BDL’s latest statistics on money supply revealed that Broad Money (M3) significantly decreased by LBP 1,547B ($1,026M) to stand at LBP 192,502B ($127.70B) by the week ending February 24, 2022. As such, on an annual basis, M3 retreated by 5.01% year over year and by 3.38% since year-start (YTD).
In details, M1 dropped by LBP 1,270B ($842M) by a week to settle at LBP 51,894B ($34.42B) by February 24, 2022. The contraction is attributed to the decrease in currency in circulation by LBP 406B and in demand deposits by LBP 864B.
In turn, total deposits (excluding Demand deposits) decreased by $184.23M, owing to a decrease in Terms and saving deposits by LBP 130B ($86.23M). In the same token, deposits denominated in foreign currencies dropped by $98M.
As such, the rate of broad money dollarization increased from 62.073% in the week ending to February 17, 2022, to 62.495% by the week ending February 24, 2022.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 2.31% and 0.58% in January 2021 to 1.03% and 0.18%, respectively, in January 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 8.53% and 6.52% in January 2021 to 6.4% and 6.15%, respectively, in January 2022.
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 January 2022, M3 stood at $130.67, 2.01% less than January 2021; NFA were $14.79B, less by 14.28% YOY; CPS was $26.29B, less by 22.84% YOY; NCPS was $32.59B, less by 18.16% annually; and OIN were $56.99B, higher by an annual 35.07%, 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 February 24, 2022, the Ministry of Finance (MoF) raised LBP 393.335B ($260.918M) through the issuance of T-Bills maturing in 6 months (6M) and notes maturing in 3 years (3Y). The highest demand was recorded on the 3 year notes which grasped 78.81% of total subscriptions, while the 6M T-bills accounted for the remaining shares of 21.19%. In details, the yield on 6M stood at 4% while coupon on the 3Y notes stood at 5.50%.
Source: BDL; MoF