BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 718B ($476M) to stand at LBP 198.243B ($131.50B) by the week ending November 11, 2021. As such, on an annual basis, M3 increased by 0.03% year over year and decreased by 0.50% since year-start (YTD).
In details, M1 regressed by a weekly LBP 389B ($258M) to settle at LBP 53,389B ($35.42B) by November 11, 2021. The contraction is attributed to the decrease in currency in circulation and demand deposits of LBP 68B and LBP 321B, respectively.
In turn, total deposits (excluding Demand deposits) decreased by $218.13M, owing to a decrease in Terms and saving deposits by LBP 94B ($62.35M). In the same token, deposits denominated in foreign currencies regressed by USD 155M.
As such, the rate of broad money dollarization increased from 61.96% in the week ending November 04, 2021 to 62.072% in the week ending November 11, 2021.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 3.14% and 1.04% in October 2020 to 1.34% and 0.23%, respectively, in October 2021. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 7.61% and 7.46% in October 2020 to 7.46% and 6.86%, respectively, in October 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 October 2021, M3 stood at $132.41, 0.92% more than October 2020; NFA were $15.32B, less by 16.62% YOY; CPS was $27.88B, less by 22.74% YOY; NCPS was $35.17B, less by 11.65% annually; and OIN were $53.97B, higher by an annual 46.50%, 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 11, 2021, the Ministry of Finance (MoF) raised LBP 77.884B ($51.66M) 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 64.84% of total subscriptions, while the 3M and 1Y T-bills accounted for the remaining shares of 21.65% and 13.51%, respectively. In details, the yield on 3M and 1 Y T-bills stood at 3.5% and 4.5%, respectively. Meanwhile coupon on the 5Y notes stood at 6%.
Source: BDL; MoF