By Lee C. Chipongian
The country’s net international investment position (IIP) improved in the first quarter of the year with external liability position falling to $34.1 billion as of end-March from $43.4 billion in December 2017, the Bangko Sentral ng Pilipinas (BSP) reported.
During the period, total financial liabilities stood at $205.9 billion, lower than end-December’s $214 billion and March 2017’s $192.53 billion.
The 21.3 percent improvement in net IPP came from the $8.1-billion contraction in financial liabilities, said the BSP, while financial assets position improving to $171.7 billion from $170.6 billion previously.
External financial liabilities ended up lower by 3.8 percent at the end of the first quarter mainly due to negative revaluation adjustments in the portfolio and direct investment accounts.
As of end-March, foreign portfolio investments (FPI) went down by 7.9 percent, while foreign direct investments (FDI) also fell by two percent. The BSP said the revaluation adjustments were seen affecting the Philippine Stock Exchange index during the period as shares dropped by 6.8 percent quarter-on-quarter. The continued weakness of the peso was also a factor.
The central bank, however, noted a small 0.6 percent increase in external financial assets which was “driven by the expansion in residents’ portfolio investments (by 10.1 percent) and direct investments (by 1.7 percent) abroad. These increases more than offset the 1.3 percent decline in reserve assets during the quarter.”
Data showed that net external liability position, on a year-on-year basis, increased by 14.9 percent to $29.7 billion.
The BSP explained that net IIP weakened as the total external liabilities grew by 6.9 percent, which exceeded the 5.5 percent growth in the total external assets. “The hefty accumulation of external liabilities was driven by the combined impact of investment inflows and positive revaluation adjustments, particularly in the FDI and FPI,” it said.
The BSP as a sector is still the sole net lender of resources to the rest of the world as of end-March with 47 percent of the country’s total external financial assets held by the BSP. This amounted to $80.7 billion of which $80.5 billion were official reserve assets.