BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 3,373B to stand at LBP 1,200,359B ($ 80.02B) by the week ending March 16, 2023. Furthermore, on an annual basis, M3 dropped by 37.32% year-over-year and by 46.94% 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 2,714B by a week to settle at LBP 88,269B ($5.88B) by March 16, due to a decrease in demand deposits of LBP 6,977 B and an increase in currency in circulation of LBP 4,263 B.
In turn, total deposits (excluding Demand deposits) fell by LBP 658.97B ($43.93M), owing to a decrease in Terms and saving deposits by LBP 261B and a drop in deposits denominated in foreign currencies by $27M.
As such, the rate of broad money dollarization jumped from 90.95% in the week ending March 09, 2023 to 91.173% in the week ending March 16, 2023.
Looking at interest rates, the average rate on deposits in LBP at commercial banks decreased from 0.78% in May2022 to 0.84% in May 2023. Similarly, the average rate on deposits in USD at commercial banks decreased from 0.13% in May 2022 to 0.09% in May 2023. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 5.13% and 5.06% in May 2022 to 3.53% and 2.30%, respectively, in May 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 May 2023, M3 stood at LBP 1,211,418.8B versus LBP 1,972,71.2 B in May 2022; NFA were LBP 220,838.5B compared to LBP 205,06.1B in May 2022; CPS was LBP 137,054.7B compared to LBP 36,351.7B in May 2022; NCPS was LBP 857,052.2B compared to LBP 44,074.8B in May 2023; and OIN were negative LBP 3,526.7B compared to LBP 96,338.7B in May 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 16, 2023, the Ministry of Finance (MoF) raised LBP 105,207M ($7.01M) through the issuance of T-Bills maturing in 3 months (3M) and 1 year (1Y). A higher demand of 62.31% was registered for 1 year T-Bills while the 3M T-Bills grasped the rest of 37.69%. In addition, the yield on 3M and 1Y stood respectively at 3.50% and 4.50%.
Source: BDL; MoF