BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by a weekly LBP 424B ($281M) in the week ending January 07, 2021 to stand at LBP 199,667B ($132.45B). As such, on an annual basis, M3 decreased by 1.23% and 0.21% since year-start (YTD).
In details, M1 expanded by a weekly LBP 958B ($636M) to settle at LBP 40,913B ($27.14B) by January 07, 2021. The upsurge is mainly attributed to the weekly increase in Currency in circulation and demand deposits by LBP 873B ($579M) and by LBP 85B ($56.38M).
In turn, total deposits (excluding Demand deposits) decreased by LBP 534.45B ($354.53M), owing to a weekly decline in deposits denominated in foreign currencies by $190M. In addition, Terms and saving deposits in LBP witnessed a weekly drop by LBP 248B ($164.5M).
As such, the rate of broad money dollarization dropped from 66.14% in the week ending December 31, 2020 to 65.86% in the week ending January 07, 2021.
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 $132.21B, 1.57% 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 January 07, 2021, the Ministry of Finance (MoF) raised LBP 126.74B ($84.07M) through the issuance of T-Bills maturing in 3 months (3M) and in 1 year (1Y) and notes maturing in 5 years (5Y). The highest demand was recorded on the 5Y notes which grasped 65.88% of total subscriptions, while 1Y T-bills and 3M T-bills accounted for the remaining shares of 19.25% and 14.86%, respectively. In details, the yields on 3M T-bills and 1Y T-Bills stood at 3.50% and 4.50% while coupon rate on the 5Y notes stood at 6%.
Source: BDL; MoF