PH’s net external liabilities fall 24%

The external exposure of the local economy as a net position of external liabilities was better in the last quarter of 2019 with P1.7 trillion or 24 percent less than P2.2 trillion in 2018, said Bangko Sentral ng Pilipinas (BSP) in its first Stock of the Philippines. Focus Report (BSA).

The BSP said that the 24 percent improvement in the country’s net debt position vis-à-vis the rest of the world (ROW) was due to the growth of the economy’s external financial assets, which rose 9.8 percent in the fourth quarter. from 2019 to P10.2 trillion from P9. 0.3 trillion and outpacing the 3.3 percent expansion in external liability growth of P11.9 trillion from P11.5 trillion.

In terms of net financial position, the BSP said that the household sector had the highest net financial asset position at P8.1 trillion from P7.4 trillion from the previous year due to “sustained accumulation of deposits”.

Meanwhile, the other depository corporations had P1.6 trillion compared to P1.3 trillion a year ago, mostly deposits with the central bank and loans granted to non-financial corporations (NFCs).

The net financial asset positions of BSP and other financial corporations fell to P583.6 billion last year from P680.4 billion in 2018, and P490.2 billion from P578.7 billion, respectively. NFC net debtors and the general government got P7.7 billion and P4.7 billion in 2019 compared to P8.1 billion and P4.2 billion in 2018.

Regarding the position of gross financial assets, the BSP said that financial assets of 57.7 trillion pesos were 8.9 percent higher compared to 53 trillion pesos in 2018. These are made up of cash and deposits, loans, debt securities and shares and mutual fund shares.

Financial liabilities, on the other hand, increased 7.6 percent year-on-year to 59.4 trillion pesos from 55.2 trillion pesos.

The BSP said that the BSA represents the Philippine sectoral accounts on a who to whom basis and was developed by the International Monetary Fund (IMF).

He said the report is useful to “identify the possible emergence of a financial crisis, specifically those that arise from mismatches between assets and liabilities and increased interrelationships between balance sheets.”

“It is a financial stability monitoring tool developed by the IMF that is used to better monitor the potential vulnerabilities of economic sectors and their relationships with each other,” said the BSP.