BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 576B ($376M) to stand at LBP 199,311B ($132.21B) by the week ending October 14, 2021. As such, on an annual basis, M3 increased by 0.89% year over year and by 0.03% since year-start (YTD).
In details, M1 regressed by a weekly LBP 293B ($194M) to settle at LBP 53,468B ($35.47B) by October 14, 2021. The contraction is attributed to the decrease in demand deposit by LBP 293B and an increase in currency in circulation by LBP 1B.
In turn, total deposits (excluding Demand deposits) decreased by $182.119M, owing to a decrease in Terms and saving deposits by LBP 105B ($69.65m). Moreover, deposits denominated in foreign currencies regressed by $113M.
As such, the rate of broad money dollarization slightly increased from 61.956% in the week ending October 07, 2021 to 62.05% in the week ending October 14, 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 August 2021, M3 stood at $133.21B, 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 October 07, 2021, the Ministry of Finance (MoF) raised LBP 379.170B ($251.72M) through the issuance of T-Bills maturing in 6 months (6M), and notes maturing in 3 years (3Y) and 7 years (7Y). The highest demand was recorded on the 3Y notes which grasped 52.74% of total subscriptions, while the 6M T-bills and 7Y notes accounted for the remaining shares of 8.78% and 38.47%, respectively. In details, the yield on 6M stood at 4%. Meanwhile coupon on the 3Y notes and 7Y notes stood at 5.50% and 6.50%, respectively.
Source: BDL; MoF