BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by LBP 28B ($19M) to stand at LBP 194,933B ($129.313B) by the week ending May 12, 2022. However, on an annual basis, M3 retreated by 3.79% year-over-year and by 2.16% since year-start (YTD).
In details, M1 added LBP 879B ($583M) by a week to settle at LBP 58,257B ($38.65B) by May 12, 2022. The expansion is attributed to an increase in currency in circulation by LBP 273B and in demand deposits by LBP 606B.
In turn, total deposits (excluding Demand deposits) retreated by $564.80M, owing to a decrease in Terms and saving deposits by LBP 158B ($104.89M), and a decrease in deposits denominated in foreign currencies by $460M.
As such, the rate of broad money dollarization decreased from 60.61% in the week ending May 05, 2022, to 60.25% by the week ending May 12, 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 May 12, 2022, the Ministry of Finance (MoF) raised LBP 66.089B ($43.84M) 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 note which grasped 59.06% of total subscriptions, while the 3M T-bills and 5 years (5Y) notes accounted for the remaining shares of 37.10% and 3.84%, respectively. In more details, the yield on 3M stood at 3.50%, while the coupon on the 1Y and 5Y notes reached 4.50% and 6%, respectively.
Source: BDL; MoF