M3 reached $125.89B Over the Period Ending March 17, 2022

M3 reached $125.89B Over the Period Ending March 17, 2022

BDL’s latest statistics on money supply revealed that Broad Money (M3) significantly decreased by LBP 542B ($360M) to stand at LBP 189,786B ($125.89B) by the week ending March 17, 2022. As such, on an annual basis, M3 retreated by 6.28% year over year and by 4.75% since year-start (YTD).

In details, M1 contracted by LBP 22B ($15M) by a week to settle at LBP 50,606B ($33.57B) by March 17, 2022. The decline is attributed to the decrease in currency in circulation by LBP 495B and to an increase in demand deposits by LBP 473B.

In turn, total deposits (excluding Demand deposits) decreased by $345.02M, owing to a decrease in Terms and saving deposits by LBP 98B ($65M). In the same token, deposits denominated in foreign currencies dropped by $280M.

As such, the rate of broad money dollarization decreased from 61.974% in the week ending to March 03, 2022, to 61.868% by the week ending March 10, 2022.

Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 1.96% and 0.52% in March 2021 to 0.87% and 0.16%, respectively, in March 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 8.02% and 7.14% in March 2021 to 5.58% and 5.72%, respectively, in March 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 March 2022, M3 stood at $126.50B, 5.67% less than March 2021; NFA were $14.89B, less by 2.68% YOY; CPS was $25.29B, less by 22.93% YOY; NCPS was $29.87B, less by 25.17% annually; and OIN were $56.44B, higher by an annual 22.53%, 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 17, 2022, the Ministry of Finance (MoF) raised LBP 151.536B ($100.52M) through the issuance of T-Bills maturing in 3 months (3M) and 1 year and notes maturing in 5 years (5Y). A higher demand was recorded on the 1 year T-Bills which grasped 76.67% of total subscriptions, while the 3M T-bills and 5Y notes accounted for the remaining shares of 16.35% and 6.98%, respectively. In more details, the yield on 3M and 1Y notes stood at 3.50% and 4.5% whereas coupon on the 5Y notes stood at 6%.

Source: BDL; MoF

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