BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 3,067B ($2,035M) to stand at LBP 192,932B ($127.98B) by the week ending June 02, 2022. However, on an annual basis, M3 retreated by 4.82% year-over-year and by 3.17% since year-start (YTD).
In details, M1 dropped by LBP 2,953B ($1,959M) by a week to settle at LBP 57,185B ($37.93B) by June 02, 2022. The contraction is attributed to a decrease in currency in circulation by LBP 3,673B and an increase in demand deposits by LBP 720B.
In turn, total deposits (excluding Demand deposits) retreated by $75.50M, owing to a decrease in Terms and saving deposits by LBP 30B ($19.90M), and a decline in deposits denominated in foreign currencies by $55M.
As such, the rate of broad money dollarization increased from 59.55% in the week ending May 26, 2022, to 60.45% by the week ending June 02, 2022.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 1.85% and 0.42% in May 2021 to 0.78% and 0.13%, respectively, in May 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 7.86% and 7.14% in May 2021 to 5.13% and 5.06%, respectively, in May 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 May 2022, M3 stood at $130.85B, 2.70% less than May 2021; NFA were $13.60B, less by 18.12% YOY; CPS was $24.11B, less by 22.74% YOY; NCPS was $29.23B, less by 19.69% annually; and OIN were $63.90B, higher by an annual 38.73%, 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 June 02, 2022, the Ministry of Finance (MoF) raised LBP 469.299B ($311.30M) through the issuance of T-Bills maturing in 6 months (6M) and notes maturing in 2 years (2Y) and 10 years (10Y). A higher demand was recorded on the 2 years note which grasped 42.61% of total subscriptions, while the 6M T-bills and 10 Y note accounted for the remaining shares of 30.63% and 26.76%, respectively. In more details, the yield on 6M stood at 4%, while the yield on the 2Y and 10Y notes reached 5% and 7%, respectively.
Source: BDL; MoF