The Philippines continues to attract massive foreign funds, with net investments and loans from other countries reaching $59.3 billion as of March 31, 2024, according to data from the Bangko Sentral ng Pilipinas (BSP).
The figure represents the country’s net international investment position (IIP), which is essentially its financial balance sheet with the rest of the world. The IIP reflects the difference between the Philippines’ holdings of foreign assets and foreign holdings of Philippine assets. These include foreign direct investments, foreign portfolio investments, loans and reserves.
A net IIP indicates that foreign entities are investing more in the Philippines than Filipinos are investing abroad.
By sector, the BSP holds about $104.8 billion in net foreign assets, while the government has net foreign debt of $82.3 billion. Foreign entities have net investments or loans of $4.3 billion in Philippine banks and $82.3 billion in local companies.
The BSP reported a 15.5-percent increase in the Philippines’ net IIP in the first quarter of 2024, compared to $51.3 billion in the fourth quarter of 2023. It’s also up from $47.12 billion in the first quarter of 2023.
The central bank attributed the quarter-on-quarter growth to a 3.8 percent expansion in the country’s external financial liabilities, outpacing the 1.3 percent growth in external financial assets. By the end of March 2024, total outstanding external financial liabilities reached $303.8 billion, while total outstanding external financial assets amounted to $244.5 billion.
The country’s total stock of external financial liabilities increased as of March 31, 2024, with all components except financial derivatives registering growth. Net foreign portfolio investment (FPI) rose 5.3 percent to $90.3 billion from $85.8 billion, due to investment inflows and positive price adjustments.
Meanwhile, net foreign direct investment (FDI) climbed 3.3 percent to $126.6 billion from $122.6 billion.
“The rise in net FDI and FPI reflects investor confidence in the Philippine economy, supported by the country’s growth and improved domestic inflation trends,” the BSP said. “Additionally, other investments, in the form of loans, increased by 3.0 percent to $74.7 billion from $72.5 billion, contributing to the rise in the country’s total external financial liabilities.”
Philippine investments abroad, or the stock of external financial assets, increased due to a rise in residents’ net portfolio investments, particularly in debt securities to $33.5 billion (up 7.0 percent from $31.3 billion) and direct investments in equity capital to $29.8 billion (up 2.1 percent from $29.2 billion) as of March 31, 2024.
On a year-to-year basis, the country’s net external liability position grew by 25.8 percent from $47.1 billion in March 2023. This is due to the 7.7 percent increase in total external financial liabilities from $282.1 billion, which outweighed the 4.0 percent growth in total external financial assets from $235.0 billion.
Total external financial liabilities grew 7.7 percent year-on-year, stemming from combined growth in net FDI (by 8.2 percent to $126.6 billion), other investments (by 12.4 percent to $86.6 billion), and net FPI (by 2.9 percent to $90.3 billion). Notably, nonresidents’ net investments in debt instruments and equity capital rose by 11.8 percent (to $64.3 billion from $57.6 billion) and 4.8 percent (to $62.3 billion from $59.4 billion), respectively. Residents’ net outstanding loans from nonresident creditors increased by 15.7 percent (to $74.7 billion from $64.5 billion).
Nonresidents’ net outstanding investments in portfolio debt securities rose by 4.5 percent (to $51.1 billion from $48.9 billion) as of March 31, 2024.
Meanwhile, the 4.0 percent annual growth in total external financial assets was primarily due to the 5.2 percent increase in residents’ net direct investments abroad (to $72.4 billion from $68.8 billion). The country’s reserve assets also rose by 2.5 percent (to $104.1 billion from $101.5 billion), reflecting mainly the national government’s net foreign currency deposits with the BSP, the BSP’s net income from foreign investments, the BSP’s net foreign exchange.