Category : Press Release
Date : March 02, 2021
Agency : Bangko Sentral ng Pilipinas
Title : Domestic Liquidity Grows by 9.0 Percent, Year-on-Year, in January
Article : Preliminary data show that domestic liquidity (M3) grew by 9.0 percent year-on-year to about ?14.0 trillion in January 2021. This was slower than the 9.5-percent growth in December 2020. On a month-on-month seasonally-adjusted basis, M3 increased by 0.7 percent.

Domestic claims expanded by 5.0 percent year-on-year in January 2021 from 4.5 percent (revised) last month, attributed mainly to increase in net claims on the national government even as bank lending activity remained weak. Loans for production activities contracted as lending to a number of key sectors declined, specifically for wholesale and retail trade and repair of motor vehicles and motorcycles; manufacturing; and financial and insurance activities. Similarly, consumer lending contracted due to the decline in credit card and motor vehicle loans as well as the slowdown in salary-based consumption loans. Net claims on the central government increased by 39.0 percent in January from 31.1 percent (revised) in the previous month, due in part to the sustained borrowings by the National Government.

Net foreign assets (NFA) in peso terms continued to grow by 21.8 percent year-on-year in January 2021, though slower compared to the 25.5-percent (revised) growth in December 2020. The expansion in the BSP’s NFA position reflected the increase in the country’s level of gross international reserves relative to the same period a year ago. Meanwhile, the NFA of banks also expanded, albeit at a slower pace relative to December 2020, as growth in banks’ foreign assets eased on account of lower loans and investments in marketable securities.

Looking ahead, the overall stance of monetary policy is expected to remain accommodative in order to complement ongoing fiscal and health initiatives to support economic activity and market confidence. In this regard, the BSP stands ready to deploy appropriate measures as needed in support of the recovery of the economy, consistent with its price and financial stability mandate.

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