BDL’s latest statistics on money supply revealed that Broad Money (M3) significantly increased by LBP 1,406B ($933M) to stand at LBP 194,905B ($129.29B) by the week ending May 05, 2022. However, on an annual basis, M3 retreated by 3.77% year-over-year and by 2.18% since year-start (YTD).
In details, M1 added LBP 1,666B ($1,105M) by a week to settle at LBP 57,379B ($38.06B) by May 05, 2022. The expansion is attributed to an increase in currency in circulation by LBP 965B and in demand deposits by LBP 701B.
In turn, total deposits (excluding Demand deposits) retreated by $149.78M, owing to an increase in Terms and saving deposits by LBP 35B ($23.22M), and a decrease in deposits denominated in foreign currencies by $173M.
As such, the rate of broad money dollarization decreased from 61.186% in the week ending April 28, 2022, to 60.61% by the week ending May 05, 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 05, 2022, the Ministry of Finance (MoF) raised LBP 783.834B ($591.95M) through the issuance of T-Bills maturing in 6 months (3M) and notes maturing in 2 year (2Y) and 10 years (10Y). A higher demand was recorded on the 2 year’s notes which grasped 38.27% of total subscriptions, while the 6M T-bills and 10 years (10Y) notes accounted for the remaining shares of 36.21% and 25.55%, respectively. In more details, the yield on 6M stood at 4%, while the coupon on the 2Y and 10Y notes reached 5% and 7%, respectively.
Source: BDL; MoF