BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 63B ($42M) to stand at LBP 198.961B ($131.98B) by the week ending November 04, 2021. As such, on an annual basis, M3 increased by 0.52% year over year and decreased by 0.14% since year-start (YTD).
In details, M1 increased by a weekly LBP 213B ($142M) to settle at LBP 53,778B ($35.67B) by November 04, 2021. The expansion is attributed to the increase in currency in circulation of LBP 1046B and the decrease in demand deposits of LBP 833B.
In turn, total deposits (excluding Demand deposits) decreased by $183.47M, owing to a decrease in Terms and saving deposits by LBP 51B ($33.83M). In the same token, deposits denominated in foreign currencies regressed by $150M.
As such, the rate of broad money dollarization decreased from 62.06% in the week ending October 28, 2021 to 61.96% in the week ending November 04, 2021.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 3.35% and 1.15% in September 2020 to 1.53% and 0.26%, respectively, in September 2021. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 7.89% and 7.54% in September 2020 to 7.65% and 6.34%, respectively, in September 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 September 2021, M3 stood at $132.90, 1.51% more than September 2020; NFA were $14.97B, less by 20.83% YOY; CPS was $28.59B, less by 22.43% YOY; NCPS was $36.29B, less by 9.81% annually; and OIN were $53.03B, higher by an annual 51.95%, 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 November 04, 2021, the Ministry of Finance (MoF) raised LBP 580.930B ($385.35M) 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 51.64% of total subscriptions, while the 7Y notes and 6M T-bills accounted for the remaining shares of 45.76% and 2.59%, 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