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BSP Constructs a Philippine Financial Social Accounting Matrix

09.14.2018

The BSP has constructed a Philippine Financial Social Accounting Matrix for 2010 (PFSAM 2010). The PFSAM provides an overview of the real and financial transactions in the economy. It presents the connection from the multi-industrial relationships in production to the multi-sectoral distribution of income, consumption, investment in produced and non-produced assets and financial instruments, and the interlinkages among the domestic institutions, and between these institutions with the Rest of the World (ROW).

It provides a comprehensive database that can be used to assess the performance of the economy. It also serves as a statistical framework for identifying data gaps/weaknesses as well as inconsistencies in the related macroeconomic aggregates. As such, the PFSAM also serves as input to a financial computable general equilibrium model to simulate responses to what-if questions using policy or behavioral assumptions.

Major findings of PFSAM 2010

Household-based enterprises played a significant role in the economy's production activities contributing 39.9 percent to the Gross Domestic Product (GDP). The household sector also had the largest share of the Gross National Income (GNI), given that mixed income and compensation which accrue to the household sector contributed about 64.6 percent of the GDP. The household sector's income was supported by the compensation earned abroad by resident Overseas Filipinos' (OF) and current transfers, primarily in the form remittances of non-resident OFs.

The Non-financial Corporations (NFCs) sector was the largest saver in the economy followed by the household sector. Thus, the NFCs financed their investment demand (also the highest), which includes both real and financial investments, mainly with their saving and with only 35.4 percent sourced through the incurrence of liabilities, largely in the form of loans and equities.

Except for the general government, all sectors were net lenders whose gross saving provided basically all the funds for gross capital formation and asset acquisition. Deposits and debt securities emerged as the domestic economy's most preferred financial instrument for net fund provision.

Domestic production accounted for 84.2 percent of the total supply of goods and services, while the rest was sourced from the ROW. Of the total supply, 87.8 percent was absorbed by domestic institutions mainly as intermediate inputs for production activities. The remaining was exported to the ROW, largely from the manufacturing and real estate and business service industries, exporting 16.8 percent and14.9 percent of their production, respectively. Their combined exports comprised 81.7 percent of the country's total exports.

A major outcome, albeit indirect, of the construction of the PFSAM 2010 is the adoption of a new approach—the Sequence of Accounts (SOA)—in the compilation of the Philippine Flow of Funds. In addition to improving the compilation of saving, this enhanced the estimates for the rest of the accounts in the PFSAM, as the SOA ensures the interconnectedness of the different accounts from production to the financial accounts.

The construction of the PFSAM 2016 is underway to be completed by 2020.

The construction of the PFSAM is a collaborative project involving the Department of Economic Statistics (DES) and the Center for Monetary and Financial Policy (CMFP).

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