M3 reached $128.59B Over the Period Ending August 18, 2022

M3 reached $128.59B Over the Period Ending August 18, 2022

BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 702B ($466M) to stand at LBP 193,849B ($128.59B) by the week ending August 18, 2022. However, on an annual basis, M3 retreated by 3.53% year-over-year and by 3.16% since year-start (YTD).

In details, M1 fell by LBP 264B ($175M) by a week to settle at LBP 61,255B ($40.63B) by August 18, 2022; due to a decrease in demand deposits of LBP 808 billion and an increase in currency in circulation of LBP 544 billion.

In turn, total deposits (excluding Demand deposits) decreased by $290.13M, owing to a decrease in Terms and saving deposits by $19.90M (LBP 30B) and in deposits denominated in foreign currencies by $270M.

As such, the rate of broad money dollarization increased from 59.084% by the week ending August 11, 2022 to 59.088% in the week ending August 18, 2022.

Looking at interest rates, the average rate on deposits in LBP at commercial banks decreased from 1.62% in August 2021 to 0.6% in August 2022. Similarly, the average rate on deposits in USD at commercial banks decreased from 0.3% in August 2021 to 0.1% in August 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 7.52% and 5.87% in August 2021 to 4.85% and 5.51%, respectively, in August 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 August 2022, M3 stood at $127.7B, 4.13% less than August 2021; NFA were $11.5B, less by 23.11% YOY; CPS was $22.54B, less by 23.2% YOY; NCPS was $27.85B, less by 20.73% annually; and OIN were $65.8B, higher by an annual 22.42%, 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 August 18, 2022, the Ministry of Finance (MoF) raised LBP 1,041.57B ($690.87M) through the issuance of T-Bills maturing in 3 months (3M) and 1 year (1Y). A higher demand was recorded on the 1 year T-bills which grasped 95.55% of total subscriptions, while the 3 months T-Bills accounted for the remaining shares of 4.45%. 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


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