BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 206B ($137M) to stand at LBP 200,573B ($133.05B) by the week ending August 05, 2021. As such, on an annual basis, M3 increased by 2.62% year over year and by 0.67% since year-start (YTD).
In details, M1 added a weekly LBP 90B ($60M) to settle at LBP 51,732B ($34.32B) by August 05, 2021. The expansion is mainly attributed to the increase in currency in circulation of LBP 464B and a decrease in demand deposits of LBP 374B.
In turn, total deposits (excluding Demand deposits) decreased by $196.82M, owing to a decrease in Terms and saving deposits in LBP 99B($65.67M). In addition, deposits denominated in foreign currencies contracted by $131M.
As such, the rate of broad money dollarization slightly decreased from 62.678% in the week ending July 22, 2021 to 62.644% in the week ending August 05, 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 29, 2021, the Ministry of Finance (MoF) raised LBP 286.154B ($189.82M) through the issuance of T-Bills maturing in 6 months (6M), and notes maturing in 2 years (2Y) and 10 years (10Y). The highest demand was recorded on the 2Y notes which grasped 76.88% of total subscriptions, while the 10Y notes and the 6M T-bills accounted for the remaining shares of 19.69% and 3.43%, respectively. In details, the yield on 6M stood at 4%. Meanwhile coupon on the 2Y and 10Y notes stood at 5% and 7%, respectively.
Source: BDL; MoF