Domestic liquidity or M3 continued to grow steadily in November 2009, albeit at a slightly slower pace of 12.0 percent year-on-year (y-o-y) compared to 12.5 percent in October. On a monthly basis, seasonally-adjusted M3 growth decelerated to 1.1 percent in November from 1.6 percent (revised) in the previous month.
The expansion in liquidity continued to be fueled by the sustained growth in net foreign assets (NFA) at 32.5 percent in November from 29.9 percent in October. This can be traced to the steady growth in the NFA positions of the BSP and of the banks at 21.3 percent and 137.6 percent, respectively. NFA expanded as the BSP continued to build up its international reserves, with strong inflows from OF remittances, while banks settled a significant portion of their foreign liabilities.
Meanwhile, net domestic assets (NDA) contracted further in November by 5.0 percent from 3.2 percent in the previous month. This was due largely to the expansion of the net other items, which impacts negatively on overall domestic liquidity. Net domestic credit remained strong as the growth in credit extended to the private sector slightly increased to 7.3 percent from 5.7 percent in October. In contrast, the growth in credit extended to the public sector eased to 11.8 percent in November, as the credits extended to local governments and other public entities decreased by 3.0 percent in November.
BSP Governor Amando M. Tetangco, Jr. noted that the sustained growth in domestic liquidity indicates that ample funds are available to support the credit needs of firms and households. Going forward, he said that the BSP will continue to closely monitor monetary conditions to ensure an adequate level of liquidity for the economy's spending and investment needs.