M3 reached $126.91b Over the Period Ending April 14, 2022

M3 reached $126.91b Over the Period Ending April 14, 2022

BDL’s latest statistics on money supply revealed that Broad Money (M3) significantly increased by LBP 914B ($606M) to stand at LBP 191,320B ($126.91B) by the week ending April 14, 2022. Hence, on an annual basis, M3 retreated by 5.44% year-over-year and by 3.98% since year-start (YTD).

In details, M1 added LBP 1,183B ($784M) by a week to settle at LBP 53,369B ($35.40B) by April 14, 2022. The expansion is attributed to an increase in currency in circulation by LBP 1,483B and a decrease in demand deposits by LBP 300B.

In turn, total deposits (excluding Demand deposits) retreated by $178.53M, owing to a contraction in Terms and saving deposits by LBP 40B ($26.53M). In the same token, deposits denominated in foreign currencies regressed by $152M.

As such, the rate of broad money dollarization decreased from 62.264% in the week ending April 07, 2022, to 61.847% by the week ending April 14, 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 April 14, 2022, the Ministry of Finance (MoF) raised LBP 105.107B ($69.72M) through the issuance of T-Bills maturing in 3 months (3M) and notes maturing in 1 years (1Y) and 5 years (5Y). A higher demand was recorded on the 1 year’s notes which grasped 44.04% of total subscriptions, while the 3M T-bills and 5Y notes accounted for the remaining shares of 24.95% and 30.99%, respectively. In more details, the yield on 3M stood at 3.50%, while the coupon on the 1Y and 5Y notes reached 4.31% and 6%, respectively.

Source: BDL; MoF

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