Domestic liquidity or M3 growth rose to 9.9 percent year-on-year in February from 8.1 percent in January. On a monthly basis, seasonally-adjusted M3 expanded by 0.8 percent in February from a 0.2 percent decline posted in the previous month.
The expansion in domestic liquidity continued to be driven by the growth in both net foreign assets (NFA) and net domestic assets (NDA). NFA grew at a slower pace of 14.0 percent from 23.2 percent in the previous month. The expansion in the NFA of the BSP decelerated from 19.7 percent to 15.0 percent due to the slowdown in the growth of foreign assets and the continued decline in foreign liabilities. Similarly, there was a reduction in the pace of growth in the NFA of banks to 9.1 percent from 45.2 percent in the previous month, as the growth in foreign assets slowed down while that of foreign liabilities reversed to positive territory.
Meanwhile, NDA growth increased by 5.9 percent, reversing the 2.9 percent decline in the previous month. This developed following the double-digit growth in credit extended to the public sector at 13.8 percent on the back of increased lending to the National Government, which mostly took the form of investments in government securities. Credit to the private sector also continued to increase by 10.1 percent in February from 7.2 percent a month ago, consistent with the continued growth of bank lending.
According to Governor Amando M. Tetangco, Jr., domestic liquidity has continued to expand as financial market conditions have stabilized. This indicates that there are ample funds available to support the growth requirements of the Philippine economy. Going forward, he said the BSP will continue to ensure that the level of liquidity circulating in the economy is consistent with the objective of safeguarding price stability, which is a necessary condition for balanced and sustainable economic growth.