HomeNewsTreasury Bills bank snub

Treasury Bills bank snub

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RESERVE Bank of Zimbabwe (RBZ) governor Gideon Gono has threatened to introduce a battery of measures compelling foreign-owned banks to take up the recently floated Treasury Bills (TBs).

REPORT BY BERNARD MPOFU CHIEF BUSINESS REPORTER

Addressing delegates at the FBC Bank-sponsored Zimbabwe Independent banking survey in Harare yesterday, Gono said the apex bank would soon drop moral suasion and invoke central bank powers to force the foreign banks to participate in the financial instruments.

The central bank last month issued TBs in a bid to ease liquidity constraints on the domestic market as well as to re-activate the inter-bank market, which had been dormant since dollarisation three years ago.

TBs are short-term negotiable instruments issued by the government through the central bank to finance government short-term requirements.

“We have tried as the Reserve Bank board, we have tried as the monetary policy committee of the central bank, we have tried as Treasury to use moral suasion approaches to the sector so that they can see sense in following up on these matters,” Gono said.

“None of those approaches have worked and you would know that extraordinary circumstances demand extraordinary measures.
“We will be introducing a battery of measures that will ensure compliance.”

The central bank chief said the country continued to face capital constraints due to a widening trade gap, trickling Diaspora funds remittances and low levels of foreign direct investment.

“Despite securing credit lines, Zimbabwean borrowers have continued to face stringent borrowing conditions.

“Notable conditions that have affected utilisation levels include facilitation fees, deposit requirements and various legal aspects, which sometimes take up to six months to fulfill,” Gono said.

“Evidently, out of offshore facilities worth $2 billion approved by the external loans and coordinating committee, only $899 million was drawn down since the beginning of the year.”

Initial tenders of TBs, according to the central bank, were rejected on account of high interest rates quoted by banks on their bids.

“This notwithstanding, the third tender floated on 26 October was a success, with 89% of bids being accepted.

“Accordingly, a total of $9,85 million was raised at an average interest of 8,5%,” Gono said.

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