BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 291B ($193M) to stand at LBP 201,577B ($133.72B) by the week ending July 08, 2021. As such, on an annual basis, M3 increased by 3.27% year over year and by 1.17% since year-start (YTD).
In details, M1 progressed by a weekly LBP 224B ($149M) to settle at LBP 51,617B ($34.24B) by July 08, 2021. The expansion is mainly attributed to the increase in currency in circulation of LBP 621B and a decrease in demand deposits of LBP 397B.
In turn, total deposits (excluding Demand deposits) decreased by $341.73M, owing to a decrease in Terms and saving deposits in LBP 123B($81.59M). In addition, deposits denominated in foreign currencies decreased by $260M.
As such, the rate of broad money dollarization slightly decreased from 62.670% in the week ending July 01, 2021 to 62.566% in the week ending July 08, 2021.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 4.16% and 1.64% in June 2020 to 1.84% and 0.39%, respectively, in June 2021. As for the average lending rate in LBP, it went up from 6.84% in June 2020 to 7.32% in June 2021, while the average lending rate in USD declined from 7.49% in June 2020 to 6.46% in June 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 June 2021, M3 stood at $134.15B, 3.61% more than June 2020; NFA were $14.97B, less by 40.13% YOY; CPS was $30.63B, less by 22.15% YOY; NCPS was $36.85B, less by 13.52% annually; and OIN were $51.69B, higher by an annual 129.68%, 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 July 08, 2021, the Ministry of Finance (MoF) raised LBP 222.390B ($147.52M) through the issuance of T-Bills maturing in 3 months (3M) and 1 year (1Y), and notes maturing in 5 years (5Y). The highest demand was recorded on the 5Y notes which grasped 89.60% of total subscriptions, while 3M and 1Y T-bills accounted for the remaining shares of 5.23% and 5.17%, respectively. In details, the yield on 3M and 1Y stood at 3.5% and 4.5%, respectively. Meanwhile coupon on the 5Y notes stood at 6%.
Source: BDL; MoF