M3 reached $133.68B Over the Period Ending June 24, 2021

M3 reached $133.68B Over the Period Ending June 24, 2021

BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 235B ($156M) to stand at LBP 201,525B ($133.68B) by the week ending June 24, 2021. As such, on an annual basis, M3 increased by 3.21% year over year and by 1.15% since year-start (YTD).

In details, M1 retreated by a weekly LBP 14B ($9M) to settle at LBP 50,581B ($33.55B) by June 24, 2021. The contraction is mainly attributed to the decrease in currency in circulation of LBP 331B while the demand deposits increased by LBP 317B.

In turn, total deposits (excluding Demand deposits) decreased by $146.59M, owing to a decrease in Terms and saving deposits in LBP by $66.99M. In addition, deposits denominated in foreign currencies decreased by $80M.

As such, the rate of broad money dollarization slightly increased from 62.923% in the week ending June 17, 2021 to 62.937% in the week ending June 24, 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 24, 2021, the Ministry of Finance (MoF) raised LBP 196,613B ($130.42M) through the issuance of T-Bills maturing in 3 months (3M), and notes maturing in 1 years (1Y) and 5 years (5Y). The highest demand was recorded on the 5Y notes which grasped 93.27% of total subscriptions, while 1Y note and 3M T-bills accounted for the remaining shares of 3.89% and 2.83%, respectively. In details, the yield on 3M stood at 3.50%. Meanwhile coupon on the 1Y and 5Y notes stood at 4.50% and 6%, respectively.

Source: BDL; MoF

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