THE Reserve Bank of Zimbabwe (RBZ) this month march 2021, has gone to the market seeking to raise $400 million through the issuance of 270-day Treasury Bills to fund Government programmes and cashflow management with the previous TB action held in August 2019.
The move has been necessitated by lack of external credit support to meet Zimbabwe’s budgetary needs, the Reserve Bank of Zimbabwe has resorted to issuing TBs in a bid to raise funding to support key development operations.
The previous TBs auction was held in August 2019, raised a tune of ZWL$ 30 million. The Reserve Bank of Zimbabwe (RBZ) last week floated a tender seeking to raise $400 million through issuing a 270-day Treasury Bills (TBs) to fund cash flow management and government programmes.
The TBs have been floated in varying amounts with the debt instruments having among other features, a prescribed asset status, liquid status and tax exemption.
Market analysts have attributed the strong appetite for TBs by the Government to the budgetary constraints on the back of limited external credit support
The central bank floated the tender, which was closed on 12 march 2021, through a public notice issued last Friday where it invited bidders from the financial services sector to subscribe to the TBs.
“RBZ on behalf of the Government of Zimbabwe hereby invites commercial banks, building societies, POSB (People’s Own Savings Bank) and IDBZ (Infrastructural Development Bank of Zimbabwe) to subscribe to Government Treasury Bill Tender amounting to $400 million,” said the monetary authority.
In the short-term, the local currency has been defenceless against the US dollar on the weekly foreign currency auction market since the turn of the year all of which could also discourage the market’s appetite for the debt instruments and the TBs may find no takers on the market.
Prolongation to that, the continued issuance of TBs puts Zimbabwe in a quandary position given huge debts, both internal and external, it is struggling to service.
These TBs undesirably affects the prospects of economic growth due to the crowding out of private sector and fiscal indiscipline.
Instead, the local financial institutions, should channel such resources to the real sector to enhance productivity in the economy.
Treasury Bills (TBs) are negotiable instruments issued by Government through the central banks to finance the government’s short-term liquidity requirements and they are normally issued for the periods ranging from 30 to 365 days.
In some cases, TBs are used to mop-up excess liquidity in an overheating economy in a bid to contain inflation.
Persistent government borrowing from the local market is not sustainable as it tends to choke the economic growth prospects of the country and crowds out the private sector. Amidst that, Zimbabwe inflation is still hovering in unpleasant zones at 321.59% as of February
The Government has dedicated to maintaining a high level of fiscal discipline, the Treasury has resorted to issuing TBs in a bid to raise funding to support key development operations amid concerns of lack of external credit support to meet Zimbabwe’s budgetary needs.