The Philippines’ international investment position (IIP) recorded a $20.2-billion net external liability at the end of 2020, according to the Bangko Sentral ng Pilipinas (BSP).
In a report released on Wednesday night, the central bank said the latest amount accelerated by 90.3 percent from the $10.6 billion registered in end-September of last year.
The quarter-on-quarter rise was driven mainly by the 10.6-percent surge in the country’s total external financial liabilities to $254 billion, which outpaced the 6.8- percent uptick in total external financial assets to $233.9 billion.
“The country’s total external financial liabilities as of end-December 2020 rose, as all components registered increases stemming from continued transaction inflows coupled with positive revaluation adjustments,” the BSP said.
In particular, outstanding foreign portfolio investments (FPI) expanded by 18.9 percent to hit $88.9 billion “on account of the significant bond issuances by the national government amid strong investor interest.” Foreign direct investments (FDI) also increased by 7.1 percent to $103.2 billion.
“Positive revaluation adjustments in FPI and FDI reflected the appreciation of the Philippine peso and the slight rebound of the Philippine Stock Exchange index during the quarter on the back of improved economic sentiment, following news on the global roll out of vaccines against Covid-19 (coronavirus disease 2019) and gradual reopening of the economies,” the Bangko Sentral added.
Other investments also inched up by 5.7 percent to $61.2 billion from $57.9 billion as of end-September 2020, “driven largely by the increase in the outstanding foreign loans of banks.”
“Likewise, outstanding NG (national government) loans rose due to borrowings for Covid-19 pandemic response programs and various infrastructure projects,” the central bank said.
Meanwhile, the improvement in the country’s total external financial assets was supported by the 9.6 percent jump in international reserve assets, to reach $110.1 billion as of end-December 2020 from $100.4 billion as of end-September.
Also, the 5.3-percent pickup in residents’ direct investments to $64 billion, and portfolio investments’ 4.7-percent rise to $29.1 billion, contributed to the surge in the financial assets during the period, the BSP added.
On a year-on-year basis, the country’s net external liability position as of end-December 2020 was smaller by 47.9 percent than the $38.8 billion posted a year ago.
“This resulted as the growth in the country’s external financial assets at 19.6 percent outpaced that of external financial liabilities at 8.4 percent,” the Bangko Sentral said.
The acceleration in the external financial assets mirrored the pick up in assets across all sectors, led by the central bank. This was followed by other sectors and deposit-taking corporations, except the central bank (banks).
Meanwhile, the 8.4-percent rise in the country’s total external financial liabilities year-on-year “was due primarily to the NG’s foreign borrowings in the form of issuance of debt securities (portfolio investments) and foreign loans (other investments) as well as non- residents’ direct and other investments in the other sectors,” the BSP added.
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.