Philippine Net External Liabilities Down 7.4% in Q4 2024

The Philippines’ net external liability position improved in the fourth quarter of 2024, easing by 7.4 percent from PHP 3.8 trillion in the previous quarter to PHP 3.5 trillion.

This quarter-on-quarter progress was mainly driven by reduced liabilities of non-financial corporations and a shift by other depository corporations from net liability to net asset positions.

However, a drop in the Central Bank’s net external assets and increased liabilities by the general government partly offset these gains.

On a year-on-year basis, the country’s net liability position with the rest of the world rose sharply by 39.7 percent, from PHP 2.5 trillion in Q4 2023 to PHP 3.5 trillion in Q4 2024.

This annual increase was driven largely by the general government and non-financial corporations expanding their external liabilities.

The Central Bank helped moderate the rise through a stronger net external asset position.

Non-financial corporations saw their net financial liability position decrease by 2.5 percent quarter-on-quarter, from PHP 11.7 trillion to PHP 11.4 trillion.

This was attributed to increased foreign investments and deposits, as well as reduced foreign holdings of their equity and fund shares.

Still, their net debtor position grew 12.4 percent year-on-year due to increased borrowing and equity investments by nonresidents and other financial institutions.

The general government’s liabilities grew 5.2 percent quarter-on-quarter to PHP 10 trillion, driven by lower deposits and higher foreign loans, which now comprise 89.2 percent of total government debt.

Annually, the sector’s liability position increased by 16.1 percent, mainly due to expanded foreign and domestic holdings of government securities.

Households improved their net financial asset position by 4.1 percent quarter-on-quarter, reaching PHP 14.7 trillion, supported by higher currency holdings and investments in equities and pensions.

Annually, household assets grew 10.4 percent.

Other depository corporations posted a 10.3 percent increase in net financial assets, rising to PHP 1.5 trillion as the sector returned to a net external asset position through higher deposits and investments abroad.

Despite the quarterly gain, the sector’s annual position declined by 14.7 percent due to increased deposit liabilities.

The Bangko Sentral ng Pilipinas (BSP) maintained a stable net financial asset position at PHP 1.3 trillion, growing 1 percent quarter-on-quarter and 40.3 percent year-on-year, with gains driven by increased foreign repo agreements and domestic currency holdings.