BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by LBP 526B ($349M) to stand at LBP 202,294B ($129.54) by the week ending May 06, 2021. As such, on an annual basis, M3 increased by 3.59% year over year and by 1.53% since year-start (YTD).
In details, M1 increased by a weekly LBP 903B ($599M) to settle at LBP 22,892B ($15.19B) by May 06, 2021. The increase is mainly attributed to an increase in currency in circulation of LBP 983B and a decrease in demand deposits of LBP 80B.
In turn, total deposits (excluding Demand deposits) decreased by LBP376.45B ($249.72M), owing to a decrease in Terms and saving deposits in LBP by 182B ($120.72M). In addition, deposits denominated in foreign currencies decreased by $129M.
As such, the rate of broad money dollarization slightly decreased from 63.758% in the week ending April 29, 2021 to 63.492% in the week ending May 06, 2021.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 5.06% and 2.32% in April 2020 to 2.11% and 0.49%, respectively, in April 2021. As for the average lending rate in LBP, it went down from 9.29% in April 2020 to 8% in April 2021, while the average lending rate in USD declined from 7.79% in April 2020 to 6.88% in April 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 April 2021, M3 stood at $134.33B, 3.72% more than April 2020; NFA were $15.59B, less by 3939% YOY; CPS was $31.81B, less by 22.49% YOY; NCPS was $36.68B, less by 10.36% annually; and OIN were $48.23B, higher by an annual 149.48%, 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