Domestic liquidity up 6.5%

The country’s domestic liquidity increased to P17.4 trillion by 6.5 percent in May from 5.6 percent in April on a year-on-year basis with the rise in lending to the private sector.

Month-on-month, domestic liquidity improved by 1.1 percent based on the preliminary data released Friday by the Bangko Sentral ng Pilipinas (BSP).

Domestic liquidity consists of savings, checking accounts, short-term time deposits, and deposit substitutes registered with banks.

Growth in private sector claims

The BSP data showed claims on residents grew by 10.7 percent, reflecting growth in claims on the private sector at 11.6 percent from 10.9 percent. The claims on this subgroup amounted to P12.1 trillion.

“This was due to sustained expansion in bank lending to non-financial private corporations and households,” BSP said in its report.

Meanwhile, the BSP said net claims on the central government decreased to 12.2 percent from 13.9 percent as the government continued to borrow funds for its various programs and projects.

NFA up

Net foreign assets (NFA) in peso terms rose by 4.9 percent from 2.1 percent.

Specifically, the BSP’s NFA rose by 8.6 percent while other banks’ NFA declined due to higher payments for bills and bonds.

HSBC economist Aris Dacanay said the implementation of the reduced rice tariff of 15 percent from 35 percent could free up some portion of household funds, which they may spend immediately or save.

“Cutting the tariff rate of rice by 20 percentage points could unlock around 2 percent of household budgets to be spent on other things, more so for low-income households who spend a larger proportion of their budgets on rice,” he said.