates (22.7 percent), and residents’ availment of foreign loans (22.2 percent).