Money supply continues to post double digit growth in June

MANILA, Philippines - Domestic liquidity or M3 continued to post double-digit growth in June although at a slower rate, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Data showed that domestic liquidity in June grew at a slower rate of 12.6 percent year-on-year compared to 15 percent in the previous month.

On a monthly basis, seasonally-adjusted M3 growth decelerated to 0.3 percent in June from 1.1 percent in May.

BSP officer-in-charge Nestor Espenilla Jr. said that the continued growth of money supply indicates that the liquidity enhancing measures earlier implemented by the BSP have continued to work their way through the banking system to ensure ample funding for the requirements of the economy.

Liquidity growth, the BSP said, is one of the important vehicles considered in determining the central bank’s monetary policy.

BSP data showed that the expansion in net foreign assets continued to drive the growth of liquidity even as it was slower at 17.6 percent from 19.8 percent recorded in May. The slight slowdown in the growth of the NFA followed the slower build-up in the BSP’s international reserves even as banks’ foreign liabilities continued to decline.

Similarly, the growth in net domestic assets also slowed down, declining to 3.2 percent in June from the 8.4 percent recorded in May.

BSP officials attributed this to the deceleration in net domestic credit growth to 15.2 percent during the month from 18.3 percent recorded in May.

“Growth in credit extended to the private sector remained strong even as it rose at a slower rate of 15.1 percent from the 18 percent expansion posted in the preceding month,” Espenilla said.

The growth in credit extended to the public sector was also lower at 15.2 percent from 18.7 percent recorded a month ago.

This was because the pace of credit to local government units and other public entities slowed down.