BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 655B ($434M) to stand at LBP 201,760B ($133.84B) by the week ending June 17, 2021. As such, on an annual basis, M3 increased by 3.30% year over year and by 1.26% since year-start (YTD).
In details, M1 retreated by a weekly LBP 58B ($38M) to settle at LBP 50,595B ($33.56B) by June 17, 2021. The contraction is mainly attributed to the decrease in currency in circulation of LBP 191B while the demand deposits increased by LBP 133B.
In turn, total deposits (excluding Demand deposits) decreased by $395.93M, owing to a decrease in Terms and saving deposits in LBP by $94.85M. In addition, deposits denominated in foreign currencies decreased by $301M.
As such, the rate of broad money dollarization slightly decreased from 62.944% in the week ending June 10, 2021 to 62.923% in the week ending June 17, 2021.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 4.63% and 1.99% in May 2020 to 1.85% and 0.42%, respectively, in May 2021. As for the average lending rate in LBP, it went down from 8.45% in May 2020 to 7.8% in May 2021, while the average lending rate in USD declined from 7.9% in May 2020 to 6.61% in May 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 May 2021, M3 stood at $134.49B, 3.72% more than May 2020; NFA were $16.61B, less by 33.30% YOY; CPS was $31.21B, less by 22.81% YOY; NCPS was $36.40B, less by 15.61% annually; and OIN were $50.25B, higher by an annual 137.22%, 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 June 17, 2021, the Ministry of Finance (MoF) raised LBP 339,183B ($224.99M) 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 62.50% of total subscriptions, while 7Y note and 6M T-bills accounted for the remaining shares of 34.75% and 2.75%, respectively. In details, the yield on 6M stood at 4%. Meanwhile coupon on the 3Y and 7Y notes stood at 5.5% and 6.5%, respectively.
Source: BDL; MoF