MoF Raised $1,101M in the Treasury Bills’ Auction Held on October 8, 2020

BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by a weekly LBP 296B ($196M) in the week ending October 8, 2020 to stand at LBP 196,467B ($130.33B), leading to an annual decrease of 6.05% and a 2.97% decline since year-start (YTD).

In details, M1 expanded by a weekly LBP 336B ($223M) to settle at LBP 33,123B ($21.97B) by October 8, 2020. The uptick is mainly attributed to increase in Currency in circulation by LBP 769B ($510M)   that was offset by a decrease in in Demand deposits by LBP 433B ($287M).

 In turn, total deposits (excluding Demand deposits) decreased by LBP 631.83B ($419M), owing to a weekly drops in Term and savings deposits and in Deposits denominated in foreign currencies by LBP 189B ($125M) and USD 293M, respectively.

As such, the rate of broad money dollarization declined, as it went from 68.53% in the week ending October 1, to 68.41% in the week ending October 8, 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 8, 2020, the Ministry of Finance (MoF) raised LBP 1,659.97B ($1,101M) through the issuance of T-bills maturing in 6 months (6M) and notes maturing in 3 year (3Y) and 7 year (7Y). The highest demand was recorded on the 7Y notes which grasped 98.90% of total subscriptions, while the 6M T-bills and 3Y notes accounted for the remaining shares of 0.67% and 0.42%, respectively. In details, the yields on the 6M stood at 4%, while the coupon rates on 3Y and 7Y stood at 5.50% and 6.50% respectively.

 

Source: BDL; MoF

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