BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 765B ($507M) to stand at LBP 189,491B ($125.70B) by the week ending June 23, 2022. However, on an annual basis, M3 retreated by 6.36% year-over-year and by 4.89% since year-start (YTD).
In details, M1 dropped by LBP 600B ($398M) by a week to settle at LBP 504,602B ($36.22B) by June 23, 2022. The contraction is attributed to a decrease in demand deposits by LBP 801B and an increase in currency in circulation by LBP 201B.
In turn, total deposits (excluding Demand deposits) retreated by $108.88M, owing to a decrease in Terms and saving deposits by LBP 29B ($19.23M), and a decline in deposits denominated in foreign currencies by $90M.
As such, the rate of broad money dollarization increased from 61.074% in the week ending June 16, 2022, to 61.249% by the week ending June 23, 2022.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 1.84% and 0.39% in June 2021 to 0.74% and 0.09%, respectively, in June 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 7.32% and 6.46% in June 2021 to 5.36% and 5.28%, respectively, in June 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 June 2022, M3 stood at $127.17B, 5.20% less than June 2021; NFA were $12.77B, less by 14.69% YOY; CPS was $23.57B, less by 23.03% YOY; NCPS was $28.96B, less by 21.39% annually; and OIN were $61.85B, higher by an annual 19.66%, 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 23, 2022, the Ministry of Finance (MoF) raised LBP 3.897B ($2.58M) through the issuance of T-Bills maturing in 3 months (3M) and 1 year (1Y). A higher demand was recorded on the 3 months T-bills which grasped 50.88% of total subscriptions, while the 1 year T-Bills accounted for the remaining shares of 49.12%. In more details, the yield on 3 months stood at 3.50%, while the yield on the 1 year (1Y) reached 4.50%.
Source: BDL; MoF