BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 204B ($135M) to stand at LBP 198.039B ($131.37B) by the week ending November 18, 2021. As such, on an annual basis, M3 decreased by 0.20% year over year and by 0.60% since year-start (YTD).
In details, M1 added LBP 13B ($8M) by a weekly to settle at LBP 53,402B ($35.42B) by November 18, 2021. The expansion is attributed to the increase in currency in circulation by LBP 64B and to the decrease in demand deposits of LBP 51B.
In turn, total deposits (excluding Demand deposits) decreased by $143.33M, owing to a decrease in Terms and saving deposits by LBP 32B ($21.22M). In the same token, deposits denominated in foreign currencies regressed by USD 122M.
As such, the rate of broad money dollarization decreased from 62.072% in the week ending November 11, 2021 to 62.043% in the week ending November 18, 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 18, 2021, the Ministry of Finance (MoF) raised LBP 276.249B ($183.24M) through the issuance of T-Bills maturing in 6 months (6M), and notes maturing in 2 years (2Y) and 10 years (10Y). The highest demand was recorded on the 2Y notes which grasped 72.39% of total subscriptions, while the 10Y notes and 6M T-bills accounted for the remaining shares of 14.18% and 13.43%, respectively. In details, the yield on 6M T-bills stood at 4%. Meanwhile coupon on the 2Y and 10Y notes stood at 5% and 7%, respectively.
Source: BDL; MoF