BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased slightly by LBP 328B ($218M) to stand at LBP 200,851B ($133.23B) by the week ending February 11, 2021. As such, on an annual basis, M3 increased by 0.99% Year over year and by 0.81% since year-start (YTD).
In details, M1 expanded by a weekly LBP 536B ($355M) to settle at LBP 43,278B ($28.71B) by February 11, 2021. The upsurge is mainly attributed to the increase in Currency in circulation of LBP 675B ($447.76M) noting that demand deposits went down by LBP 139B ($92.21M) over the same period.
In turn, total deposits (excluding Demand deposits) decreased by LBP 207.18B ($137.43M), owing to an increase in deposits denominated in foreign currencies by $0.61M. In addition, Terms and saving deposits in LBP witnessed a drop by LBP 208B ($137.98M).
As such, the rate of broad money dollarization slightly regressed from 65.25% in the week ending February 4, 2021 to 65.15% in the week ending February 11, 2021.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 7.36% and 4.62% in December 2019 to 2.64% and 0.94%, respectively, in December 2020. As for the average lending rate in LBP, it went down from 9.09% in December 2019 to 7.77% in December 2020, while the average lending rate in USD declined from 10.84% in December 2019 to 6.73% in December 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 December 2020, M3 stood at $132.70B, 1.37% less than year-start (YTD); NFA were $17.93B, less 32.57% YTD; CPS was $34.47B, less by 26.62%; NCPS was $39.07B, less by 17.40%; and OIN were $41.23B, higher by 171.66%, 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 February 11, 2021, the Ministry of Finance (MoF) raised LBP 110.048B ($73M) through the issuance of notes maturing in 10 years (10Y). The whole demand was recorded on the 10Y notes which grasped 100% of total subscriptions with a coupon rate of 7%.
Source: BDL; MoF