Domestic liquidity or M3 reached P3.9 trillion in August, reflecting a slightly slower growth of 8.6 percent year-on-year from 10.2 percent in July. On a monthly basis, seasonally-adjusted M3 growth likewise decelerated to 0.4 percent from 1.2 percent in the previous month.
The slower expansion of domestic liquidity during the month can be traced mainly to the deceleration in the growth of net foreign assets (NFA) at 12.1 percent from 15.9 percent in July. The growth in the BSP’s NFA position moderated to 14.3 percent in August compared with 18.5 percent a month earlier. Similarly, the expansion in the NFA of banks decelerated to 0.9 percent from 2.4 percent in July as their accumulation of foreign assets slowed down.
Meanwhile, net domestic assets (NDA) grew at a faster pace of 4.4 percent in August relative to 2.8 percent in the previous month given the stronger expansion in private sector borrowing. Credits extended to the private sector rose by 10.9 percent, in line with the continued uptrend in bank lending activities consistent with the strong pick-up in domestic demand. However, the growth in credits to the public sector moderated to 6.9 percent during the month, owing to the slower expansion in credits extended to the National Government at 2.6 percent.
Despite the slowdown in the growth of domestic liquidity, credits extended to the private sector continued to increase, indicative of the growing confidence in the country’s growth prospects. BSP Officer-In-Charge Nestor A. Espenilla, Jr. noted that the BSP will continue to keep a close watch on developments in domestic liquidity to ensure adequate funding to support the economy’s growth momentum.