MOF raised $95.17M in the Treasury Bills Auction held on December 3, 2020

MOF raised $95.17M in the Treasury Bills Auction held on December 3, 2020

BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by a weekly LBP 1,009B ($669M) in the week ending December 3, 2020 to stand at LBP 198,545B ($131.7B). As such, on an annual basis, M3 decreased by 3.34% and 1.95% since year-start (YTD).

In details, M1 expanded by a weekly LBP 1,659B ($1,101M) to settle at LBP 38,026B ($25.22B) by December 3, 2020. The upsurge is mainly attributed to the weekly increase in Currency in circulation and demand deposits by LBP 1,203B ($798M) and by LBP 456B ($302.5M).

In turn, total deposits (excluding Demand deposits) decreased by LBP 650.54B ($431.54M), owing to a weekly decline in deposits denominated in foreign currencies by $ 310M. In addition, Terms and saving deposits in LBP witnessed a weekly drop by LBP 182B ($120.73M).

As such, the rate of broad money dollarization dropped as it went from 67.34% in the week ending November 26 to 66.77% in the week ending December 3, 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 October 2020, M3 stood at $131.04B, 2.44% less than year-start (YTD); NFA were $18.45B, less 30.58% YTD; CPS was $36.09B, less by 23.17%; NCPS was $39.82B, less by 15.84%; and OIN were $36.84B, higher by 142.75%, and comprising mostly (in BDL’s terminology) other assets which include open market operations and seigniorage, considered to be a controversial account by some.

In its treasury bills (T-Bills) auction dating December 3, 2020, the Ministry of Finance (MoF) raised LBP 143.47B ($95.17M) 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 82.78% of total subscriptions, while 3Y notes and 6M T-bills accounted for the remaining shares of 10.46% and 6.77%, respectively. In details, the yield on 6M stood at 4% while coupon rates on the 3Y and 7Y stood at 5.50% and 6.50%.

Source: BDL; MoF

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