BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by LBP 187B ($124M) to stand at LBP 201,947B ($133.96B) by the week ending April 01, 2021. As such, on an annual basis, M3 increased by 2.82% Year over year and by 1.36% since year-start (YTD).
In details, M1 increased by a weekly LBP 1,007B ($668M) to settle at LBP 47,107B ($31.25B) by April 01, 2021. The increase is mainly attributed to an increase in demand deposits of LBP 631 billion and in currency in circulation of LBP 376 billion.
In turn, total deposits (excluding Demand deposits) decreased by $544M, owing to a decrease in Terms and saving deposits in LBP by 190B ($126M). In addition, deposits denominated in foreign currencies decreased by $418M.
As such, the rate of broad money dollarization slightly decreased from 64.37% in the week ending March 25, 2021 to 64% in the week ending April 01, 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 April 01, 2021, the Ministry of Finance (MoF) raised LBP 193B ($128M) through the issuance of T-Bills maturing in 3 months (3M) and notes maturing in 1 year (1Y) and 5 years (5Y). The highest demand was recorded on the 1Y notes which grasped 80.37% of total subscriptions, while 5Y notes and 3M T-bills accounted for the remaining shares of 14.96% and 4.66%, respectively. In details, the yield on 3M stood at 3.47% while coupon rate on the 1Y and 5Y notes stood at 4.31% and 6%, respectively.
Source: BDL; MoF