External PH exposures up 137%, approaching P1T – Manila Bulletin
The country’s net external debtor position increased by 137.47% year-on-year to reach 998.8 billion pesos in the third quarter of 2021, more than double the 420.6 billion pesos in the same period of 2020, on the basis of the latest central bank balance sheet approach (BSA) report.
The Bangko Sentral ng Pilipinas (BSP) said net external liabilities increased “mainly due to the expansion of net external positions of non-financial corporations (NFCs) and general government (GG)”.
The BSP’s preliminary third quarter BSA report, which is a presentation of the country’s sector accounts on a who-to-who basis, also noted that external exposure has increased due to the continued increase in the debit position. net vis-à-vis the rest of the world (ROW).
The BSA analysis, developed by the International Monetary Fund, is considered by the BSP as a tool for monitoring financial stability to “better monitor the potential vulnerabilities of economic sectors and their relationships with each other”.
At the end of September 2021, the net liability position of NFCs increased by 17.1% year-on-year to P7.9 trillion due to increased net liabilities to other financial corporations (OFCs) and the rest of the world, the two sectors, as well as other filing companies. (ODCs), remained NFC’s main sources of funding, the BSP explained.
Against OFCs, the NFC net debit position increased 31% year-on-year to 2.5 trillion pesos, while against the rest of the world it increased 18.8% to 3.5 trillion pesos. The net debtor position of NFCs vis-à-vis ODCs remained stable at P1.6 trillion.
The BSP said the net debtor position of the GG increased by 24% year-on-year to P6.6 trillion and this was due to the higher funding needs of the national government amid the pandemic and the recovery of the economy. The GG’s net financial commitments to ODCs amounted to 45.7% and the ROW to 24.5%.
The central bank noted that GG’s gross liabilities increased by 25.1% to 12.7 trillion pula in the third quarter of last year. It said its indebtedness to ODCs and non-residents or the rest of the world increased by 31.6% to 3.9 trillion pesos and 24.3% to 3 trillion pesos, respectively.
The BSP also said that the GG’s debt security commitments increased by 20.3% to reach 10.3 trillion pesos. Liabilities in respect of debt securities are the main source of government financing with 81.1% of the total.
“The rise in GG debt securities was due to net issuances of government securities, which were purchased and reflected in higher debt holdings of ODCs (32.7%), non-residents (27.6 %) and BC (or central bank, 10.6 percent),” the BSP said.
The GG has an outstanding loan of 2.4 trillion pesos, 52.2% more than the 1.6 trillion pesos of the previous year. The increase was attributed to the GG’s higher lending from the central bank and the RoW.
The BSA report said the household sector or HHs was still the highest net creditor among domestic sectors with 10.1 trillion pesos, up 13.8% year-on-year. “The expansion of net financial claims of HHs was reflected in higher HH deposits with ODCs, holdings of equity and investment fund shares issued by OFCs, insurance technical reserves attributed to HH and currency holdings,” the BSP said.
Meanwhile, ODC net creditor position also increased by 17.1% year-on-year to P2.3 trillion in Q3 2021, while central bank net creditor position increased by 14.9% to reach 777.3 billion pula.
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