The country’s net external liability position widened by 14.5 percent quarter-on-quarter to P2.3 trillion in Q1 2023 from P2 trillion in Q4 2022 due to the higher net external liability position of the general government and the lower net external asset position of the other depository corporations.
By sector, the general government became the largest net debtor as its net financial liability position widened by 3.8 percent quarter-on-quarter to P8.5 trillion in Q1 2023 from P8.2 trillion in Q4 2022 due to the sector’s higher net indebtedness to the rest of the world, the other depository corporations, and the other financial corporations.
The general government’s net debtor position to the rest of the world increased due to a) higher net issuances of government securities and b) higher net availment of loans from the rest of the world.
Meanwhile, the general government’s net debtor position to the other depository corporations and the other financial corporations expanded due to the increased net issuances of government securities to these counterparty sectors.
The general government remained partly insulated from exchange rate fluctuations as majority of its liabilities were denominated in domestic currency.
In Q1 2023, the general government’s liabilities-to-gross domestic product ratio increased to 63.3 percent as the growth in the general government’s level of borrowings outpaced the growth of the economy in nominal terms.
Year-on-year, the general government’s net financial liability position expanded as the rest of the world, other financial corporations, and other depository corporations increased their government security holdings.
The non-financial corporations’ net financial liability position slightly declined by 0.3 percent quarter-on-quarter to P8.45 trillion in Q1 2023 from P8.48 trillion in Q4 2022 due to the sector’s lower net debt against the rest of the world and the other depository corporations.
The non-financial corporations’ net external debtor position decreased due to the rest of the world’s lower investments in non-financial corporations-issued equity and investment fund shares.
Similarly, the sector’s net debt to the other depository corporations decreased driven mainly by the decline in its outstanding loans owed to the other depository corporations.
In Q1 2023, the sector’s liabilities-to-gross domestic product ratio dropped to 87.5 percent amid the decline in the non-financial corporations’ liabilities.
Year-on-year, the non-financial corporations’ net liability position widened due to the rise in the net availment of bank loans to sustain their operations amid the continued improvement in the customers’ economic prospects.
The households continued to be the top net creditor of the economy as its net financial asset position increased by 2.8 percent quarter-on-quarter to P12.2 trillion in Q1 2023 from P11.9 trillion in Q4 2022.
This resulted from the increase in the households’ investments in other financial corporations-issued equity and investment fund shares.
Amid the steady increase in the households’ gross financial assets, the sector’s gross financial liabilities grew year-on-year by 11.2 percent – the highest recorded since the onset of the pandemic in Q1 2020.
This coincided with the steeper increase in the prices of goods and services as headline inflation accelerated to 8.3 percent in Q1 2023.
The other depository corporations’ net creditor position declined by 8.4 percent quarter-on-quarter to P1.7 trillion in Q1 2023 from P1.9 trillion in Q4 2022.
Both the value of the external assets (i.e., deposits abroad and loans to non-residents) and the domestic assets (i.e., deposit placements with the central bank) of the other depository corporations decreased quarter-on-quarter.
Meanwhile, the other depository corporations’ net debtor position to the other financial corporations widened as the other financial corporations’ deposits in banks and holdings of other depository corporations-issued equity securities increased. On an annual basis, the other depository corporations’ net asset position contracted driven mainly by the higher deposits from the households and the other financial corporations.
The central bank’s net creditor position contracted by 2.6 percent quarter-on-quarter to P789.7 billion in Q1 2023 from P811.1 billion in Q4 2022. This resulted from the increase in the general government’s deposits, which rose on the back of higher proceeds from its issuances of government securities in Q1 2023.
Year-on-year, the central bank’s net financial asset position grew, which stemmed from the substantial decline in the national government’s deposits with the central bank.
For more details, the Q1 2023 Philippine Balance Sheet Approach report and statistical tables may be accessed through the following links:
https://www.bsp.gov.ph/Media_And_Research/Media Releases/2023_10/BSA Q1 2023 Report.pdf
http://www.bsp.gov.ph/Media_And_Research/Media Releases/2023_10/news-10122023a2.xlsx
