Preliminary data on the net international investment position (IIP) indicated a net liability position of $65.5 billion as of end-December 2024, representing a 10.2 percent decrease from the $72.9 billion recorded in end-September 2024, the Bangko Sentral ng Pilipinas said Monday.

This development was driven by a 3.4 percent contraction in external financial liabilities, which outpaced the 1.4 percent decline in external financial assets.

As of end-December 2024, the total outstanding external financial liabilities stood at $318.2 billion, while total outstanding external financial assets amounted to $252.7 billion.

The country’s total stock of external financial liabilities as of end-December 2024 decreased, primarily due to an 8.2 percent decline in foreign portfolio investment (FPI) (to $96.3 billion from $104.9 billion) and a 2.0 percent decline in foreign direct investment (FDI) (to $129.3 billion from $132.0 billion).

The notable decline in net FPI was due to 14.1 percent decrease in nonresidents’ outstanding investments in equity securities of local corporations, which fell to $37.6 billion. This mirrored the drop in the Philippine Stock Exchange Index (PSEi), which experienced significant declines amid growing concerns over the policies of US President-elect Donald Trump, particularly the proposed import tariff hike that could lead to higher interest rates.

Outstanding investment in debt securities by non-residents declined by 3.9 percent to $58.7 billion. This decrease was driven by foreign investors’ net selling of their holdings in debt securities issued by the national government (NG) to residents in the secondary market as well as NG’s and other sectors’ net repayments of debt securities held by nonresidents.

Moreover, net foreign direct investment (FDI) declined by 2 percent to $129.3 billion due to downward valuation adjustments in nonresidents’ net investments in equity capital.

The country’s total stock of external financial assets contracted mainly on account of the decline in the country’s reserve assets, which stood at US$106.3 billion as of end-December 2024 (or a decrease of 5.7 percent from US$112.7 billion as of end-September 2024).

Additionally, residents’ net direct investments in debt instruments declined by 2.7 percent to $41.8 billion.

On a year-on-year basis, the country’s net external liability position grew by 29 percent from $50.7 billion as of end-December 2023. This was on account of the 8.5 percent growth in total external financial liabilities from $293.1 billion, notwithstanding the 4.2 percent growth in total external financial assets from $242.4 billion.

Total external financial liabilities expanded, stemming mainly from the collective increases in the following components: non-residents’ net investments portfolio debt securities (by 18.9 percent to $58.7 billion); loans extended by foreign affiliates to residents (by 10.8 percent to $80.3 billion); and non-residents’ net direct investments in debt instruments (by 10.4 percent to $69 billion).