PH net IIP up 23.8%

The country’s net international investment position (IIP) rose by 23.8 percent year-on-year to $35.2 billion as of end-September, 2017 from $28.4 billion due to the increase in outstanding debt instruments held by foreign investors.

The IIP or the net external liability position on a quarterly basis also increased by 5.1 percent from end-June’s $33.5 billion, according to the Bangko Sentral ng Pilipinas.

The BSP noted a 4.1 percent growth in external financial liabilities as of end-September from the same period in 2016, versus the 0.7 percent increase in external financial assets. This is valued as $201.78 billion and $166.57 billion.

“The expansion in liabilities reflected the higher outstanding debt instruments held by non-resident affiliates (as foreign direct investments or FDI) and increased holdings by non-residents of equity securities issued by residents (foreign portfolio investments or FPI),” the BSP explained over the weekend.

In the meantime, loans extended by local banks to non-residents, direct investments in the form of equity capital, and portfolio investments abroad contributed to the growth in external assets.

For the 5.1 percent increase in IIP from end-September versus end-June, the BSP said this came from a 1.8 percent increase in total external financial liabilities for the period which outpaced the 1.1 percent growth in total external financial assets.

The stock of external financial liabilities during the quarter grew mainly on account of the four percent increase in FDI and the 1.5 percent growth in FPI.

“The build-up was reflective of the significant investment inflows and positive price revaluation of non-residents’ holdings of local equity capital and equity securities on the back of the country’s sustained positive economic performance and growth prospects,” said the BSP.

The BSP accounted for 48.6 percent of the country’s external financial claims, worth $81 billion. This is mostly the gross international reserves and half of these are residents’ total external financial assets. The rest are direct investments such as intercompany lending and equity capital placements.

The country’s total external financial liabilities to the rest of the world consisted mostly of non-residents’ holdings of equity securities issued by local corporations or 27.3 percent, nonresidents’ placements of equity capital in resident affiliates or 23.2 percent, and foreign loans extended by non-resident creditors or 20.3 percent, according to the BSP statement.

The IIP is a companion data to the quarterly BSP reporting of the balance of payments (BOP). “While the BOP is a statistical statement that records the country’s transactions or flows with the rest of the world for a given period, the IIP summarizes the country’s stock of financial claims on and financial liabilities to the rest of the world as of a specific reporting period,” the BSP said.