M3 reached $145.89B Over the Period Ending January 12, 2023

($B)12-Jan-2205-Jan-2312-Jan-23Change over the Period (in $M)Y-O-Y % Change% Change y-t-d
M 137.6662.8359.68-3,15058.48%-7.32%
M 251.5174.9471.74-3,20739.26%-6.31%
M 3 132.33149.03145.89-3,14310.24%-3.26%
M 4 141.60161.08158.38-2,70411.84%-2.76%

BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 4,738B ($ 3,143M) to stand at LBP 219,930B ($ 145.89B) by the week ending January 12, 2023. Furthermore, on an annual basis, M3 added 10.24% year-over-year but retreated by 3.26% since year-start (YTD).

In details, M1 decreased by LBP 4,749B ($ 3,150M) by a week to settle at LBP 89,974B ($59.68B) by January 12, 2022; due to a decrease in currency in circulation of LBP 3,836 billion and in demand deposits of LBP 913 billion.

In turn, total deposits (excluding Demand deposits) rose by LBP 10.27B ($ 7M), owing to a drop in Terms and saving deposits by LBP 86B ($57M) and a rise in deposits denominated in foreign currencies by USD 64M.

As such, the rate of broad money dollarization increased from 49.71% in the week ending January 5, 2023 to 50.83% in the week ending January 12, 2023.

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 January 12, 2023, the Ministry of Finance (MoF) raised LBP 830,112M ($550.65M) through the issuance of notes maturing six months (6M) and T-bills maturing in two years (2Y). A higher demand was recorded on the 2Y T-bills which grasped 72% of total subscriptions, while the 6 months notes accounted for the remaining shares of 28%. In addition, the yield on 6 M stood at 4% while the return on 2Y stood at 5.06%.

Source: BDL; MoF

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