Philippines’ External Liabilities Increase to P2.3 Trillion
According to data from the Bangko Sentral ng Pilipinas (BSP), Philippines’ net external liability position has increased by 14.5 percent quarter-on-quarter to P2.3 trillion as of end-March this year. This is up from P2 trillion at the end of December. The increase is attributed to the government’s higher net indebtedness.
The BSP report states that the higher net external liability position of the general government, along with the lower net external asset position of other depository corporations (ODCs), contributed to the higher external exposures. The general government is now the largest net debtor in the country.
The government’s net financial liability position expanded by 3.8 percent quarter-on-quarter to P8.5 trillion in the first quarter, compared to P8.2 trillion in the last quarter of 2022. This is due to the government’s higher net indebtedness to the rest of the world, ODCs, and other financial corporations (OFCs). The increase in net debtor position to the rest of the world is a result of higher net issuances of government securities and higher net availment of loans.
The report also notes that most of the external exposures are in peso currency, so the general government is partly insulated from exchange rate fluctuations. However, the government’s liabilities-to-gross domestic product (GDP) ratio increased to 63.3 percent in the first quarter, as borrowings outpaced the growth of the economy in nominal terms.
On the other hand, the non-financial corporations’ (NFCs) net financial liability position decreased by 0.3 percent quarter-on-quarter to P8.45 trillion. This is due to the lower net debt against the rest of the world and ODCs. The NFCs’ liabilities-to-GDP ratio dropped to 87.5 percent.
The households remain as the top net creditor of the economy, with its net financial asset position increasing by 2.8 percent quarter-on-quarter to P12.2 trillion as of end-March. This is a result of the households’ investments in other financial corporations-issued equity and investment fund shares.
Meanwhile, the other depository corporations’ (ODCs) net creditor position declined by 8.4 percent quarter-on-quarter to P1.7 trillion. This is due to the decrease in the value of external and domestic assets. ODCs’ net debtor position to OFCs widened, while on an annual basis, the ODCs’ net asset position contracted.
Lastly, the central bank’s net creditor position declined by 2.6 percent quarter-on-quarter to P789.7 billion. This is attributed to the increase in government deposits from the higher proceeds of its government securities issuances in the first quarter.
The Balance Sheet Approach (BSA) statistics used in this report cover various sectors such as the general government, households, production-based institutions, banks, non-banks, insurance firms, money-market companies, and the central bank. The BSA provides a comprehensive view of the country’s sectoral accounts on a from whom-to-whom basis.
