BDL’s latest statistics on money supply revealed that Broad Money (M3) rose by a weekly LBP 948B ($629M) in the week ending October 1, 2020 to stand at LBP 196,763B ($130.52B), leading to an annual decrease of 5.98% and a 2.83% decline since year-start (YTD).
In details, M1 expanded by a weekly LBP 1,068B ($709M) to settle at LBP 32,787B ($21.75B) by October 1, 2020. The uptick is mainly attributed to increase in Currency in circulation and in Demand deposits by LBP 511B ($339M) and LBP 557B ($369M), respectively.
In turn, total deposits (excluding Demand deposits) decreased by LBP 141B ($79.87M), owing to a weekly drops in Term and savings deposits and in Deposits denominated in foreign currencies by LBP 91B ($60M) and USD 19M, respectively.
As such, the rate of broad money dollarization declined, as it went from 68.87% in the week ending September 24, to 68.53% in the week ending October 1, 2020.
Analytically, the money supply M3 can be derived from combining the balance sheet of BDL with the balance sheet of banks to arrive at the monetary survey of the banking system. The resulting M3 would be equal to the sum of: net foreign assets (NFA), credit to the private sector (CPS), net credit to the public sector (NCPS), and other items net (OIN). Latest data show that in August 2020, M3 stood at $130.6B, less by 2.9% from year-start (YTD); NFA was $21.8B, less 18.2%; CPS was $37.9B, less by 19.3%; NCPS was $40.1B, less by 15.3%; and OIN was $30.8B, higher by 103.1%, and comprising mostly (in BDL’s terminology) other assets which include open market operations and seigniorage.
In its treasury bills (T-Bills) auction dating October 1, 2020, the Ministry of Finance (MoF) raised LBP 67.63B ($44.86M) through the issuance of T-bills maturing in 3 months (3M) and 1 Year (1Y) and notes maturing in 5 Year (5Y). The highest demand was recorded on the 5Y notes which grasped 82.66% of total subscriptions, while the 3M and 1Y bills accounted for the remaining shares of 7.08% and 10.26%, respectively. In details, the yields on the 3M and 1Y bills stood at 3.47% and 4.31% respectively, while the coupon rates on the 5Y notes stood at 6%.
Source: BDL; MoF