The Philippines remains a net lender of resources on the global stage rather than as net borrower based on the country’s international investment position (IIP).
According to the Bangko Sentral ng Pilipinas (BSP), the USD437 billion Southeast Asian economy posted a net IIP of USD65.5 billion as of December 2024, reflecting a 10.2 percent decrease from the previous quarter’s USD72.9 billion. The decrease traced to a 3.4 percent contraction in external financial liabilities, which outpaced a 1.4 percent drop in external financial assets.
As of December 2024, total external liabilities stood at USD318.2 billion, while external financial assets totaled USD252.7 billion. The decline in liabilities was mainly driven by an 8.2 percent decrease in foreign portfolio investments (FPI) and a 2 percent fall in foreign direct investments (FDI). FPI dropped significantly due to a 14.1 percent reduction in nonresident investments in local equity securities, influenced by global market uncertainties and political concerns, notably in the U.S. The drop in FDI was attributed to valuation adjustments in equity capital investments by nonresidents.
On the assets side, the Philippines’ external financial holdings contracted primarily due to a 5.7 percent reduction in reserve assets, which fell to US$106.3 billion. Furthermore, residents’ investments in debt instruments also saw a decline.
Year-on-year, the net external liability position increased by 29.0 percent from US$50.7 billion in December 2023, reflecting a rise in liabilities, particularly in portfolio debt securities, loans from foreign affiliates, and investments in debt instruments. However, external financial assets also grew by 4.2 percent, bolstered by increases in equity capital and debt securities investments abroad.
The BSP continues to hold the largest share of the country’s external financial assets, accounting for 43.9 percent, although its holdings declined by 5.9 percent in the last quarter of 2024. The Other Sectors and the banking sector contributed 40.9 percent and 15.2 percent, respectively, to total external financial assets.
The net liability position of the Philippines remains a key economic indicator, reflecting the nation’s external financial health and its exposure to global market fluctuations. It renders the country as a whole less vulnerable to the ebb and flow of such factors as the exchange rate, debt and investment levels, and trade.
