Domestic liquidity or M3 grew by 9.0 percent year-on-year in December, broadly similar to the previous month’s growth of 9.1 percent. This was lower than the 22.7 percent expansion recorded during the same month a year ago. With the December growth, M3 expansion averaged 17.4 percent in 2007. On a monthly basis, seasonally adjusted M3 rose by 2.0 percent, compared to the 0.3 percent increase in the previous month.
The growth in domestic liquidity continued to reflect the steady, though slower, rise in net foreign assets (NFA) of depository corporations. Meanwhile, year-on-year growth in net domestic assets (NDA) declined for the fifth consecutive month to 2.9 percent from 4.7 percent in the preceding month, as the other assets/liabilities account under the Net Other Items (which includes SDAs and RRPs) continued to register a negative balance following the policy measures implemented by the BSP in May. Credit extended to the private sector expanded by 7.2 percent from the 5.7 percent growth posted in the previous month. Meanwhile, credit extended to the public sector declined by 2.3 percent in December, a turnaround from the 4.0 percent reported in the preceding month due to the lower net credit granted to local governments and other public entities (-6.2 percent), and the NG (-0.9 percent).
The BSP monitors closely the developments in domestic liquidity with a view to balancing the financing needs of a growing economy and the requirements for non-inflationary economic growth.