Govt to borrow ZWL$300m from domestic market

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RBZ Governor John Mangudya

BUSINESS REPORTER

A month after the 365-day Treasury Bills were under-subscribed, government is back in the domestic market to raise ZWL$300m to finance its programmes, the central bank said Monday.

Last month, government raised ZWL$51m out of the ZWL$150m it required indicating low appetite in the 365-day paper.

In a notice, the Reserve Bank of Zimbabwe invited commercial banks, building societies, POSB and the Infrastructure Development Bank of Zimbabwe to subscribe to Government Treasury Bill tender to raise ZWL$300m.

The Bills have tenure of 182 and interest rate is open tender on a yield basis. The offer opens and closes on Tuesday. The allotment and payment will be on the same day.

The commercial paper enjoys prescribed asset and liquid asset status, is tradable and enjoys tax exemption. It is acceptable as collateral for overnight accommodation by the central bank and allotment will be at weighted average rate.

The latest issuance of the TBs is the sixth since August signifying serious financial pressures government is under to meet the growing needs in the wake of the deteriorating economy which has wiped away the purchasing power.

With no budgetary support, government has relied on the debt instruments to fund its capital projects and social spending.

The TBs issuance is coming through the auction system after government abandoned the private placement which has been in place over the years.

The growing needs have meant that government revenues are not enough.

This has left government to borrow from the domestic market and from the central bank. The issuance of Treasury Bills 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.