M3 reached $128.36B Over the Period Ending April 28, 2022

M3 reached $128.36B Over the Period Ending April 28, 2022

BDL’s latest statistics on money supply revealed that Broad Money (M3) significantly increased by LBP 1,154B ($765M) to stand at LBP 193,449B ($128.36B) by the week ending April 28, 2022. However, on an annual basis, M3 retreated by 4.44% year-over-year and by 2.88% since year-start (YTD).

In details, M1 added LBP 1,573B ($1,043M) by a week to settle at LBP 55,712B ($36.96B) by April 28, 2022. The expansion is attributed to an increase in currency in circulation by LBP 740B and in demand deposits by LBP 833B.

In turn, total deposits (excluding Demand deposits) retreated by $278.71M, owing to a contraction in Terms and saving deposits by LBP 87B ($57.71M). In the same token, deposits denominated in foreign currencies decreased by $221M.

As such, the rate of broad money dollarization decreased from 61.847% in the week ending April 21, 2022, to 61.186% by the week ending April 28, 2022.

Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 2.01% and 0.49% in April 2021 to 0.88% and 0.15%, respectively, in April 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 8% and 6.88% in April 2021 to 6.01% and 6.11%, respectively, in April 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 April 2022, M3 stood at $129.64B, 3.49% less than April 2021; NFA were $14.56B, less by 6.60% YOY; CPS was $24.61B, less by 22.64% YOY; NCPS was $29.50B, less by 23.74% annually; and OIN were $60.95B, higher by an annual 26.37%, 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 28, 2022, the Ministry of Finance (MoF) raised LBP 105.882B ($69.73M) through the issuance of T-Bills maturing in 3 months (3M) and notes maturing in 1 year (1Y) and 5 years (5Y). A higher demand was recorded on the 1 year’s notes which grasped 64.11% of total subscriptions, while the 3M T-bills and 5 years (5Y) notes accounted for the remaining shares of 21.06% and 14.82$, 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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