DOMESTIC liquidity in March as measured by M3—the total amount of cash and cash-equivalents circulating within the economy—grew 9.4 percent year-on-year to P7.7 trillion on the sustained demand for credit, the central bank said on Thursday.
Data released by the Bangko Sentral ng Pilipinas (BSP) showed that the M3 expansion in March was faster than the 8.5-percent expansion recorded in February.
Month-on-month and on a seasonally-adjusted basis, M3 increased by 2.1 percent, the central bank said.
The BSP said money supply continued to increase on the back of sustained demand for credit as domestic claims in March grew slightly from a month ago.
Domestic claims grew by 10.4 percent in March from 10 percent in February as credits to the private sector expanded at a slightly faster pace relative to the previous month, the BSP said.
The bulk of the bank loans during the month were channeled into key production sectors such as real estate, renting, and business services, manufacturing, wholesale and retail trade, financial intermediation, and utilities.
In contrast, the BSP data showed lending for the public sector contracted by 6.5 percent after declining by 4.5 percent in February.
“Domestic liquidity accelerated during the month due in part to the slower increase in placements of trust entities in the BSP’s special deposit account facility relative to the previous month,” the central bank said
Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands (BPI), said that bank loan growth and corporate issuances may have been the reason for the lower placements in the SDA facility.
“We’ve seen an increase in bank loans in the past few months, meaning that funds that used to be parked in the SDA have found their way to the real economy,” Mapa explained.
“We’ve also seen a bevy of corporate issuances in the past few months, which have successfully helped mop up liquidity,” he added.