BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by LBP 656B ($435M) to stand at LBP 201,387B ($133.59B) by the week ending July 22, 2021. As such, on an annual basis, M3 increased by 3.17% year over year and by 1.08% since year-start (YTD).
In details, M1 added a weekly LBP 695B ($461M) to settle at LBP 52,100B ($34.56B) by July 22, 2021. The expansion is mainly attributed to the increase in demand deposits of LBP 833B and a decrease in currency in circulation of LBP 138B.
In turn, total deposits (excluding Demand deposits) decreased by $25.61M, owing to a decrease in Terms and saving deposits in LBP 70B($46.43M). In addition, deposits denominated in foreign currencies added by $21M.
As such, the rate of broad money dollarization slightly decreased from 62.691% in the week ending July 15, 2021 to 62.502% in the week ending July 22, 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 22, 2021, the Ministry of Finance (MoF) raised LBP 275 B ($182.42M) 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 1Y T-Bills which grasped 56.37% of total subscriptions, while the 5Y notes and the 3M T-bills accounted for the remaining shares of 41.10% and 2.52%, respectively. In details, the yield on 3M and 1Y stood at 3.50% and 4.50%, respectively. Meanwhile coupon on the 5Y notes stood at 6%.
Source: BDL; MoF