External PH exposures up to P1.3 T – Manila Bulletin

The Philippines’ net external position rose to 1.3 trillion pesos in 2021, up 34.8 percent from 971 billion pesos in 2020, according to the central bank’s latest balance sheet approach report (BSA ), which is a financial stability monitoring tool.

Bangko Sentral ng Pilipinas (BSP) BSA report covers National Government (NG), Households, Production Based Institutions, All Banks and Non-Banks, Insurance Companies, Money Market Companies and BSP himself.

The BSA report is essentially a presentation of the country’s sector accounts on a who-to-whom basis. It is developed by the International Monetary Fund and is considered by BSP as a financial stability monitoring tool to “better monitor potential vulnerabilities of economic sectors and their relationships with each other”.

Based on the latest but preliminary BSA for the fourth quarter of 2021, the increase in net external debt was driven by growth in the net external debt positions of non-financial corporations (NFCs) and general government (GG).

NFCs, which are both public and private institutional units engaged in the production of market goods and non-financial services, posted a net debtor position of P8.2 trillion at the end of 2021, up 7.9% from compared to 7.6 trillion pula in the same period in 2020. .

The GG reported a net financial liability position of 6.9 trillion pesos last year, higher than 5.8 trillion pesos in 2020 due to government borrowing. GG includes the GN and other extrabudgetary units such as local governments and social security funds.

The BSP said that NFCs continued to show higher net borrowing from the rest of the world and other financial companies which are insurance companies, holding companies and government financial institutions.

The GG’s net financial liability position has also widened. Indeed, the NG has borrowed heavily from domestic and foreign sources to finance its socio-economic stimulus programs to combat the “widespread negative effects” of the still-unfolding pandemic, the BSP said.

Meanwhile, the BSP said households (HH) remain the country’s highest net creditor at 10.5 trillion pesos. This was 10.6% higher than the 9.5 trillion pesos in the same period in 2020.

HHs also showed improvements in savings and investments such as: increased deposits with other depository companies (ODCs); the expansion of household holdings of stocks and investment fund shares issued by other financial corporations; increase in insurance, pension and standard guarantee schemes allocated to HHs; and the accumulation of assets in national currency.

The BSP also noted the improvement in the net creditor position of ODCs due to the increase in its net financial assets with the GG and non-residents. BSP’s net creditor position has also widened due to the increase in net foreign assets.

ODCs are banks and non-banks, non-exchange savings and loan associations, money market funds and offshore banking units. Last year, ODC’s net creditor position increased by 9.1%, from 2 trillion pesos to 2.2 trillion pesos.

Meanwhile, BSP’s net creditor position also increased by 13.7% to reach 771.3 billion pesos in 2021, from 678.5 billion pesos.



Shirlene J. Manley