Preliminary data show that domestic liquidity (M3) grew by 12.6 percent year-on-year to ₱9.4 trillion in February 2017, slightly faster than the 12.3-percent (revised) expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 1.2 percent.
Demand for credit remains the principal driver of money supply growth. Domestic claims grew by 15.8 percent in February, broadly steady from 15.9 percent in January due largely to sustained growth in credit to the private sector. Growth in bank loans remains strong on account of lending to key production sectors such as real estate activities; financial and insurance activities; wholesale and retail trade, repair of motor vehicles and motorcycles; manufacturing; and electricity, gas, steam and airconditioning supply. Meanwhile, net claims on the central government expanded by 17.3 percent during the month as a result of increased borrowings as part of National Government (NG) cash operations and the continued withdrawal by the NG of its deposits with the BSP.
Net foreign assets (NFA) in peso terms grew by 7.2 percent year-on-year in February from 8.7 percent in the previous month. Foreign exchange inflows coming from overseas Filipinos’ remittances and business process outsourcing receipts continued to be the main drivers behind the increase in the BSP’s NFA position. Meanwhile, the NFA of banks expanded due mainly to the growth in banks’ foreign assets resulting from higher interbank loans and investments in marketable debt securities.
The growth in M3 remains consistent with the BSP’s prevailing outlook for inflation and economic activity. Going forward, the BSP will continue to monitor domestic liquidity closely to ensure that monetary conditions are conducive to maintaining price and financial stability.