The country’s external financial landscape showed mixed signals in 2Q 2024, with a 3.6 percent quarter-on-quarter easing in its net external liability position to P2.9 trillion, down from P3 trillion in 1Q 2024. This improvement was largely driven by an increase in the Bangko Sentral ng Pilipinas’ (BSP) net external asset position. However, the reduction was partially offset by a rise in the net external liabilities of the general government and non-financial corporations, signaling ongoing debt pressures.
The general government’s net financial liabilities grew by 3.4 percent quarter-on-quarter to P10.2 trillion, up from P9.9 trillion. This arose from increased debt issuances to non-residents, including loans and debt securities, as well as a decline in government deposits with the BSP. Annually, the general government’s liabilities expanded further, driven by higher holdings of government securities by the financial sector and loans payable to foreign creditors.
Non-financial corporations also saw an uptick in liabilities, with their net financial obligations widening by 2.3 percent quarter-on-quarter to P9.8 trillion. This was primarily due to higher loans from local depository corporations and a reduction in their bank deposits. On an annual basis, this sector’s debt exposure increased due to growing loans payable to non-residents.
On a more positive note, households saw a 1.3 percent quarter-on-quarter increase in their net financial assets, now standing at P14 trillion. This growth was fueled by higher bank deposits and investments in equity and investment fund shares. Year-on-year, household assets rose thanks to increased savings and investments, reflecting solid consumer financial health.
The BSP’s net financial assets expanded significantly by 28.6 percent to P1.2 trillion, bolstered by increased investments in foreign debt securities and higher deposits with foreign banks. On an annual basis, the BSP’s strong position was supported by rising gross international reserves and a reduction in the general government’s deposits with the central bank.
The other depository corporations (ODCs) saw a notable 12.7 percent quarter-on-quarter increase in their net financial assets, reaching P1.6 trillion. This was driven by a rise in loans receivable from non-financial corporations and higher investments in government securities. However, on a yearly basis, their net financial position declined due to increased deposit liabilities to households, despite growing investments in BSP bills and government securities.
In conclusion, while the easing of external liabilities points to some stabilization, the growing debt levels of the government and corporations underscore ongoing fiscal challenges. The increase in household assets and the BSP’s strong financial position, however, provide a buffer against these pressures.
