Preliminary data show that domestic liquidity (M3) expanded by 16.2 percent year-on-year to about ₱13.6 trillion in April. This was faster than the 13.3-percent expansion in March. On a month-on-month seasonally-adjusted basis, M3 increased by 3.7 percent.
Demand for credit remained the principal driver of money supply growth. Domestic claims rose by 15.0 percent in April from 11.9 percent in March due mainly to the sustained growth in credit to the private sector. Loans for production activities continued to be driven by lending to key sectors such as real estate activities; financial and insurance activities; electricity, gas, steam and air conditioning supply; information and communication; and transportation and storage. Meanwhile, loans for household consumption eased due mainly to the slower expansion in credit card and motor vehicle loans during the month. Net claims on the central government grew by 45.5 percent in April, faster than the 21.6-percent growth in the previous month, reflecting the increased borrowings by the National Government.
Net foreign assets (NFA) in peso terms expanded by 11.9 percent year-on-year in April, following the 9.1-percent growth in March. The BSP’s NFA position continued to expand, reflecting the increase in gross international reserves. The NFA of banks also increased, as growth in banks’ foreign assets rose on account of higher interbank loans and deposits with other banks.
Domestic liquidity conditions and market sentiment have improved with the implementation of various liquidity-enhancing measures by the BSP. The continued stabilization of domestic liquidity conditions has given the BSP some room to slowly rescale its monetary operations in the coming weeks, as the economy begins to transition towards new normal conditions. This will help the BSP’s liquidity measures gain further traction by providing better guidance to short-term market interest rates.
Going forward, the BSP will continue to monitor domestic liquidity and credit dynamics in order to provide support amid significant disruptions to economic activity. The BSP reassures the public of its commitment and readiness to deploy its full range of instruments to ensure that liquidity and credit remain adequate to support domestic demand amid the ongoing health crisis.
Source: Bangko Sentral ng Pilipinas (BSP)