The country’s liquidity position in October expanded on a year-on-year basis to 8.2 percent in October or to P14.6 trillion indicating that it is better equipped to service debts and pay for imports needed.
THE country’s liquidity (M3) position expanded by 8.2 percent year-on-year to P14.6 trillion in October 2021, which though slightly lower than the 8.3 percent growth in September still indicates that the economy is in a better position to pay debts and imports.
On a month-on-month, the liquidity, seasonally-adjusted, increased by 0.7 percent.
Domestic claims grew by 7.5 percent year-on-year in October from 7.7 percent (revised) in the previous month due to the expansion in net claims on the central government and the continued improvement in bank lending to the private sector.
Net claims on the central government rose by 21.5 percent in October from 24.4 percent (revised) in September on the back of sustained borrowings by the National Government.
Claims on the private sector, driven by bank lending to non-financial private corporations, went up by 2.6 percent in October from 3.1 percent in September.
Net foreign assets (NFA) in peso terms expanded by 8.8 percent in October from 11.3 percent in September.
The pace of expansion of the BSP’s NFA position moderated during the month, reflecting a slower increase in the country’s gross international reserves relative to the same period a year ago.
Meanwhile, the NFA of banks grew at a broadly steady pace, with banks’ foreign assets rising on account of higher deposits maintained overseas by local branches of foreign banks.
Looking ahead, the BSP will ensure appropriate liquidity conditions to preserve ongoing policy support to domestic economic activity, consistent with its price and financial stability objectives.
Monetary authorities will remain patiently data-dependent in maintaining monetary accommodation to help achieve a sustainable recovery from the pandemic.
Liquidity indicates a country’s ability to pay debt obligations, or current liabilities, without having to raise external capital or take out loans.
High liquidity means that a country can easily meet its short-term debts while low liquidity implies the opposite and that a company could imminently face bankruptcy.
Liquidity refers to the amount of money a country has on hand and the ability to quickly convert assets into cash. The higher the liquidity, the easier it is to meet financial obligations.
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