M3 reached $127.35B Over the Period Ending September 8, 2022

($B)08-Sep-2101-Sep-2208-Sep-22Change over the Period (in $M)Y-O-Y % Change% Change y-t-d
M 134.9639.0840.341,26215.41%5.79%
M 249.8851.0152.141,1284.54%-0.17%
M 3 133.13126.53127.35814-4.34%-4.09%
M 4 141.56138.70139.48781-1.47%-1.87%

BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by LBP 1,227B ($814M) to stand at LBP 191,974B ($127.35B) by the week ending September 8, 2022. However, on an annual basis, M3 retreated by 4.34% year-over-year and by 4.09% since year-start (YTD).

In details, M1 rose by LBP 1,902B ($1,262M) by a week to settle at LBP 60,817B ($40.34B) by September 8, 2022; due to an increase in currency in circulation of LBP 2,515B billion and a decrease in demand deposits of LBP 613 billion.

In turn, total deposits (excluding Demand deposits) decreased by $447M, owing to a drop in Terms and saving deposits by $133M (LBP 201B) and deposits denominated in foreign currencies by $314M.

As such, the rate of broad money dollarization decreased from 59.687% in the week ending September 1, 2022 to 59.058% in the week ending September 8, 2022.

Looking at interest rates, the average rate on deposits in LBP at commercial banks decreased from 1.53% in September 2021 to 0.66% in September 2022. Similarly, the average rate on deposits in USD at commercial banks decreased from 0.26% in September 2021 to 0.09% in September 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 7.65% and 6.34% in September 2021 to 5.09% and 4.61%, respectively, in September 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 September 2022, M3 stood at $138.45B, 4.17% higher than September 2021; NFA were $10.98B, less by 26.63% YOY; CPS was $21.97B, less by 23.14% YOY; NCPS was $27.25B, less by 24.91% annually; and OIN were $78.24B, higher by an annual 47.52%, 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 September 8, 2022, the Ministry of Finance (MoF) raised LBP 45,446M ($30.15M) through the issuance of T-Bills maturing in 6 months (6M), while the yield on 6 months stood at 4%.

Source: BDL; MoF

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