The country’s money supply grew faster in February despite the sustained slide in bank lending, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.
In a statement, the central bank said domestic liquidity (M3) rose by 9.4 percent year-on-year to P14 trillion in the second month of 2021, quicker than the 8.9-percent revised surge in January. Month-on-month and seasonally adjusted, M3 was up by 0.1 percent.
Domestic claims widened by 5.6 percent in February from a year ago, faster than the adjusted 4.9-percent acceleration a month earlier, which was “due mainly to the faster growth in net claims on the central government, even as bank lending to the private sector remained tepid,” the BSP explained.
It said net claims on the central government expanded by 47.1 percent in February from 39 percent in January, “owing partly to the sustained borrowings by the national government.”
Meanwhile, bank lending eased further by 2.7 percent from the revised 2.5-percent fall a month ago. The figure represented its quickest slide since August 2006’s 2.9-percent slip.
Month-on-month and seasonally adjusted, commercial bank loans saw an uptick of 0.2 percent.
Loans to residents, net of reverse repurchase, declined by 2.1 percent, while outstanding loans to nonresidents also decreased by 20.7 percent.
“Credit activity eased further as demand for loans remained soft,” the Bangko Sentral stressed.
It added that consumer loans shrank by 8.3 percent in February following a revised 7.3-percent dip in the previous month “due to the continued decline in credit card and motor vehicle loans as well as the slowdown in salary-based consumption loans.”
Lending for production activities dived further by 1.3 percent from the 1.1-percent drop, as outstanding loans to these sectors continued to plunge: wholesale and retail trade and repair of motor vehicles and motorcycles (-6.3 percent), financial and insurance activities (-7.5 percent), and manufacturing (-5.7 percent).
Meanwhile, the central bank said the contraction was partially moderated by the pick up in loans to some key production sectors such as real estate activities (5.1 percent); electricity, gas, steam and airconditioning supply (3.6 percent); as well as transportation and storage (7.1 percent).
“Going forward, the BSP shall ensure that the overall stance of monetary policy continues to be in line with the BSP’s price and financial stability objectives while remaining supportive of the government’s ongoing initiatives to combat the effects of the pandemic on the economy,” the Bangko Sentral noted.
The central bank also assured the public that it is “prepared to take immediate measures as appropriate to ensure ample liquidity and credit in the financial system, consistent with its price and financial stability objectives.”