Domestic liquidity up 13.4% to P2.5T in June

Demand for money continued to grow in June as domestic liquidity (M3) rose by 13.4 percent year-on-year, preliminary data from the Depository Corporations Survey (DCS) of the Bangko Sentral ng Pilipinas (BSP) showed. 

The BSP said this was a further acceleration from the 12.7-percent growth recorded in May.  On a month-on-month basis, M3 rose by 2.1 percent.

The current M3 level was on track of the BSP’s programmed level of 14 percent for the year.

In absolute terms, the June M3 level stood at P2.5 trillion compared to P2.2 billion in the same period last year and P2.45 billion in May 2006. 

The BSP attributed the continued growth in M3 to the increase in net foreign assets (NFAS) and credits to the public sector. 

During the period under review, the NFAs rose to P1.99 trillion as against P887 billion in end-June 2005 and P1.15 trillion in end-May 2006.

The build-up in the BSP’s net international reserves (NIR) — resulting mainly from the accumulation in foreign assets — and the reduction in deposit money banks’ foreign liabilities drove the increase in net foreign assets. 

The NIR as of June rose to P1.09 trillion from P812 billion in June last year and P990.9 billion in end-May 2006.

According to the BSP, inflows from overseas Filipino workers’ remittances and portfolio investments contributed to the growth in the NIR. 

Meanwhile, the growth in credits to the public sector was driven by increased credit to the National Government in the form of investments, and increased lending to local government units and semi-government entities.