BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 339B ($225M) to stand at LBP 201,761B ($133.84B) by the week ending March 25, 2021. As such, on an annual basis, M3 increased by 3.70% Year over year and by 1.26% since year-start (YTD).
In details, M1 increased by a weekly LBP 123B ($82M) to settle at LBP 46,100B ($30.58B) by March 25, 2021. The increase is mainly attributed to an increase in demand deposits of LBP 91 billion and in currency in circulation of LBP 32 billion.
In turn, total deposits (excluding Demand deposits) decreased by LBP 462.80B ($306.99M), owing to a decrease in Terms and saving deposits in LBP by 128B ($84.90M). In addition, deposits denominated in foreign currencies decreased by $222M.
As such, the rate of broad money dollarization slightly decreased from 64.43% in the week ending March 18, 2021 to 64.37% in the week ending March 25, 2021.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 5.81% and 3.22% in February 2020 to 2.11% and 0.54%, respectively, in February 2021. As for the average lending rate in LBP, it went down from 9.33% in February 2020 to 7.59% in February 2021, while the average lending rate in USD declined from 9.11% in February 2020 to 6.92% in February 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 February 2021, M3 stood at $133.87B, 2.10% more than February 2020; NFA were $16.11, less by 40.75% YOY; CPS was $34.04B, less by 21.98% YOY; NCPS was $40.47B, less by 9.36% annually; and OIN were $43.97B, higher by an annual 159.10%, 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 25, 2021, the Ministry of Finance (MoF) raised LBP 350B ($232M) through the issuance of T-Bills maturing in 6 months (6M) and notes maturing in 3 years (3Y) and 7 years (7Y). The highest demand was recorded on the 3Y notes which grasped 61.9% of total subscriptions, while 7Y notes and 6M T-bills accounted for the remaining shares of 34.73% and 3.08%, respectively. In details, the yield on 6M stood at 3.92% while coupon rate on the 3Y and 7Y notes stood at 5.5% and 6.5%, respectively.
Source: BDL; MoF