Domestic liquidity (M3) increased by 13.2 percent year-on-year (y-o-y) in April to reach P5.2 trillion. This growth was nearly unchanged relative to the 13.3 percent (revised) expansion recorded in the previous month. On a monthly basis, seasonally-adjusted M3 also expanded at a faster pace of 3.2 percent compared to the 1.7 percent (revised) month-on-month growth in March.
The growth in money supply was driven largely by the sustained expansion in net domestic assets (NDA). NDA increased by 19.7 percent y-o-y in April from 25.3 percent (revised) in the previous month due largely to the continued increase in credits to the private sector of 14.3 percent, reflecting the robust lending activity of commercial banks. Similarly, claims on the public sector grew by 11.9 percent in April after rising by 15.0 percent (revised) in March, largely a result of the increase in credits to the National Government (NG).
Meanwhile, net foreign assets (NFA) increased by 2.7 percent in April, reversing the 0.8 percent decline in the previous month. The BSP’s NFA position increased by 6.0 percent on the back of steady foreign exchange inflows from overseas Filipinos’ remittances, portfolio investments, and BPO receipts. However, the NFA of banks declined further as banks’ foreign liabilities continued to increase due in part to higher placements and deposits made by foreign banks with their local branches and other banks, while their foreign assets continued to decrease due to the decline in their loan receivables.
The robust domestic liquidity growth during the month indicates that liquidity remains sufficient to support economic growth. Going forward, the BSP will continue to monitor monetary conditions closely to ensure that liquidity in the financial system remains consistent with the BSP’s price and financial stability objectives.