Philippines registered an improvement in its International Investment Position
The Philippines registered an improvement in its International Investment Position (IIP) in end-2008 amid the risk aversion due to the global slowdown.
Initial Bangko Sentral ng Pilipinas (BSP) data show that the country’s IIP at the end of last year stood at net liability of US$ 26.9 billion, better than the previous year’s net liability position of US$ 28.5 billion.
“This came about as the decline in total external financial liabilities compensated for the slight drop in total external financial assets,” BSP said in a report.
BSP said the country’s total external financial assets from the rest of the world totaled to US$ 65.1 billion as of end-December 2008, an improvement of 2.6 percent compared to year-ago’s US$ 66.8 billion.
Also, the country’s total external financial liabilities dropped by 3.6 percent to US$ 92 billion during the same period from the US$ 95.37 billion in end-December 2007.
“The meager improvement in the IPP reflected the weaker external payments position in 2008, as the BOP yielded a surplus of US$ 89 million, markedly lower than the US$ 8.6 billion surplus realized in 2007,” the report said.
BOP is the summary of an economy’s transactions with the rest of the world while IIP is an information of the country’s stock of financial claims on and financial liabilities to the rest of the world in a given period.
BSP said that by sector the central bank and the banks continue to be in net external asset position at end-2008 after registering a US$ 35.8 billion and US$ 2.4 billion asset position, respectively.
BSP’s net external asset position improved by 6.9 percent at end of last year from year-ago’s US$ 33.5 billion.
The report said increase in the central bank’s total foreign assets was due to the continued build-up of its gross international reserves composed mostly of foreign government debt securities and other assets like monetary gold, Reserves Position in the Fund, and holdings of Special Drawing Rights, the last two of which pertain to contribution and currency holdings, respectively, to the International Monetary Fund.
“Ample foreign exchange liquidity during the first half of the year allowed the BSP to build up its reserves level as a buffer against external shocks, given increasing global commodity prices up to the third quarter of the year and the recessionary pressure in advanced economies,” the central bank report said.
On the other hand, bank’s net external asset position went down by 31.1 percent from year-ago’s US$ 3.53 billion “as banks used part of their asset holdings to repay their foreign loans, as well as their issuance of debt securities.”
Relatively, the General Government and the Other Sector continue to be net users of foreign funds after these registered net liability positions of US$ 30 billion and US$ 35.1 billion, respectively last year.
In 2007, the General Government’s net liability positions stood at US$ 29.3 billion while the Other Sector, which consists of private non-banks and public corporations, was at US$ 36.24 billion.
