Domestic liquidity or M3 continued to post double-digit growth in June 2009, albeit at a slower rate of 12.6 percent year-on-year compared to 15.0 percent in the previous month. On a monthly basis, seasonally-adjusted M3 growth decelerated to 0.3 percent in June from 1.1 percent (revised) in May.
The expansion in net foreign assets (NFA) continued to drive the growth of liquidity, even as it was lower at 17.6 percent from 19.8 percent in May. The slight slowdown in the growth of NFA followed the slower build-up in the BSP’s international reserves even as banks’ foreign liabilities continued to decline.
The growth in net domestic assets (NDA) also slowed down, declining to 3.2 percent in June from 8.4 percent in May as net domestic credit growth decelerated to 15.2 percent from 18.3 percent. Growth in credit extended to the private sector remained strong, even as it rose at a slower rate of 15.1 percent, from the 18.0 percent expansion posted in the preceding month. Meanwhile, the growth in credit extended to the public sector was also lower at 15.2 percent from 18.7 percent a month ago, as the pace of credit expansion to the National Government (16.2 percent from 18.7 percent) and to local government units and other public entities (11.8 percent from 18.5 percent) slowed down.
According to BSP Officer-in-Charge Nestor A. Espenilla, Jr., liquidity growth is one of the important variables considered in determining the BSP’s monetary policy stance. He said that the continued strong growth of money supply indicates that the liquidity-enhancing measures earlier implemented by the BSP have continued to work their way through the banking system to ensure ample funding for the requirements of the economy.