MONEY SUPPLY continued to grow in June — although at a slower pace — amid a tempered increase in bank lending, the Bangko Sentral ng Pilipinas (BSP) reported on Tuesday.
M3, or the broadest measure of money in an economy, reached P11.1 trillion in June as it grew by 11.7%, slowing from the 14.3% increase clocked in May. This is the slowest pace seen since an 11.5% rise recorded in May 2017.
Month on month, money supply actually declined by 0.1%.
Funds from local sources rose by 16% in June, slower than the 16.8% pickup in May as growth of bank loans eased, the central bank said in a statement.
Growth of net claims on the government eased to 12.5% from 17.3% the previous month, which came even after the government borrowed more money. The Bureau of the Treasury raised P121.765 billion from three-year retail bonds in June, on top of its weekly float of debt notes.
Net foreign assets (NFA) in peso terms went up by 2.4%, easing from May’s 5.4% pickup following a decline in dollar reserves maintained by the BSP.
Gross international reserves slipped to $77.525 billion in June from $79.202 billion the preceding month.
Despite the softer increase, the BSP said overall money supply growth “remains in line” with inflation and economic activity, as it continued to support key production sectors.
Credit growth likewise eased to 19.1% in June from the downward-revised 19.3% growth in May, the central bank said, logging the slowest climb since March.
Computed to include reverse repurchase agreements availed by banks, bank lending grew by 17.6% compared to 17.7% a month earlier.
Some 88.6% of the loans funded productive sectors, growing by 19.2% in June versus 19.3% the preceding month.
Lending for community, social and personal activities nearly doubled, while credit for finance and insurance increased by a third.
Other sectors that got bigger loans were wholesale and retail trade, repair of motor vehicles and motorcycles (24.9%); manufacturing (17.8%) and real estate activities (16.1%).
On the other hand, borrowings for administrative and support services fell by 52.9%, while credit for the farm sector slipped by 7.8%.
Consumer lending also softened in June as credits grew by just 17.7%, slower than the 18.4% clocked in the previous month. This came as loans for motor vehicles slowed while other borrowings declined, versus an increase in salary-based borrowings and bigger credit card debts.
The BSP raised interest rates by another 25 basis points in its June policy meeting, following an increase of the same magnitude in May as policy makers sought to rein in inflation pressures.
“The BSP will continue to ensure that the expansion in domestic credit and liquidity proceeds in line with overall economic growth while remaining consistent with the BSP’s price and financial stability objectives,” the central bank said.
Debt watcher Fitch Ratings affirmed the Philippines’ investment grade status last month, but flagged overheating risks given rapid bank lending growth, a bigger trade gap and rising inflation. — Melissa Luz T. Lopez