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Domestic Liquidity Sustains Strong Growth in November

01.15.2009

Demand for money remained strong in November with domestic liquidity or M3 growth reported at 14.6 percent year-on-year, higher than the 13.1 percent year-on-year increase in domestic liquidity recorded a month ago. This brings the average M3 growth for January to November to 7.3 percent. On a monthly basis, seasonally-adjusted M3 expanded by 1.9 percent in November from the 1.7 percent growth posted in the previous month.

BSP Governor Amando M. Tetangco, Jr. pointed out that the sustained expansion in domestic liquidity starting in the second quarter of the year was due to the strong growth in both net domestic assets (NDA) and net foreign assets (NFA).  NDA increased by 11.6 percent driven largely by credit extended to the private sector, which grew by 15.8 percent. Credit extended to the public sector also rose by 7.3 percent on the back of increased lending to the National Government.  A double-digit growth of 11.6 percent was also posted in credit granted to local government units and other public entities. Meanwhile, NFA grew by 11.8 percent from 10.7 percent in October, due mainly to the sustained growth in the BSP’s NFA as the BSP’s foreign assets continued to expand to reach 28.3 percent from 23.1 percent recorded a month ago. Banks’ NFA continued to fall, declining by 41.9 percent as investments in foreign securities dropped while foreign liabilities increased. 

The BSP will continue to ensure appropriate levels of domestic liquidity to keep prices stable and at the same time maintain the efficient functioning of the financial markets to provide the right environment for sustainable growth.

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