M3 reached $131.30B Over the Period Ending November 25, 2021

BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 109B ($72M) to stand at LBP 197,930B ($131.30B) by the week ending November 25, 2021. As such, on an annual basis, M3 decreased by 0.39% year over year and by 0.66% since year-start (YTD).

In details, M1 added LBP 88B ($58M) by a weekly to settle at LBP 53,489B ($35.48B) by November 25, 2021. The expansion is attributed to the increase in demand deposits by of LBP 129B and a decrease in currency in circulation by LBP 41B.

In turn, total deposits (excluding Demand deposits) decreased by $130.14M, owing to a decrease in Terms and saving deposits by LBP 56B ($37.14M). In the same token, deposits denominated in foreign currencies regressed by USD 93M.

As such, the rate of broad money dollarization decreased from 62.043% in the week ending November 18, 2021 to 62%b by the week ending November 25, 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 25, 2021, the Ministry of Finance (MoF) raised LBP 285.490B ($189.380M) through the issuance of T-Bills maturing in 3 months (3M), and notes maturing in 1 year (1Y) and 5 years (5Y). The highest demand was recorded on the 5Y notes which grasped 82.80% of total subscriptions, while the 1Y notes and 3M T-bills accounted for the remaining shares of 6.55% and 10.62%, respectively. In details, the yield on 3M T-bills stood at 3.50%. Meanwhile coupon on the 1Y and 5Y notes stood at 4.31% and 6%, respectively.

Source: BDL; MoF

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