External PH exposures up to P1.5 T at the end of March – Manila Bulletin
The country’s net foreign liability position increased to P1.5 trillion in the first quarter, up 17.3 percent from P1.3 trillion in the fourth quarter of last year, based on the Bangko Sentral ng Pilipinas Balance Sheet Approach (BSA) report. (BSP).
On a yearly basis, the net external liability position increased by 115% from P714.5 billion in the same period of 2021.
The BSA, a financial stability monitoring tool, covers national government (NG), households, production-based institutions, all banks and non-banks, insurance companies, money market corporations and the BSP itself.
According to the report, the net external liabilities of general government (GG) and non-financial corporations (NFC) increased quarter on quarter. By sector, the BSP said households (HH) and financial corporations continued to be net creditors to the economy, while NFCs and GG were net debtors.
The year-on-year increase in the country’s external financial liabilities more than offset the growth in its external assets.
“In particular, external financial liabilities increased by 17.3% (from 11,900 billion pesos to 14,000 billion pesos) due to the increase in liabilities of NFCs and GGs of the ROW (rest of the world) “, according to the report.
As for external financial assets, they increased by 11.1% to reach 12,400 billion pesos at the end of March, against 11,200 billion pesos at the end of 2021, “the indebtedness of the national economy towards external creditors presenting itself mainly in the form of shares and shares of investment funds and loans. »
NFCs, which are both public and private institutional units engaged in the production of market goods and non-financial services, reported a net debtor position of P8.4 trillion in the first quarter, up 3.2% compared to the previous quarter of P8.2. trillion.
“The net debtor position of NFCs widened primarily due to increased net liabilities to ROW and other depository companies (ODCs). The net debit position of NFCs to ROW and ODCs widened mainly due to increased cross-border borrowing and contraction of NFC deposits with ODCs, respectively,” the BSP said.
The GG reported a net financial liability position of 6.8 trillion pesos during the period, down 0.5% from 6.9 trillion pesos in the last quarter of 2021.
“GG’s net financial liability position decreased slightly in the first quarter (Q1) 2022, mainly due to higher central bank (CB) and ODC deposits, which partly tempered the growth of its financial liabilities. GG’s gross liabilities increased due to increased obligations to BC, ODCs and ROW. GG’s liabilities were mainly in the form of government securities held primarily by ODCs and ROW” , said the BSP.
Meanwhile, the BSP said households were still the largest net creditor with a net financial position of 10.7 trillion pesos, up 2.4% from 10.5 trillion pesos in the previous quarter. .
“HHs remained the largest creditor among domestic sectors (and its expansion) stemmed from higher net claims on ODCs and OFCs,” the BSP said. The improvement in the net financing capacity of households is explained by the following elements: shares and shares in investment funds issued by the OFC; debt securities; and standard insurance, pension and warranty plans.
On the other hand, ODC’s net creditor position decreased during the quarter due to an increase in ODC’s gross financial liabilities which more than offset the growth of its financial assets, the BSP said.
The net creditor position of ODCs decreased by 9.5% to 2,000 billion pesos against 2,200 billion pesos in the last quarter of 2022. ODCs are banks and non-banking institutions, associations of savings and loans other than shares, money market funds and offshore banking units.
The BSA report is basically a presentation of the country’s sector accounts on a who-to-whom basis. It is developed by the International Monetary Fund and is considered by BSP primarily as a financial stability monitoring tool. “The BSA is also useful in identifying the possible emergence of a financial crisis, particularly those arising from asset-liability mismatches and growing balance sheet interconnections,” the BSP said.
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