M3 reached $128.30B Over the Period Ending March 03, 2022


M3 reached $128.30B Over the Period Ending March 03, 2022

BDL’s latest statistics on money supply revealed that Broad Money (M3) significantly increased by LBP 912B ($605M) to stand at LBP 193,413B ($128.30M) by the week ending March 03, 2022. As such, on an annual basis, M3 retreated by 4.65% year over year and by 2.93% since year-start (YTD).

In details, M1 increased by LBP 1,502B ($996M) by a week to settle at LBP 53,395B ($35.42B) by March 03, 2022. The increase is attributed to the increase in currency in circulation by LBP 573B and in demand deposits by LBP 928B.

In turn, total deposits (excluding Demand deposits) decreased by $391.16M, owing to a decrease in Terms and saving deposits by LBP 151B ($100.16M). In the same token, deposits denominated in foreign currencies dropped by $291M.

As such, the rate of broad money dollarization decreased from 62.495% in the week ending to February 24, 2022, to 61.974% by the week ending March 03, 2022.

Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 2.11% and 0.54% in February 2021 to 0.99% and 0.17%, respectively, in February 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 6.52% and 6.92% in February 2021 to 5.69% and 5.5%, respectively, in February 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 February 2022, M3 stood at $128.91B, 4.23% less than February 2021; NFA were $15.21B, less by 5.54% YOY; CPS was $26.04B, less by 23.49% YOY; NCPS was $30.57B, less by 24.46% annually; and OIN were $57.07B, higher by an annual 29.78%, 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 March 03, 2022, the Ministry of Finance (MoF) raised LBP 150.272B ($99.68M) 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 1 year notes which grasped 38.76% of total subscriptions, while the 3M T-bills and 5Y notes accounted for the remaining shares of 24.44% and 36.79%, respectively. In details, the yield on 3M stood at 3.50% while coupon on the 1Y and 5Y notes stood at 4.31% and 6%, respectively.

Source: BDL; MoF


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