The Bangko Sentral ng Pilipinas (BSP) reported yesterday a strong demand for money in November last year, an indication that economic activities have started to improve after languishing in the doldrums due to the lingering effects of the regional financial crisis.
Domestic liquidity or M3 expanded by a strong 15.2 percent as of end-November 1999, up 3.2 percentage points from the 12-percent growth in October 1999, the BSP said.
Month-on-month, domestic liquidity grew by 4.96 percent in November, a sharp turnaround from the 0.24-percent decline reported a month ago.
M3 refers to the amount of money in circulation, including bank deposits, deposit substitutes and reserve money (RM).
RM, on the other hand, is the sum of currency issued by the BSP and the reserve balances of banks less cash locked in Treasury vaults.
These liquidity indicators are being closely watched by the International Monetary Fund (IMF).
The BSP also attributed the use in end-November figures to the increase in monthly growth of average reserve money as banks increased their lending from the BSP through the reverse repurchase facility and special deposit accounts in preparation for the possible increase in demand for cash during the holiday season.
Another factor which caused the expansion in domestic liquidity was the renewed increase in bank lending activities. As of end-November last year, total loans outstanding of commercial banks reached P1.338 trillion, up 1.88 percent from a year earlier.
By sector, bank lending grew strongly in productive sectors such as mining and quarrying, manufacturing, construction, agriculture, fisheries and forestry.
Sectors with lower lending activity, on the other hand, were led by the utilities, financial institutions, real estate and business services sectors.