M3 reached $148.59B Over the Period Ending January 26, 2023

($B)26-Jan-2219-Jan-2326-Jan-23Change over the Period (in $M)Y-O-Y % Change% Change

y-t-d

M 136.7661.4062.561,15770.19%-2.86%
M 250.4773.3874.3496447.31%-2.91%
M 3 131.11147.53148.591,06413.33%-1.47%
M 4 140.33160.07161.331,25814.96%-0.95%

BDL’s latest statistics on money supply revealed that Broad Money (M3) increased by LBP 1,605B ($ 1,064M) to stand at LBP 224,001B ($ 148.59B) by the week ending January 26, 2023. Furthermore, on an annual basis, M3 added 13.33% year-over-year but retreated by 1.47% since year-start (YTD).

In details, M1 increased by LBP 1,744B ($ 1,157M) by a week to settle at LBP 94,310B ($62.56B) by January 26, 2022; due to an increase in currency in circulation of LBP 4,222 billion and a decrease in demand deposits of LBP 2,478 billion.

In turn, total deposits (excluding Demand deposits) fell by LBP 139B ($ 92M), owing to a drop in Terms and saving deposits by LBP 290B ($192M) and a rise in deposits denominated in foreign currencies by USD 100M.

As such, the rate of broad money dollarization fell from 50.26% in the week ending January 19, 2023 to 49.97% in the week ending January 26, 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 26, 2023, the Ministry of Finance (MoF) raised LBP 516,952M ($342.92M) through the issuance of notes maturing six months (6M) and T-bills maturing in three years (3Y). A higher demand was recorded on the  which grasped 61% of total subscriptions, while the 3 years T-bills accounted for the remaining shares of 39%. In addition, the yield on 6M and 3Y stood respectively at 4% and 5.5%.

Source: BDL; MoF

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