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Domestic Liquidity Growth Accelerates in September


Domestic liquidity or M3 reached P4.1 trillion in September, growing at a faster pace of 10.5 percent year-on-year from 8.6 percent in August. On a monthly basis, seasonally-adjusted M3 growth likewise accelerated to 2.0 percent from 0.5 percent (revised) in the previous month.

The faster expansion of domestic liquidity during the month can be traced mainly to the slight acceleration in the growth of net foreign assets (NFA) at 12.8 percent from 12.1 percent in August. The growth in the BSP’s NFA position accelerated to 19.2 percent from 14.3 percent, due in part to higher foreign exchange inflows from overseas remittances, portfolio investments, and export receipts. However, the NFA of banks contracted by 22.6 percent from a growth of 0.9 percent in the previous month due to the continued appreciation of the peso.

Likewise, net domestic assets (NDA) grew at a faster pace of 5.1 percent in September relative to 4.4 percent in August due to the steady increase in private sector credits. Credits extended to the private sector rose by 9.5 percent, in line with the continued uptrend in bank lending activities consistent with the strong pick-up in domestic demand. Similarly, credits extended to the public sector increased by 9.0 percent, buoyed up by the 20.5 percent expansion in credits extended to local governments and other public entities.

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. noted that liquidity conditions in the financial system remain favorable and supportive of the stronger momentum of the economy as evidenced by the steady uptrend in bank lending activity and continued improvements in domestic financial market conditions. He added that the BSP will continue to keep a close watch over developments in domestic liquidity with a view to promoting monetary stability and ensuring well-functioning financial markets.

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