Year-on-year growth in domestic liquidity continued to recover in June 2008, with M3 rising by 5.1 percent from 3.7 percent in May, based on the Depository Corporations Survey (DCS). The data were generated from the new system of bank reports, the Financial Reporting Package (FRP), which is consistent with the International Accounting Standards (IAS) and International Financial Reporting System (IFRS). 1
The expansion in domestic liquidity was traced mainly to the continued double- digit, albeit slower, growth of net foreign assets (NFA) at 17.7 percent in June. Driven by the significant expansion in private credit, the growth of net domestic assets (NDA) returned to positive territory in June, as it posted a 1.5 percent growth, from the negative growth rates recorded starting in August 2007. The Net Other Items account (which includes SDAs and RRPs) remained in negative balance. Credit extended to the private sector picked up further in June to reach 11.8 percent from the 8.6 percent increase recorded in May. Meanwhile, credit extended to the public sector continued to grow but at a slower pace of 2.0 percent in June from 4.9 percent in the previous month due to the relatively slower growth of credit extended to the National Government (NG) and the decline in loans to local governments and other public entities.
BSP Governor Amando M. Tetangco, Jr. assured the markets that “the BSP shall continue to keep an eye on domestic liquidity trends to ensure that liquidity growth is supportive of non-inflationary economic growth”.
1 All the numbers were worked back to show a consistent series.