The BSP has released the 2011 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.
The economy’s savings momentum is sustained, notwithstanding challenges on the external front.
Domestic savings continued to expand to P1,854.3 billion, higher by 6.8 percent relative to the previous year’s level. The household sector remained the prime saver in the economy for the fourth consecutive year and accumulated P909.8 billion in savings during the year, a 6.3 percent expansion from the previous year’s level. This could be attributed to sustained inflows of overseas Filipinos’ remittances and favorable domestic labor market conditions. The non-financial corporations sector trailed behind, generating savings amounting to P672.5 billion owing to the sustained profitability of the industry and the services sectors. The general government sector posted the highest growth in savings at 65.3 percent to reach P193.6 billion, as the National Government’s (NG) position reversed from a dissaving of P17.6 billion in 2010 to a savings of P28.8 billion in 2011. In contrast, the financial sector’s savings declined by roughly a quarter to settle at P78.4 billion due to the large benefit payments by the life insurance industry along with the higher interest payments by the BSP.
Real investment continues to expand on the strength of the investments of households and public non-financial corporations.
The economy’s capital accumulation expanded by 16.2 percent to reach P1,544.8 billion. The household sector was the biggest accumulator of capital at P661.4 billion. However, the 12 percent growth in households’ real investment was a deceleration from the previous year’s 31.1 percent, due likely to the lower demand for residential condominiums. The non-financial corporations sector’s real investments surged by 53.2 percent amid mixed investment sentiments across sub-sectors. The growth of private companies’ real investments decelerated to 9.4 percent from 72.9 percent a year ago due to weak global economic growth. Meanwhile, the deferment of the power sector privatization plan resulted in lower disposal of fixed assets, translating to lower deccumulation in the Government-Owned and Controlled Corporations’ (GOCCs) real assets. The banking sector accelerated their disposal of non-performing assets to bring the financial sector’s fixed asset transactions to P40.3 billion, 43.7 percent lower than that of the previous year. Similarly, the general government sector’s capital accumulation fell by 10.9 percent to P250.3 billion, due largely to the NG’s cautious fiscal spending.
All sectors are net lenders, except for the general government.
The household sector regained the top net lender position at P248.4 billion, with currency and deposits as the desired form of asset accumulation. The non-financial corporation sector’s net fund provision fell by 70.8 percent to P79.7 billion, with accounts receivables as the dominant financial instrument. The financial sector’s net lending grew by 19.9 percent to P38.1 billion as the combined increase in net lending of banks and the insurance sector outweighed the BSP’s net borrowing. Moreover, with the savings generated by the general government¬, its net borrowing was 65.4 percent lower than the previous year’s level at P56.6 billion.
The domestic economy’s net lending to the rest of the world (ROW) declined by 23.9 percent to P309.5 billion as growth in capital accumulation outpaced the growth in total savings.
This development was also reflected in the narrowing of the current account surplus in the balance of payments. The most preferred financial instrument was securities (other than shares), particularly investments of depository corporations on the asset side and NG-issued securities on the liability side.
View 2011 FOF Table
View 2010 FOF Table