BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by LBP 63B ($42M) to stand at LBP 201,768B ($133.84B) by the week ending April 29, 2021. As such, on an annual basis, M3 increased by 3.32% year over year and by 1.27% since year-start (YTD).
In details, M1 increased by a weekly LBP 202B ($134M) to settle at LBP 48,138B ($31.93B) by April 29, 2021. The increase is mainly attributed to an increase in demand deposits of LBP 433 billion and a decrease in currency in circulation of LBP 231 billion.
In turn, total deposits (excluding Demand deposits) decreased by LBP138.76B ($92.04M), owing to a decrease in Terms and saving deposits in LBP by 171B ($113.42M). In addition, deposits denominated in foreign currencies increased by $21M.
As such, the rate of broad money dollarization slightly decreased from 63.758% in the week ending April 22, 2021 to 63.754% in the week ending April 29, 2021.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 5.13% and 2.53% in March 2020 to 1.96% and 0.52%, respectively, in March 2021. As for the average lending rate in LBP, it went down from 9.41% in March 2020 to 8.02% in March 2021, while the average lending rate in USD declined from 8.55% in March 2020 to 7.14% in March 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 March 2021, M3 stood at $134.11B, 2.9% more than March 2020; NFA were $15.30, less by 38.64% YOY; CPS was $32.82B, less by 23.16% YOY; NCPS was $39.92B, less by 10.08% annually; and OIN were $46.06B, higher by an annual 152.37%, 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 29, 2021, the Ministry of Finance (MoF) raised LBP 81.51B ($54.07M) 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 5Y notes which grasped 85.39% of total subscriptions, while 1Y notes and 3M T-bills accounted for the remaining shares of 9.74% and 4.87%, respectively. In details, the yield on 3M stood at 3.5% while yield on the 1Y and the coupon on the 5Y notes stood at 4.5% and 6 %, respectively.
Source: BDL; MoF