The BSP has released the 2010 Flow of Funds (FOF) Report. The FOF presents 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 are net borrowers and net lenders 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.
All sectors in the economy generate savings.
Total savings in the economy improved to P1,710.6 billion in 2010 from the previous year’s level of P1,570.1 billion, with all sectors in the economy generating savings. The household sector, for the third consecutive year, maintained its position as lead saver in the economy with total accumulated savings of P841.5 billion, a modest improvement of 6.4 percent from the year-ago level. Meanwhile, savings in the non-financial corporations sector steadily grew at 14.6 percent to reach P692.9 billion in 2010, underpinned by strong net income that was observed in all industries, notably in food and beverage, real estate, transport, and wholesale trade. The financial sector generated total savings of P106.1 billion, higher by 6.8 percent compared to that of the previous year, largely due to the 8.0 percent drop in banks’ interest expense on deposit liabilities as a result of the decline in interest rates. On the other hand, the general government (national and local governments, and social security agencies) posted savings of P70.3 billion. However, the level of savings in 2010 was 6.3 percent lower than that of the previous year due to the dissaving of the National Government.
Investments in real and other non-financial assets rebound considerably on the prospect of a global economic recovery.
Real investment or capital accumulation grew appreciably by 18.2 percent to P1,329.7 billion in 2010 from P1,124.6 billion in 2009. The non-financial corporations sector’s capital accumulation rose by 17.1 percent to P395.3 billion from P337.4 billion in 2009. The positive outlook of investors given improving market conditions, helped by the low interest rate regime, provided the impetus for expansion. Likewise, the upbeat mood contributed to the 28.7 percent growth in the household sector’s investments in dwelling units, with residential condominiums accounting for the bulk of the increase. On the other hand, the main driver for the financial sector’s capital accumulation was the BSP’s purchase of unrefined gold for its raw material inventory. Meanwhile, capital expenditures of the general government sector fell by 3.4 percent as the National Government slowed down in the implementation of its fiscal stimulus program amid its review of capital expenditures under the “zero-based budgeting” program.
The non-financial corporations sector displaces household sector as the top provider of funds.
The non-financial corporations sector was the top fund provider in 2010 with a net lending of P297.6 billion, 11.4 percent higher than the 2009 level of P267.2 billion. Its net lending activity, stemming from improving market sales, was mainly in the form of accounts receivable through provision of trade credits. The household sector ranked second with a net lending of P261.6 billion, lower than the previous year’s level of P340.0 billion. Currency and deposits was the sector’s most preferred financial asset, reflecting ample liquidity in the financial system. The financial sector’s net lending position strengthened as banks’ deposit-taking activity almost doubled. On the other hand, the general government sector was a net borrower (at P205.7 billion) due to the deficit incurred by the national government.
Domestic economy remains net lender to the rest of the world.
While remaining as a provider of funds to the rest of the world, the country’s net lending to the rest of the world declined to P385.5 billion in 2010 from P450.3 billion in 2009. Securities were the dominant instruments for financial transactions with the rest of the world. Aside from the Bangko Sentral ng Pilipinas, commercial banks and the insurance sector were the main investors in debt issues by non-residents. On the other hand, the National Government was the top bond issuer offshore.
View 2010 FOF Table
View 2009 FOF Table