The country’s external financial footprint expanded further in the second quarter, with the Bangko Sentral ng Pilipinas (BSP) reporting that stronger inflows of foreign capital drove the Philippines’ net international investment position (IIP) deeper into deficit.
The IIP, which tracks the value of foreign financial assets and liabilities at a given point in time, showed the Philippines holding a net external liability of $68.3 billion as of end-June. This was up by 44.1 percent from $47.4 billion a year earlier and 9.8 percent higher than the $62.2 billion posted in March.
‘The increase was driven by inward foreign investments outpacing the country’s own investments abroad,’ the BSP said in a statement.
As of June, foreign investments in Philippine assets climbed by 2.7 percent quarter-on-quarter to $325.2 billion, while Philippine residents’ investments in overseas assets grew at a slower pace of 0.9 percent to $256.9 billion.
According to the BSP, the IIP is an important gauge of the economy’s financial ties with the rest of the world, serving as a measure of both external vulnerability and resilience.
By sector, general government borrowings accounted for $88.4 billion or 27.2 percent of total foreign investments in Philippine assets, while banks held $42.5 billion (13.1 percent).
Other sectors, including corporations and households, cornered the largest share at $190.4 billion (58.6 percent). The BSP itself carried $3.9 billion, or 1.2 percent.
Meanwhile, Philippine investments abroad were largely driven by the central bank, which held $111.2 billion or 43.3 percent of total foreign assets. This was a 0.2-percent decrease from the end-March level of $111.4 billion.
‘The moderation was driven by a 0.6 percent decline in reserve assets, which constitute the majority of the BSP’s external financial holdings,’ the BSP said.
The slight decrease in reserve assets was due to the government’s drawdowns on its deposits with the BSP to service external debt obligations and central bank’s net foreign exchange operations.
Other sectors followed with $105.5 billion (41.1 percent), while banks accounted for $40.2 billion (15.7 percent).