BDL’s latest statistics on money supply revealed that Broad Money (M3) increased slightly by LBP 398B ($264M) to stand at LBP 201,249B ($133.50B) by the week ending February 18, 2021. As such, on an annual basis, M3 increased by 1.50% Year over year and by 1.01% since year-start (YTD).
In details, M1 expanded by a weekly LBP 476B ($316M) to settle at LBP 43,755B ($29.02B) by February 18, 2021. The upsurge is mainly attributed to the increase in Currency in circulation and in demand deposits by of LBP 306B ($202.98M) and LBP 170B ($112.77M) over the same period.
In turn, total deposits (excluding Demand deposits) decreased by LBP 78.45B ($52.03M), owing to a decrease in deposits denominated in foreign currencies by $30M. In addition, Terms and saving deposits in LBP witnessed a drop by LBP 32B ($21.23M).
As such, the rate of broad money dollarization slightly regressed from 65.15% in the week ending February 11, 2021 to 64.9% in the week ending February 18, 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 by 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 18, 2021, the Ministry of Finance (MoF) raised LBP 124.564B ($82.63M) through the issuance of T-Bills maturing in 3 months (3M) and 1 year (1Y) and notes maturing in 5 years (5Y). The highest demand was recorded on the 5Y notes which grasped 67.61% of total subscriptions, while 1Y T-Bills and 3M T-Bills accounted for the remaining shares of 12.79% and 19.6%, respectively. In details, the yields on 3M T-Bills and 1Y T-Bills stood and 3.50% and 4.50% while coupon rate on the 5Y notes stood at 6%.
Source: BDL; MoF