BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 421B ($279M) to stand at LBP 201,745B ($133.83B) by the week ending May 20, 2021. As such, on an annual basis, M3 increased by 3.25% year over year and by 1.26% since year-start (YTD).
In details, M1 decreased by a weekly LBP 69B ($46M) to settle at LBP 49,226B ($32.65M) by May 20, 2021. The increase is mainly attributed to an increase in currency in circulation of LBP 96B and a decrease in demand deposits of LBP 165B.
In turn, total deposits (excluding Demand deposits) decreased by LBP351.51B ($233.17M), owing to a decrease in Terms and saving deposits in LBP by 74B ($49.09M). In addition, deposits denominated in foreign currencies decreased by $184M.
As such, the rate of broad money dollarization slightly decreased from 63.389% in the week ending May 13, 2021 to 63.383% in the week ending May 20, 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 May 20, 2021, the Ministry of Finance (MoF) raised LBP 146.44B ($97.14M) 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 7Y notes which grasped 90.56% of total subscriptions, while 6M T-bills and 3Y notes accounted for the remaining shares of 6.03% and 3.41%, respectively. In details, the yield on 6M stood at 4% while coupon on the 3Y and on the 7Y notes stood at 5.58% and 6.5%, respectively.
Source: BDL; MoF