BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 535B ($355M) to stand at LBP 199,500B ($132.34 B) by the week ending August 26, 2021. As such, on an annual basis, M3 increased by 1.52% year over year and by 0.13% since year-start (YTD).
In details, M1 retreated by a weekly LBP 267B ($177M) to settle at LBP 51,491B ($34.16B) by August 26, 2021. The decrease is mainly attributed to the decrease in currency in circulation of LBP 541B and to the increase in demand deposit by LBP 274B.
In turn, total deposits (excluding Demand deposits) decreased by $178.08M, owing to a decrease in Terms and saving deposits in LBP 68B($45.10M). In addition, deposits denominated in foreign currencies contracted by $133M.
As such, the rate of broad money dollarization slightly increased from 62.632% in the week ending August 19, 2021 to 62.699% in the week ending August 26, 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 26, 2021, the Ministry of Finance (MoF) raised LBP 280.203B ($185.87M) through the issuance of T-Bills maturing in 6 months (6M), and notes maturing in 2 year (2Y) and 10 years (10Y). The highest demand was recorded on the 2Y notes which grasped 74.23% of total subscriptions, while the 10Y notes and the 6M T-Bills accounted for the remaining shares of 19.90% and 5.86%, respectively. In details, the yield on 6M stood at 4%. Meanwhile coupon on the 2Y and 10Y notes stood at 4.50% and 7%, respectively.
Source: BDL; MoF