M3 reached $127.72B Over the Period Ending July 14, 2022

M3 reached $127.72B Over the Period Ending July 14, 2022

BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by LBP 558B ($370M) to stand at LBP 192,543B ($127.72B) by the week ending July 14, 2022. However, on an annual basis, M3 retreated by 4.56% year-over-year and by 3.36% since year-start (YTD).

In details, M1 expanded by LBP 695B ($461M) by a week to settle at LBP 58,557B ($38.84B) by July 14, 2022; due to an increase in currency in circulation of LBP 809B, and a decrease in demand deposits of LBP 114B.

In turn, total deposits (excluding Demand deposits) retreated by $91.38M, owing to a decrease in Terms and saving deposits by LBP 46B ($30.51M), and a decline in deposits denominated in foreign currencies by $61M.

As such, the rate of broad money dollarization decreased from 60.209% in the week ending July 07, 2022, to 59.986% by the week ending July 14, 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 14, 2022, the Ministry of Finance (MoF) raised LBP 340.250B ($225.70M) through the issuance of T-Bills maturing in 6 months (6M) and notes maturing in 3 years (3Y). A higher demand was recorded on the 3 years notes grasped 88.17% of total subscriptions, while the 6 months T-Bills accounted for the remaining shares of 11.83%. In more details, the yield on 6 months stood at 4% whereas the coupon on the 3 years note reached 5.50%.

Source: BDL; MoF

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