BDL’s latest statistics on money supply revealed that Broad Money (M3) increased slightly by LBP 1,015B ($673M) to stand at LBP 202,830B ($134.55B) by the week ending March 04, 2021. As such, on an annual basis, M3 increased by 2.81% Year over year and by 1.80% since year-start (YTD).
In details, M1 expanded by a weekly LBP 1,328B ($881M) to settle at LBP 45,834B ($30.40B) by March 04, 2021. The upsurge is mainly attributed to the increase in Currency in circulation and in demand deposits by LBP 1,085B ($719.73M) and LBP 243B ($161.19M) over the same period.
In turn, total deposits (excluding Demand deposits) decreased by LBP 313.37B ($207.87M), owing to a decrease in deposits denominated in foreign currencies by $67M. In addition, Terms and saving deposits in LBP witnessed a drop by LBP 212B ($140.63M).
As such, the rate of broad money dollarization slightly regressed from 64.79% in the week ending February 25, 2021 to 64.41% in the week ending March 04, 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 January 2021, M3 stood at $133.36B, 0.61% more than January 2020; NFA were $17.25B, less by 36.30% YOY; CPS was $34.07B, less by 24.74% YOY; NCPS was $39.83B, less by 12.32% annually; and OIN were $42.19B, higher by an annual 159.57% , 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 March 04, 2021, the Ministry of Finance (MoF) raised LBP 107,589B ($71.37M) through the issuance of T-Bills maturing in 3 months (3M) and 1 year (1Y), and notes maturing 5 years (5Y). The highest demand was recorded on the 5Y notes which grasped 67.57% of total subscriptions, while 3M T-Bills and 1Y T-Bills accounted for the remaining shares of 16.41% and 16.02%, respectively. In details, the yields on 3M T-Bills and 1Y T-Bills stood at 3.5% and 4.5%, respectively, while coupon rate on the 5Y notes stood at 6%.
Source: BDL; MoF