The country’s money supply grew faster in February despite the continued decline in bank lending, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.
In a statement, the central bank said domestic liquidity (M3) increased 9.4 percent year-on-year to 14 trillion pesos in the second month of 2021, faster than the revised increase of 8.9 percent in January. On a monthly basis and seasonally adjusted, M3 increased by 0.1%.
Domestic claims widened 5.6% in February from a year ago, faster than the adjusted acceleration of 4.9% a month earlier, which was “mainly due to faster growth net claims on the central government, even if bank lending to the private sector remained lukewarm, ”explained the BSP.
He said net claims on the central government rose 47.1% in February from 39% in January, “in part due to sustained borrowing from the national government.”
At the same time, bank lending fell a further 2.7% from the revised 2.5% drop a month ago. The figure represented its fastest drop since the 2.9% drop in August 2006.
On a monthly basis and seasonally adjusted, commercial bank loans increased 0.2%.
Loans to residents, net of reverse repurchase agreements, fell 2.1%, while outstanding loans to non-residents also fell 20.7%.
“Credit activity has slowed down further while demand for loans has remained weak,” Bangko Sentral said.
He added that consumer loans fell 8.3% in February after a revised 7.3% drop in the previous month “due to the continued decline in credit card and motor vehicle loans as well as the slowdown. wage-based consumer loans “.
Loans to production activities plunged again by 1.3% compared to the drop of 1.1%, with outstanding loans to these sectors continuing to decline: wholesale and retail trade and repair of motor vehicles and motorcycles (-6.3%), financial and insurance activities (-7.5 percent) and manufacturing (-5.7 percent).
Meanwhile, the central bank said the contraction was partially moderated by the resumption of lending to some key production sectors such as real estate activities (5.1%); supply of electricity, gas, steam and air conditioning (3.6%); as well as transport and storage (7.1%).
“Going forward, the BSP will ensure that the overall stance of monetary policy continues to be in line with BSP’s pricing and financial stability objectives while remaining supportive of ongoing government initiatives to address the effects of the pandemic on the economy, ”Bangko said. Sentral noted.
The central bank also assured the public that it was “ready to take immediate action, if necessary, to ensure sufficient liquidity and credit in the financial system, in accordance with its price and financial stability objectives.”