BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by LBP 1,930B ($1,280M) to stand at LBP 191,986B ($127.35B) by the week ending July 07, 2022. However, on an annual basis, M3 retreated by 4.95% year-over-year and by 3.64% since year-start (YTD).
In details, M1 expanded by LBP 2,547B ($1,690M) by a week to settle at LBP 57,862B ($38.38B) by July 07, 2022; due to an increase in demand deposits by LBP 336.7B and in currency in circulation by LBP 2210.7B.
In turn, total deposits (excluding Demand deposits) retreated by $409.47M, owing to a decrease in Terms and saving deposits by LBP 181B ($120.06M), and a decline in deposits denominated in foreign currencies by $289M.
As such, the rate of broad money dollarization decreased from 61.050% in the week ending June 30, 2022, to 60.209% by the week ending July 07, 2022.
Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 1.74% and 0.33% in July 2021 to 0.54% and 0.12%, respectively, in July 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 7.26% and 5.99% in July 2021 to 5.09% and 4.74%, respectively, in July 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 July 2022, M3 stood at $129.74B, 2.75% less than July 2021; NFA were $12.09B, less by 22.94% YOY; CPS was $22.98B, less by 22.92% YOY; NCPS was $29.66B, less by 15.95% annually; and OIN were $64.98B, higher by an annual 23.56%, 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 July 07, 2022, the Ministry of Finance (MoF) raised LBP 30.835B ($20.45M) through the issuance of T-Bills maturing in 3 months (3M) and notes maturing in 1 year (1Y). A higher demand was recorded on the 3 months T-bills which grasped 68.96% of total subscriptions, while the 1 year notes accounted for the remaining shares of 31.04%. In more details, the yield on 3 months stood at 3.50% whereas the coupon on the 1 year note reached 4.50%.
Source: BDL; MoF