BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 10,299B to stand at LBP 1,203,733B ($ 80.25B) by the week ending March 09, 2023. Furthermore, on an annual basis, M3 dropped by 37.41% year-over-year and by 46.79% since year-start (YTD). Noting that effective February 1st 2023, the official exchange rate has been set at LBP 15,000 per dollar
In details, M1 decreased by LBP 7,685B by a week to settle at LBP 90,983B ($6.07B) by March 09, due to a decrease in currency in circulation of LBP 14,027 B and an increase in demand deposits of LBP 6,342 B.
In turn, total deposits (excluding Demand deposits) fell by LBP 2,613.77B ($174.25M), owing to an increase in Terms and saving deposits by LBP 13B and a drop in deposits denominated in foreign currencies by $174M.
As such, the rate of broad money dollarization jumped from 90.4% in the week ending March 02, 2023 to 90.95% in the week ending March 09, 2023.
Looking at interest rates, the average rate on deposits in LBP at commercial banks decreased from 0.88% in April 2022 to 0.59% in April 2023. Similarly, the average rate on deposits in USD at commercial banks decreased from 0.15% in April 2022 to 0.08% in April 2023. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 6.01% and 6.11% in April 2022 to 3.07% and 2.46%, respectively, in April 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 April 2023, M3 stood at LBP 1,208,194B versus LBP 195,434 B in April 2022; NFA were LBP 224,310B compared to LBP 21,959B in April 2022; CPS was LBP 139,332B compared to LBP 37,106B in April 2022; NCPS was LBP 785,641B compared to LBP 44,475B in April 2022; and OIN were LBP 58,911B compared to LBP 91,894B in April 2022, 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 March 09, 2023, the Ministry of Finance (MoF) raised LBP 468,145M ($31.20M) through the issuance of T-Bills maturing in six months (6M) and notes maturing in two years (2Y). A higher demand of 85.44% was registered for 2 years notes while the 6M T-Bills grasped the rest of 14.56%. In addition, the yield on 6M and 2Y stood respectively at 4% and 5.06%.
Source: BDL; MoF