The country’s net external liability position stood at $51.317 billion as of end-December 2023, higher by 25.2 percent compared to $40.98 billion in 2022, based on Bangko Sentral ng Pilipinas (BSP) data.

The BSP in its latest preliminary international investment position (IIP) report said that the net external liability position went up on a year-on-year basis due to the increase in total external financial liabilities which amounted to $292.76 billion, and outpacing the growth in total external financial assets of $241.444 billion.

The central bank noted that total external financial liabilities grew by 8.3 percent year-on-year because of the collective growth in the following: the other investments increased by 13.4 percent to $84.1 billion; foreign direct investments (FDI) rose by 8.2 percent to $122.6 billion; and foreign portfolio investments (FPI) increased by four percent to $85.8 billion.

“The expansion in FDI and FPI reflects investor confidence in the Philippine economy on the back of the country’s growth and improved domestic inflation dynamics,” said the BSP.

The IIP is a companion framework or data to the balance of payments statistics reported monthly.

As defined by the BSP using International Monetary Fund (IMF) description, the IIP is a statistical statement that shows at a point in time the value of financial assets of residents of an economy that are claims on non-residents or are gold bullion held as reserve assets and the liabilities of residents of an economy to non-residents. The difference between the assets and liabilities is the net position in the IIP which represents either a net claim on or a net liability to the rest of the world.

Meanwhile, the 5.3 percent growth in total external financial assets was mainly on account of the increase in the country’s reserve assets to $103.8 billion from $96.1 billion combined with the increase in residents’ net direct investments abroad, both in the form of debt instruments and equity capital, said the BSP.

On a quarter-on-quarter basis, the country’s net external liability position increased by 8.1 percent from $47.464 billion in end-September 2023. “This development was driven by the 4.9 percent expansion in the country’s external financial liabilities, outpacing the 4.3 percent growth in external financial assets,” noted the BSP.

The central bank likewise stated that the increase in the country’s external financial assets last year was driven mainly by the accumulation of reserves assets which totaled $103.8 billion versus $98.1 billion as of end-September 2023.

In terms of external financial assets, the BSP continued to hold the biggest share of total external financial claims on the rest of the world at 44.9 percent or $108.5 billion at the end of 2023.

The other sectors which refer to other financial corporations such as insurance and holding firms, accounted for 41 percent or $99 billion of the country’s outstanding external financial assets while banks have the remaining 14.1 percent or $33.9 billion of the country’s total external financial assets.

As for external financial liabilities, the BSP said the other sectors accounted for 60.6 percent or $177.5 billion of the country’s total external financial liabilities. The government has 25.7 percent or $75.4 billion while banks accounted for 12.3 percent or $36 billion.

The BSP, on the other hand, has 1.3 percent of the country’s total external financial liabilities worth $3.8 billion. These are mostly in the form of special drawing rights of the IMF.