BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 426B ($283M) to stand at LBP 200,147B ($132.77 B) by the week ending August 12, 2021. As such, on an annual basis, M3 increased by 2.22% year over year and by 0.45% since year-start (YTD).
In details, M1 retreated a weekly LBP 133B ($88M) to settle at LBP 51,599B ($34.23B) by August 12, 2021. The contraction is mainly attributed to the decrease in demand deposit of LBP 240B and to the increase in currency in circulation of LBP 107B.
In turn, total deposits (excluding Demand deposits) decreased by $194.15M, owing to a decrease in Terms and saving deposits in LBP 135B($89.55M). In addition, deposits denominated in foreign currencies contracted by $104M.
As such, the rate of broad money dollarization slightly increased from 62.644% in the week ending August 05, 2021 to 62.699% in the week ending August 12, 2021.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 3.76% and 1.49% in July 2020 to 1.74% and 0.33%, respectively, in July 2021. As for the average lending rate in LBP, it went up from 7.14% in July 2020 to 7.26% in July 2021, while the average lending rate in USD declined from 7.42% in July 2020 to 5.99% in July 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 July 2021, M3 stood at $133.41B, 3.04% more than July 2020; NFA were $15.70B, less by 33.66% YOY; CPS was $29.82B, less by 22.36% YOY; NCPS was $35.30B, less by 12.69% annually; and OIN were $52.59B, higher by an annual 95.05%, 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 August 05, 2021, the Ministry of Finance (MoF) raised LBP 160.069B ($106.18M) 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 90.91% of total subscriptions, while the 1Y and the 3M T-bills accounted for the remaining shares of 5.97% and 3.12%, 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