The Bangko Sentral ng Pilipinas (BSP) said the increase in the country’s money supply slowed in March as bank lending continued to fall.

Domestic liquidity (M3) increased by 8.3 percent year on year to P14.2 trillion in the third month of the year, slower than the 9.4-pecent increase in February, according to a statement released Monday night by the central bank. M3 increased by 0.7 percent month over month and seasonally adjusted.

Domestic claims increased by 5.6 percent from a year ago in March, slower than the revised 5.7 percent rise a month earlier, the BSP said, owing to “mainly the modest expansion in net claims on the central government, even as bank lending to the private sector remained weak.”

Net claims on the central government increased by 47.4 percent in March, up from 46.5 percent in February, “owing partly to the national government’s sustained borrowings.”

Meanwhile, bank lending shrank by 4.5 percent in February, following a 2.7 percent decline the month before. The drop was the most significant since a 4.6 percent drop in May 2004.

Commercial bank loans fell 0.12 percent month-over-month and seasonally adjusted.

Loans to residents, net of reverse repurchase, slid by 3.9 percent, while outstanding loans to nonresidents also slipped by 20.4 percent.

“Credit activity remained tepid on banks’ tighter lending standards as a resurgence in coronavirus cases dampened the domestic economic outlook,” the Bangko Sentral said.

It added that consumer loans contracted by 9.9 percent in March after the 8.3-percent decline in the month before “due to the decline in credit card and motor vehicle loans.”

Lending for production activities decreased further by 3.2 percent from the 1.3-percent dip, as outstanding loans to these sectors continued to drop: wholesale and retail trade and repair of motor vehicles and motorcycles (-9.7 percent), manufacturing (-5.5 percent), and financial and insurance activities (-5.1 percent).