Domestic liquidity expands by 7.7 pct, year-on-year, in December 2021

Preliminary data show that domestic liquidity (M3) grew by 7.7 percent year-on-year to about ₱15.3 trillion in December 2021 following an 8.3-percent expansion in November. On a month-on-month seasonally-adjusted basis, M3 rose by 0.2 percent.

Domestic claims grew by 8.0 percent year-on-year in December from 8.1 percent in the previous month due to the sustained expansion in net claims on the central government as well as the continued improvement in bank lending to the private sector. Net claims on the central government rose by 21.7 percent in December from 24.0 percent (revised) in November due to the sustained borrowings by the National Government. Claims on the private sector, driven by bank lending to non-financial private corporations, increased by 3.6 percent in December from 3.0 percent in November.

Net foreign assets (NFA) in peso terms expanded by 6.5 percent in December from 8.8 percent in November. The slower growth in Bangko Sentral ng Pilipinas’ (BSP) NFA position during the month reflected the decline in the country’s gross international reserves relative to the same period a year ago. Meanwhile, the NFA of banks increased as banks’ foreign assets increased on account of higher loans with nonresident banks.

Looking ahead, the BSP will continue to monitor liquidity conditions closely in preserving adequate support to the domestic economic recovery, consistent with the BSP’s price and financial stability objectives. (BSP)