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Improvement in Domestic Credits Noted in February


BSP governor Gabriel C. Singson today announced that there has been an improvement in credit conditions for the month of February, buoyed by significant growth in deposit money banks’ (DMBs’) credits to the public sector, and lower decline in private sector credits. The domestic credits of DMBs registered a lower year-on-year decline of 0.16 percent as of end-February from the previous month’s negative 3.77 percent. Likewise, the month-on-month rate of decline in DMBs’ credit slowed down to 0.04 percent as of end-February from the previous month’s comparable figure of 0.53 percent.

Meanwhile, the annual growth in bank credits to the public sector nearly doubled to 24.25 percent in February from the previous month’s 13.89 percent, while the rate of contraction of private sector credits eased to 5.34 percent from 7.64 percent during the same period.

Loans outstanding of commercial banks similarly reflected a lower decline of 5.8 percent in February from the previous month’s comparable figure of 8.2 percent, arising mainly from the sharp rise to 51 percent of loans outstanding to the wholesale and retail trade, as contrasted to the negative growth of 14.1 percent a month ago. The community, social and personal services; electricity, gas, and water; as well as mining and quarrying sectors also posted higher loans outstanding.

Singson also noted that domestic liquidity or m3 reflected a 7.7 percent increase from its year-ago level, indicative of monetary authorities’ efforts to increase liquidity in the system through the reduction of liquidity reserves and the BSP’s policy rates. The January M3 level rose by 6.7 percent year-on-year. Singson said that ample liquidity in the financial system along with the improvement in the macroeconomic fundamentals in terms of lower inflation rate, stable foreign exchange, and lower interest rates could help improve further the domestic credit conditions, and in turn help accelerate economic growth in the country.

Singson also expressed optimism that with the improved credit conditions, investment and production will also reflect more dynamic growth. “The surge in inflows of foreign capital in recent days could very well signal the long-anticipated return of market confidence.”

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