Philippines’ Net External Liability Position Reaches US$59.3 Billion as of End-March 2024

This development was driven by the 3.8 percent expansion in the country’s external financial liabilities, outpacing the 1.3 percent growth in external financial assets. As of end-March 2024, total outstanding external financial liabilities reached US$303.8 billion, while total outstanding external financial assets amounted to US$244.5 billion.

The country’s total stock of external financial liabilities as of end-March 2024 rose, as all components registered an increase, except for financial derivatives. Net foreign portfolio investment (FPI) increased by 5.3 percent to US$90.3 billion from US$85.8 billion, which was due to transaction inflows and positive price revaluations.² Moreover, net foreign direct investment (FDI) rose by 3.3 percent to US$126.6 billion from US$122.6 billion.

The expansion in net FDI and FPI reflects investor confidence in the Philippine economy on the back of the country’s growth and improved domestic inflation dynamics. Further, other investments, in the form of loans, rose by 3.0 percent to US$74.7 billion from US$72.5 billion, contributing to the rise in the total external financial liabilities of the country.

Likewise, the country’s total stock of external financial assets rose due to the increase in the residents’ net portfolio investments, particularly in debt securities to US$33.5 billion (by 7.0 percent from US$31.3 billion) and direct investments in equity capital to US$29.8 billion (by 2.1 percent from US$29.2 billion) as of end-March 2024

On a year-on-year basis, the country’s net external liability position expanded by 25.8 percent from US$47.1 billion in end-March 2023. This was on account of the 7.7 percent growth in total external financial liabilities from US$282.1 billion, which more than offset the 4.0 percent growth in total external financial assets from US$235.0 billion.

Total external financial liabilities grew by 7.7 percent year-on-year stemming from the collective growth in net FDI (by 8.2 percent to US$126.6 billion), other investments (by 12.4 percent to US$86.6 billion), and net FPI (by 2.9 percent to US$90.3 billion). In particular, nonresidents’ net investment in debt instruments as well as equity capital rose by 11.8 percent (to US$64.3 billion from US$57.6 billion) and 4.8 percent (to US$62.3 billion from US$59.4 billion), respectively.⁴ Residents’ net outstanding loans from nonresident creditors rose by 15.7 percent (to US$74.7 billion from US$64.5 billion). Further, nonresidents’ net outstanding investments in portfolio debt securities increased by 4.5 percent (to US$51.1 billion from US$48.9 billion) as of end-March 2024.

Meanwhile, the 4.0 percent annual growth in total external financial assets was mainly on account of the 5.2 percent increase in residents’ net direct investments abroad (to US$72.4 billion from US$68.8 billion).  The country’s reserve assets likewise rose by 2.5 percent (to US$104.1 billion from US$101.5 billion) reflecting mainly the National Government’s (NG) net foreign currency deposits with the BSP, BSP’s net income from its investments abroad, BSP’s net foreign exchange operations, and upward adjustments in the BSP’s gold holdings and foreign currency-denominated reserve assets, excluding gold. In addition, the residents’ net investments in portfolio investments grew by 6.8 percent (to US$39.3 billion from US$36.8 billion).⁵ 

External Financial Assets

The BSP continued to hold the largest share of the country’s total external financial assets at 44.4 percent, valued at US$108.6 billion as of end-March 2024. This level was 0.1 percent higher than the US$108.5 billion asset holdings registered in end-December 2023.  The Other Sectors accounted for 41.2 percent of the country’s outstanding external financial assets at US$100.9 billion.⁶ The Banks accounted for the remaining 14.3 percent of the country’s total external financial assets, amounting to US$35.1 billion.

External Financial Liabilities

The Other Sectors contributed the largest share to the country’s total external financial liabilities at 60.3 percent or equivalent to US$183.2 billion as of end-March 2024. This level was 3.2 percent higher than the end-December 2023 level of US$177.5 billion. The NG, likewise, recorded a 2.7 percent growth in its outstanding external financial liabilities to reach US$77.4 billion, which represents 25.5 percent of the Philippines’ total external financial liabilities. The Banks’ share accounted for 13.0 percent of the country’s total external financial liabilities at US$39.4 billion as of end-March 2024. Meanwhile, the BSP held a marginal portion or 1.3 percent of the country’s total external financial liabilities at US$3.8 billion, which were mostly in the form of Special Drawing Rights (SDRs).