Philippines still a net borrower as of end - June

MANILA, Philippines — The Philippines remains a net borrower despite the 16.2 percent decline in its international investment position (IIP) to $28.4 billion in the second quarter of the year from $33.87 billion in the first quarter, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend.

The IIP is a nation’s stock of foreign assets minus its foreign liabilities. In the case of the Philippines, the country’s foreign liabilities continue to exceed its foreign assets.

Preliminary data showed a 3.7 percent decline in financial liabilities to $198.2 billion in end June from $205.88 billion in end-March due mainly to the revaluation adjustments, particularly in direct and portfolio equity instruments.

The BSP said the negative revaluation adjustments mirrored the 9.9 percent quarter-on-quarter dip in the Philippine Stock Exchange Index to 7,193.68 in end-June.

The central bank also said the continued depreciation of the peso against the US dollar contributed partly to the decrease in financial liabilities as peso-denominated instruments posted lower US dollar equivalents.

“These negative revaluation adjustments more than offset the continued inflows of foreign direct investments to the economy during the quarter,” it added.

On the other hand, the BSP said the country’s financial assets decreased 1.2 percent to $169.85 billion in end-June from $172.01 billion in end-March reflecting the $3 billion decline in the central bank’s reserves as it continues to smoothen the volatility of the peso.

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 of the year.

The BSP recorded a net external asset position amounting to $76.4 billion as of end-June, albeit lower than the previous quarter’s level at $79.3 billion due mainly to the drop in reserve assets that accounted for 99.8 percent of the total.

On the other hand, the national government yielded a net external liability position of $35.8 billion as of end-June, 2.3 percent lower than the $36.7 billion recorded in end-March due mainly to lower outstanding loans and bond issuances by the national government in the second quarter.

Likewise, the central bank also continued to account for almost half or $77.7 billion of the country’s total financial assets. This was, however, lower by 3.7 percent than the previous quarter’s level due to the $3 billion reduction in the GIR level.

The other sectors accounted for the second largest share at 38.7 percent or $65.7 billion, 1.9 percent higher than the previous quarter, due mainly to local corporates’ higher holdings of foreign-issued debt securities and placements of currency and deposits abroad.