BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 2,361B ($1,566M) to stand at LBP 190,571B ($126.42B) by the week ending June 09, 2022. However, on an annual basis, M3 retreated by 5.93% year-over-year and by 4.35% since year-start (YTD).
In details, M1 dropped by LBP 1,923B ($1,275M) by a week to settle at LBP 55,263B ($36.66B) by June 09, 2022. The contraction is attributed to a decrease in currency in circulation by LBP 1,507B and in demand deposits by LBP 416B.
In turn, total deposits (excluding Demand deposits) retreated by $290.76M, owing to a decrease in Terms and saving deposits by LBP 161B ($106.79M), and a decline in deposits denominated in foreign currencies by $184M.
As such, the rate of broad money dollarization increased from 60.459% in the week ending June 02, 2022, to 61.062% by the week ending June 09, 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 09, 2022, the Ministry of Finance (MoF) raised LBP 8.026B ($5.32M) through the issuance of T-Bills maturing in 3 months (3M) and 6 months (6M). A higher demand was recorded on the 3 months T-bills which grasped 64.22% of total subscriptions, while the 6 months T-bills accounted for the remaining shares of 35.78%. In more details, the yield on 3 months stood at 3.50%, while the yield on the 6 months (6M) reached 4.50%.
Source: BDL; MoF