BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 124B ($82M) to stand at LBP 199,275B ($132.19 B) by the week ending September 23, 2021. As such, on an annual basis, M3 increased by 1.04% year over year and by 0.02% since year-start (YTD).
In details, M1 progressed by a weekly LBP 57B ($38M) to settle at LBP 52,152B ($34.59B) by September 23, 2021. The expansion is attributed to the increase in demand deposit and in currency in circulation by LBP 46B and LBP 11B, respectively.
In turn, total deposits (excluding Demand deposits) decreased by $120.17M, owing to a decrease in Terms and saving deposits by LBP 106B($70.31M). Moreover, deposits denominated in foreign currencies regressed by $50M.
As such, the rate of broad money dollarization slightly increased from 62.567% in the week ending September 16, 2021 to 62.569% in the week ending September 23, 2021.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 3.47% and 1.28% in August 2020 to 1.62% and 0.30%, respectively, in August 2021. As for the average lending rate in LBP, it went up from 7.14% in August 2020 to 7.52% in August 2021, while the average lending rate in USD declined from 7.54% in August 2020 to 5.87% in August 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 $133.20B, 2.05% more than August 2020; NFA were $14.96B, less by 31.29% YOY; CPS was $29.35B, less by 22.39% YOY; NCPS was $35.13B, less by 12.27% annually; and OIN were $53.74B, higher by an annual 74.14%, 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 September 16, 2021, the Ministry of Finance (MoF) raised LBP 269.153B ($178.54M) 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 96.40% of total subscriptions, while the 3M and 1Y T-bills accounted for the remaining shares of 2.48% and 1.12%, respectively. In details, the yield on 3M and 1Y stood at 3.50% and 4%, respectively. Meanwhile coupon on the 5Y notes stood at 6%.
Source: BDL; MoF