Metro Manila (CNN Philippines) — Domestic liquidity (M3) — the aggregate of currency and cash-equivalent securities circulating in the economy — grew to P7.6 trillion in April. The amount accounts for a 9% growth compared to the figure for the same month last year, according to figures from the Bangko Sentral ng Pilipinas (BSP).
Likewise, April’s near-double digit growth was slightly faster than the ventral bank’s 8.7% revised growth figure for march. On a month-on-month seasonally-adjusted basis, the BSP remarked the M3 grew by 0.9%.
The acceleration was buoyed by a decline in the placements of trust entities in the BSP’s special deposit account (SDA) facility compared to the previous month.
“Nonetheless, the broadly slower pace of M3 expansion in April 2015 relative to a year ago reflects the gradual normalization of domestic liquidity growth after the operational adjustments involving access of trust entities to the BSP’s SDA facility were completed in November 2013,” the central bank said in a statement.
It added that money supply increased due largely to a sustained demand for credit. However, credits to the private sector expanded at a slightly lower pace month. Domestic claims grew by 9.3% in April compared to March’s 10.4%.
A majority of banks loans in April were channeled to key production sectors such as manufacturing, renting and business services, and wholesale and retail trade, among others. The BSP also revealed that net public sector credit further contracted by 7.9 % in April after a revised 8.3% contraction figure posted a month earlier.
Net foreign assets (NFA) — the value of assets owned by the Philippines abroad minus domestic assists owned by nonresidents — marked a slightly faster growth of 8.8% in April compared to the previous month’s revised 8.4% figure. The BSP attributes its expanded NFA position to robust foreign exchange inflows from overseas Filipinos’ remittances and business process outsourcing receipts.
Apart from a contraction in their foreign liabilities, other banks also saw their NFA increase because of foreign asset expansion. The expansion was credited mainly to the growth in their investments in marketable debt securities and deposits with other banks. Lower foreign liabilities were attributed to lower placements made by foreign banks with their local branches.
“The continued expansion in domestic liquidity during the month indicates that liquidity remains sufficient to sustain the economy’s growth momentum,” the central bank said.
“Going forward, the BSP will closely monitor monetary conditions to ensure that liquidity dynamics stay consistent with the BSP’s price and financial stability objectives.”
