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Domestic Liquidity Growth Eases in August

Press Release
Preliminary data show that domestic liquidity (M3) grew by 6.2 percent year-on-year
to about P11.9 trillion in August 2019, slightly slower than the 6.7-percent growth in July.
On a month-on-month seasonally-adjusted basis, M3 increased by 0.3 percent.

Demand for credit remained the principal driver of money supply growth. Domestic
claims grew by 6.2 percent in August from 5.8 percent (revised) in the previous month. This
was due mainly to the sustained growth in credit to the private sector. Loans for production
activities continued to be driven by lending to key sectors such as real estate activities;
financial and insurance activities; electricity, gas, steam and airconditioning supply;
construction; and wholesale and retail trade, repair of motor vehicles and motorcycles.

Loans for household consumption increased due to the growth in credit card loans,
motor vehicle loans, and salary-based general purpose consumption loans during the
month. Meanwhile, net claims on the central government grew by 2.1 percent following a
1.8-percent contraction in July, reflecting the increased borrowings by the National
Government.

Net foreign assets (NFA) in peso terms increased by 8.9 percent in August from
5.8 percent in July. The BSP's NFA position expanded during the month, driven by foreign
exchange inflows coming mainly from overseas Filipinos' remittances and business process
outsourcing receipts. Similarly, the NFA of banks increased as their foreign assets grew as a
result of higher loans and investments in marketable debt securities.

The BSP will continue to monitor domestic liquidity dynamics to ensure that overall
monetary conditions remain in line with maintaining price and financial stability.

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