Domestic liquidity reaches P4.215T in February

Domestic liquidity or money circulating within the Philippine economy expanded to P4.215 trillion in February this year, from P3.840 trillion in the same period last year, the Bangko Sentral ng Pilipinas (BSP) said Friday. “The larger increase in net foreign assets of 19.3 percent in February, from 17.8 percent in the previous month fueled the expansion in domestic liquidity," the central bank said in a statement. The BSP’s net foreign assets grew by 32.9 percent in February “due in part to steady foreign exchange inflows from overseas remittances as well as portfolio and direct investments," the statement said. By contrast, the net foreign assets of banks declined by 62.3 percent in the same month, because of the significant increase in foreign liabilities related to higher placements and time deposits made by the head office or other branches of foreign banks in Philippine branches, the BSP said. Net domestic assets also decreased by 5.1 percent in February “due to the accelerated expansion of the net other items account," according to the central bank. Net domestic credits, on the contrary, rose by 7.5 percent in the similar month because of the stronger increase in credits extended to the private sector, the BSP said. “This trend is consistent with the continued expansion in bank lending to the productive sectors of the economy," the BSP said. Meanwhile, the growth in credits extended to the public sector slowed down as credits extended to the national government continued to decline, it also said. The BSP said it will continue to closely monitor monetary conditions to ensure that domestic liquidity “remains in line with the BSP’s price stability objective, while providing ample funds for the economy’s growth requirement." — JE/OMG, GMA News