Category : Press Release
Date : December 28, 2020
Agency : Bangko Sentral ng Pilipinas
Title : The Philippine Balance Sheet Approach (BSA) Report: The Philippines’ Net External Liability Position Narrows to ₱670.5 Billion
Article : The Balance Sheet Approach (BSA) is a presentation of the country’s sectoral accounts on a from whom-to-whom (WTW) basis using the aggregate balance sheet data of each sector of the economy.(1) The highlights of the Q1 2019-Q2 2020 Philippine BSA compilation are summarized as follows:

• External Exposure. The country’s net external liability position substantially declined to ?670.5 billion in Q2 2020 from the ?1.8 trillion recorded in Q2 2019. The 62.3 percent improvement in the country’s net debtor position against the rest of the world (ROW) is attributed to the 7.4 percent expansion in the domestic economy’s external financial assets to ?10.4 trillion along with the 3.4 percent contraction in its external financial liabilities to ?11.1 trillion.

• Net financial position. The household (HH) sector recorded the highest net financial asset position at ?9.0 trillion, 19.7 percent higher than the ?7.5 trillion a year ago. These financial assets were mainly deposits placed with the other depository corporations (ODCs) as well as equity and investment fund shares and insurance, pension, and standardized guarantee schemes with the other financial corporations (OFCs). The ODCs’ net financial asset position increased 38.3 percent to reach ?1.7 trillion from ?1.3 trillion in Q2 2019, mostly with the Central Bank (CB) in the form of currency and deposits. The net financial asset position of both the CB and OFCs declined to ?598.6 billion and ?292.3 billion from ?641.9 billion and ?673.7 billion, respectively, respectively. The non-financial corporations (NFCs) and the general government (GG) sectors remained net debtors at ?7.2 trillion and ?5.1 trillion, respectively. The NFCs’ net liability position was 10.1 percent lower compared to the previous year’s ?8.0 trillion. Meanwhile, the GG’s net liability position widened by 31.7 percent from ?3.9 trillion in Q2 2019 due to higher issuance of government securities and loans, both from domestic and foreign sources, to fund its programs against COVID-19.

• Gross Financial Asset Position. The domestic economy’s total financial assets grew 11.4 percent to reach ?61.3 trillion from ?55 trillion in Q2 2019, comprised mainly of currency and deposits, loans, and debt securities. The ODCs accounted for about a third of the domestic economy’s financial claims at ?19.9 trillion, 10.3 percent higher than the ?18.1 trillion recorded a year ago. Being financial intermediaries, these financial assets were primarily loans, extended mostly to NFCs and HHs, and deposits parked in BSP facilities. The HHs held the second highest stock of financial assets at ?13.9 trillion, 15.7 percent higher than the prior year’s ?12.0 trillion, mostly in currency and deposits. The NFCs’ financial assets grew by 10.7 percent to ?8.7 trillion from ?7.9 trillion following its increased deposit placements with the ODCs. The OFCs’ financial assets, predominantly invested in equity and investment fund shares, rose to ?8.1 trillion from ?7.8 trillion a year ago. The CB’s financial claims, majority of which correspond to the BSP’s reserve assets, increased to ?6.2 trillion from ?5.0 trillion in the previous year. The GG consistently registered the lowest level of financial assets at ?4.5 trillion, higher than the preceding year’s level of ?4.2 trillion.

• Gross Liability Position. The domestic economy’s financial liabilities expanded 9.1 percent to reach ?62.0 trillion from ?56.8 trillion in Q2 2019, mostly in currency and deposits, loans, equity and investment fund shares, and debt securities. The ODCs’ liabilities, constituting almost 30 percent of the domestic economy’s total liabilities, grew 8.1 percent to ?18.2 trillion from ?16.8 trillion a year ago. The ODCs’ liabilities were predominantly deposit liabilities to HHs and NFCs. The NFCs’ liabilities, which remained steady relative to its year-ago level, registered at ?15.9 trillion. More than 90 percent of its liabilities were loans and equity and investment fund shares owed primarily to the ODCs and the ROW, respectively. The GG’s financial obligations soared 18.4 percent to reach ?9.6 trillion from ?8.1 trillion in Q2 2019, largely debt securities held mostly by the FCs (i.e. CB, ODCs, and OFCs) and the ROW. The OFCs’ liabilities increased 8.2 percent to ?7.8 trillion from ?7.2 trillion in the previous year. The CB’s liabilities grew 29.2 percent from ?4.4 trillion to ?5.6 trillion in Q2 2020, more than half of which were currency holdings of the public and deposits of the ODCs. The HHs has the least liabilities at ?5.0 trillion from ?4.5 trillion a year ago, predominantly loans that owed mainly to ODCs.

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1 IMF (2015), Balance Sheet Analysis in Fund Surveillance, p.5.?

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