BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by LBP 1,120B to stand at LBP 196,811B ($130.55B) by the week ending February 03, 2022. As such, on an annual basis, M3 retreated by 2.20% year over year and by 1.22% since year-start (YTD).
In details, M1 increased by LBP 1,460B ($969M) by a week to settle at LBP 55,482B ($36.80B) by February 03, 2022. The expansion is attributed to the increase in demand deposits by LBP 39B and in currency in circulation by LBP 1,141B.
In turn, total deposits (excluding Demand deposits) decreased by $225.85M, owing to a decrease in Terms and saving deposits by LBP 40B ($26.53M). In the same token, deposits denominated in foreign currencies regressed by $199M.
As such, the rate of broad money dollarization increased from 61.81% in the week ending January 27, 2022 to 61.3% by the week ending February 03, 2022.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 2.64% and 0.94% in December 2020 to 1.09% and 0.19%, respectively, in December 2021. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 7.77% and 6.73% in December 2020 to 7.14% and 6.73%, respectively, in December 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 December 2021, M3 stood at $133.38, 0.51% more than December 2020; NFA were $15.20B, less by 15.16% YOY; CPS was $26.97B, less by 21.74% YOY; NCPS was $33.25B, less by 14.89% annually; and OIN were $57.94B, higher by an annual 40.56%, 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 January 27, 2022, the Ministry of Finance (MoF) raised LBP 361.103B ($239.537M) through the issuance of T-Bills maturing in 6 months (6M), and notes maturing in 3 years. The highest demand was recorded on the 3y notes which grasped 83.07% of total subscriptions, while the 6M T-bills accounted for the remaining shares of 16.92%. In details, the yield on 6M T-bills stood at 4%. Meanwhile coupon on the 3Y notes stood at 5.50%
Source: BDL; MoF