PH has enough liquidity to support growth, says BSP
The Bangko Sentral ng Pilipinas said there was sufficient liquidity in the country to help accelerate economic growth next year following a disappointing performance so far this year.
“Liquidity is not a problem. We have domestic liquidity growing by nearly 10 percent and we have available credit to provide support to growth,” BSP Deputy Governor Diwa Guinigundo said.
Guinigundo said the liquidity in the system just had to be tapped so that the economy could recover from the slower-than-targeted growth this year.
Data from the Bangko Sentral ng Pilipinas showed that annual growth in M3 or domestic liquidity—which includes currencies in circulation, demand deposits and money market instruments—stood at 9.4 percent in August. The level, the central bank said, was sufficient to spur growth. This was faster than the 8.3 percent registered in July.
Guinigundo also said bank lending was growing at a healthy pace, indicating the capacity of the country’s banking sector to finance investment initiatives.
Lending has so far grown by 20 percent this year and this shows sufficient supply of financing and strong demand from borrowers, he said.
“I don’t think the problem on growth is premised on monetary variables (liquidity),” he said.
What the economy needs to accelerate growth is investments, particularly in infrastructure, Guinigundo said.
The economy, measured in terms of gross domestic product, grew by 3.6 percent in the first three quarters of the year. This prompted the government to admit the full-year growth target of between 4.5 and 5.5 percent likely to be missed.
Economists partly blamed the anemic global demand, driven by the crisis in the United States and the Euro zone, for the slowdown.
They also attributed the slowdown of the domestic economy to the under-spending by the government.
Guinigundo said that if economic growth would be accelerated, the push should come from other factors besides liquidity, such as public spending.
Budget officials said under-spending, mostly in the first half, was due to efforts to scrutinize expenditure proposals of line agencies to make sure leakages from corruption are prevented.
