External PH exposure reaches P1 T – Manila Newsletter

The Philippines’ net international investment position increased 19.2% to 1,000 billion pesos in the first half of 2021, compared to 873.6 billion pesos in the same period last year, thanks to the increase in net foreign liabilities government, said the Bangko Sentral ng Pilipinas (BSP). .

BSP’s second quarter Philippine Balance Sheet Approach (BSA) report noted that external exposures increased due to “the increase in the country’s net debt position relative to the rest of the world (ROW)” which was ” mainly driven by the expansion of the liabilities of general government (GG) and non-financial corporations (SNF).

The BSA report, which helps the BSP detect the financial crisis by assessing asset-liability mismatches, found that the GG’s net debt position rose 19.6 percent to 6.1 trillion pesos this year, from 5 , 1 trillion pesos at the same time in 2020.

“This is due to the double-digit growth in the GG’s net financial liabilities vis-à-vis ROW, other deposit-taking institutions and the Central Bank (CB),” BSP said.

The government’s gross liabilities stood at 11.9 trillion pesos compared to 9.9 trillion pesos last year due to increased security commitments. Its outstanding loans also increased by 27.3%, from 1.8 trillion pesos to 2.3 trillion pesos.

BSP said loans to ROW increased 21.3 percent year-on-year to 1.4 trillion pesos from 1.2 trillion pesos, while loans owed to CB increased 60.6 percent to 608.4 billion pesos against 378.7 billion pesos. As part of the pandemic response, PASB has provided interim advances to the national government.

Another key feature of the BSA is the net debt position of NFCs, which also increased 3.8 percent to 7.5 trillion pesos from 7.2 trillion pesos last year.

As for the household sector (HHs), the BSP said it had the highest net financial asset position at 9.7 trillion pesos, 10.2% more than the 8.8 trillion pesos of the previous year, due to higher household net claims on financial corporations. “This is explained by the higher deposits of HHs with ODCs, the greater investments in equities and investment fund shares of other financial companies (OFC), the higher technical insurance reserves attributed to the HH and increasing foreign currency holdings, ”BSP said.

The BSP also reported that the net credit position of ODCs increased 18.9% to 2.1 trillion pesos in the second quarter from 1.8 trillion pesos in the same period in 2020 due to larger net claims of ODCs. on the CB and GG, which rose 23 percent to 3.8 trillion pesos and 34.6 percent to 1.9 trillion pesos, respectively.

The BC’s net debt position, meanwhile, fell 2.3 percent to 590.1 billion pesos from 603.8 billion pesos last year, the BSP said.

The BSA analysis that has been developed by the International Monetary Fund is the country’s sectoral accounts “on a who-to-whom basis using aggregate balance sheet data from each sector of the economy”.

The BSP said the report is primarily a financial stability monitoring tool to “better monitor potential vulnerabilities of economic sectors and their relationships with each other.”


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Shirlene J. Manley