BUSINESS WRITER
A month after the 365-day Treasury Bills (TBs) were under-subscribed, the government got it right this time around raising the required ZWL$300m through the auction of the 182-day commercial paper to finance its programmes.
Last month, the government raised ZWL$51m out of the ZWL$150m it required, indicating low appetite in the 365-day paper. The story was different for the 182-day TBs which were auctioned on Tuesday with total bids of ZWL$300m. The amount allotted was ZWL$300m.
The highest interest rate was 17% and the lowest was 12%. The average interest rate was 14.02%. The commercial paper enjoys prescribed asset and liquid asset status, it is tradable and enjoys tax exemption. It is acceptable as collateral for overnight accommodation by the central bank and allotment is at the weighted average rate.
The latest issuance of the TBs is the sixth since August, signifying serious financial pressures the government is under to meet the growing needs in the wake of the deteriorating economy which has wiped away the purchasing power of the people. With no donor budgetary support, the government has relied on the debt instrument to fund its capital projects and social spending.
Government revenues are not enough to meet its growing needs. This has in the past forced the government to borrow from the domestic market and the central bank to plug the hole.
The issuance of TBs has been blamed for crowding out the private sector amid revelations that banks were turning to the government paper instead of lending to the productive sectors of the economy
