The BSP has released the 2009 Flow of Funds (FOF) Report. The FOF is a summary of financial transactions among the different institutions of the economy, and between these institutions and the rest of the world. It identifies which institutions end up as net users of funds or net providers of funds after a series of financial transactions for the year. Institutions are categorized into four, namely: 1) financial corporations, 2) non-financial corporations, 3) the general government, and 4) the households.
1. All sectors generate savings, with this year’s total exceeding the previous year’s level.
All sectors contributed to a total national savings of P1,542.9 billion in 2009, which was 19.0 percent higher than the 2008 level. The household sector remained as the prime saver, having accumulated P779.0 billion worth of savings, boosted in part by the steady inflow of remittances from overseas Filipinos. The non-financial corporation sector maintained its position as the second highest saver, with P586.0 billion in savings. The sector’s savings level was 31.4 percent higher than that of the previous year despite subdued business conditions as private businesses streamlined operating expenses to counter the effects of weaker revenue. Profits were posted by the mining and quarrying companies as well as by the real estate, renting and business sectors. The financial sector experienced a sharp 90.5 percent growth in savings, which reached P102.9 billion largely due to sustained credit growth and improving loan and asset quality. On the other hand, the general government sector—which consists of the national and local governments and social security agencies (such as public pension funds)—registered savings of P74.8 billion. This was, however, 67.1 percent lower than the 2008 level. The government’s fiscal measures to support the domestic economy could have contributed to the lower savings.
2. Investments decline, reflecting weak investor confidence.
Investments in real and other non-financial assets (real investment or capital accumulation) dropped by 0.7 percent to P1,124.6 billion as businesses turned wary due to the fragile economic conditions, particularly in world trade. The non-financial sector’s real investments declined by 24.5 percent to P339.1 billion. Households’ investment in residential properties grew, albeit at a slower pace of 2.2 percent to P448.7 billion in 2009, as lesser employment opportunities could have dampened their confidence in engaging in long-term investment commitments. However, the hefty increase in capital expenditures of the general government (GG), aimed at spurring economic activity, mitigated the impact of these developments. Specifically, GG’s capital expenditures rose by close to 30 percent as the public sector frontloaded its infrastructure projects under the Economic Stimulus Fund. Likewise, real investments in the financial sector rose by 132.6 percent to P45.9 billion more as a result of slower disposal of non-performing assets (compared with prior year’s) than acquisition of new assets. As asset quality continued to improve, sale of non-performing assets declined significantly.
3. With the exception of the general government, all sectors are net providers of funds.
The household sector emerged as the top net provider at P329.6. billion, more than double compared to the P128.4 billion recorded in 2008. While currency and deposits remained as the top instruments of fund holdings, a shift of investment away from fixed-income debt securities and into shares and other equity was noted. This indicated greater willingness by households to take on risks in the stock market in exchange for higher returns as bond yields remained low. Meanwhile, the non-financial corporation sector made a remarkable turnaround from being a net user of funds in 2008 to become the second top net provider of funds at P246.9 billion in 2009. Accounts receivables dominated their assets mainly in the form of trade credits. Likewise, the net fund provision of the financial sector strengthened, as it rose by 65.7 percent to P57.1 billion. This development was accompanied by an 11.4 percent growth in deposit liabilities, indicative of the banks’ prudent financial position as their lending activities remained largely deposit-funded. On the other hand, the general government reverted to being a net user of funds at P210.5 billion as it provided fiscal support by way of infrastructure and social safety nets to cushion the economy from the effects of the global economic slowdown.
4. The country strengthens its position as net provider of funds to the rest of the world.
The domestic economy’s growing capacity as a provider of funds to the rest of the world since 2003 continued, with net provision of funds expanding to P423.1 billion in 2009 as against the P167.1 billion in 2008. The significant improvement in the trade balance contributed to this development, with net receipts from trade in services increasing by 33.6 percent and merchandise trade deficit narrowing by 31.2 percent.
View 2009 FOF Table
View 2008 FOF Table