PH's Net External Liability Position Eases, Quarter-on-Quarter

The country’s net external liability position eased by 3.6 percent quarter-on-quarter to P2.9 trillion in Q2 2024 from P3 trillion in Q1 2024 due to the higher net external asset position of the Central Bank. However, this was partially tempered by the increased net external liability position of the general government.

By sector, the general government’s net financial liability position grew by 3.4 percent quarter-on-quarter to P10.2 trillion from P9.9 trillion. This was driven by the additional financing provided by non-residents to the general government in the form of debt securities and loans, along with the decrease in the sector’s deposits with the Central Bank. Moreover, the other depository corporations’ holdings of government securities increased. On an annual basis, the general government’s net financial liability position rose as the government security holdings of the other depository corporations, the rest of the world, and the other financial corporations expanded. Similarly, the sector’s loans payable to non-residents grew.​

The non-financial corporations’ net financial liability position widened by 2.3 percent quarter-on-quarter to P9.8 trillion from P9.5 trillion. This resulted primarily from the rise in loans payable to the other depository corporations, coupled with the decrease in the sector’s deposits in the banking system. On a year-on-year basis, the non-financial corporations’ net financial liabilities expanded due to the rise in the sector’s loans payable to the rest of the world, alongside the decline in the sector’s holdings of debt securities issued by non-residents. Likewise, the sector’s loans payable to the other depository corporations grew. Meanwhile, issuances of equity and investment fund shares to the other financial corporations expanded.

The households’ net financial asset position rose by 1.3 percent quarter-on-quarter to P14 trillion from P13.8 trillion driven by the increase in the sector’s bank deposits. Similarly, the sector’s investments of equity and investment fund shares issued by the other financial corporations and the sector’s holdings of currencies issued by the Central Bank increased. On an annual basis, the households’ net financial asset position increased due to the sector’s higher bank deposits and increased investments in equity and investment fund shares, as well as insurance, pension and standardized guarantee schemes issued by the other financial corporations.

The other depository corporations’ net financial asset position increased by 12.7 percent quarter-on-quarter to P1.6 trillion from P1.4 trillion due to the rise in loans receivable from and lower deposit liabilities to the non-financial corporations. Additionally, the sector’s reverse repurchase agreements with the BSP and investments in government securities increased. In contrast, on a year-on-year perspective, the other depository corporations’ net financial asset position declined, resulting mainly from the growth in deposit liabilities to the households. However, this was partly offset by the other depository corporations’ higher holdings of BSP bills and government securities, as well as higher loans receivable from the non-financial corporations. 

The Central Bank’s net financial asset position expanded by 28.6 percent quarter-on-quarter to P1.2 trillion from P1 trillion driven mainly by the expansion of the Central Bank’s investments in debt securities issued by non-residents, as well as deposits with foreign banks. Additionally, the Central Bank’s deposit liabilities to the general government declined. On a year-on-year basis, the Central Bank’s net financial asset position widened due to the increase in the country’s gross international reserves and the decline in the general government’s deposits in the BSP.