FINANCE minister Tendai Biti said lenders, including units of Barclays Plc and Standard Chartered Plc, have a last chance to support the central bank’s Treasury Bill (TB) sales or they will be compelled to buy negotiable certificates of deposit (NCDs).
Report by Bloomberg
The Reserve Bank of Zimbabwe will today offer $30 million worth of 91-day Treasury Bills after two failed offerings and one partially successful sale last month.
The sales are the first since 2008 shortly before the country abandoned its currency in favour of the multi-currency system in a bid to curb an inflation rate that had risen to 500 billion percent, according to the International Monetary Fund.
“I am giving the banking sector the last chance to fully support the Treasury Bills,” Biti said in an interview in the resort town of Victoria Falls on Saturday.
“If they don’t support it, I will issue NCDs and that’s it.” Biti and the central bank was trying to kick-start the country’s capital markets after a decade-long recession ended in 2009 after the 15-nation Southern African Democratic Community negotiated a settlement that ended a political dispute. A coalition government between President Robert Mugabe’s Zanu PF and the MDC-T’s Prime Minister Morgan Tsvangirai was then formed.
On October 26, the central bank offered $15 million of the securities of which $9,9 million were sold at an average yield of 8,51%. The bank rejected all bids at attempted sales on October 4 and October 24.
The plan to restart the TB sales was announced in July by central bank governor Gideon Gono.
Zimbabwe lacks a benchmark interest rate. The weighted average lending rate for private banks ranged from 14% to 20% in the four months through July 31, Gono said in a Mid-year Monetary Policy statement.
Barclays Bank of Zimbabwe Ltd is the biggest lender by market value on the Zimbabwe Stock Exchange with a capitalisation of $62 million while units of London-based Standard Chartered as well as Standard Bank Group Ltd and Nedbank Group Ltd, both based in Johannesburg, operate in the country.
Biti is also in negotiations to secure funding to recapitalise the country’s banks and plans further regulation of the industry.