M3 reached $148.11B Over the Period Ending December 22, 2022

($B)22-Dec-2115-Dec-2222-Dec-22Change over the Period (in $M)Y-O-Y % Change% Change y-t-d
M 137.6860.1961.641,44863.59%61.64%
M 251.7472.3073.711,40542.46%41.13%
M 3132.87146.87148.111,24811.47%11.55%
M 4142.09159.02160.301,28212.81%12.78%

BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by LBP 1,880.9B ($ 1,247.7M) to stand at LBP 223,281B ($ 148.11B) by the week ending December 22, 2022. Furthermore, on an annual basis, M3 added 11.47% year-over-year and 11.55% since year-start (YTD).

In details, M1 increased by LBP 2,182B ($ 1,447M) by a week to settle at LBP 92,925B ($ 61.64B) by December 22, 2022; due to an increase in currency in circulation of LBP 2,148 billion and in demand deposits of LBP 34 billion.

In turn, total deposits (excluding Demand deposits) fell by LBP 302B ($ 200M), owing to a drop in Terms and saving deposits by LBP 64B ($42M) and in deposits denominated in foreign currencies by LBP 238B ($158M).

As such, the rate of broad money dollarization decreased from 50.77% in the week ending December 15, 2022 to 50.24% in the week ending December 22, 2022.

Looking at interest rates, the average rate on deposits in LBP at commercial banks decreased from 1.03% in January 2022 to 0.73% in January 2023. Similarly, the average rate on deposits in USD at commercial banks decreased from 0.18% in January 2022 to 0.09% in January 2023. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 6.4% and 6.15% in January 2022 to 5.61% and 5.38%, respectively, in January 2023.

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 January 2023, M3 stood at $149.59B, 14.47% higher than January 2022; NFA were $12.54B, less by 15.24% YOY; CPS was $19.56B, less by 25.6% YOY; NCPS was $18.11B, less by 44.45% annually; and OIN were $99.38B, higher by an annual 74.37%, 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 December 22, 2022, the Ministry of Finance (MoF) raised LBP 216,300M ($143.48M) through the issuance of T-bills maturing in two years. In more details, the return on two years (2Y) reached 5.06%.

Source: BDL; MoF

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