GOVERNMENT plans to issue Treasury bills to various financial institutions to raise $30 million and settle outstanding amounts owed to tobacco farmers.
The debt was incurred through a 25% foreign currency retention scheme introduced by the central bank to shore up the country’s foreign currency reserves.
Failure by the central bank to repay triggered a series of court cases as farmers sought their dues.
In a letter seen by NewsDay sent to Zimbabwe Tobacco Association chief executive officer Rodney Ambrose, the Ministry of Finance and Economic Development told the Zimbabwe Tobacco Association that government was committed to ensuring that all outstanding amounts owing to tobacco farmers were settled.
In the letter dated July 16 2014, the Ministry of Finance and Economic Development said it would issue Treasury Bills to raise the money.
“In this regard, government has issued 2, 3, 4 and 5-year Treasury Bills to Agribank, NMB, MetBank, Allied Bank, EcoBank, MBCA, Barclays, Stanbic, Stanchart, ZB, FBC and CBZ bank for tobacco retention amounts. This was after the completion of the validation and reconciliation exercise on the figures that had been submitted by these institutions,” part of the letter read.
The government securities have a prescribed asset status and half yearly coupons, an interest of 2%, tax exemption status and can be used as securities on the interbank market.
The letter did not give the exact date on which farmers would be able to access funds.
“For more details on the modalities of payment and when they can expect to start receiving their money, the tobacco farmers should liaise with their banks,” the letter further read.
Ambrose yesterday said that the association was encouraged by government’s gesture.
“The issue has been outstanding since 2008.We do appreciate despite the constraints that government is facing,” Ambrose said.
Tobacco Industry and Marketing Board chief executive officer Andrew Matibiri applauded the move and said it would close the chapter that was outstanding.
“This is a good movement forward. It unlocks the money that farmers have put in those banks,” Matibiri said.
Tobacco production continues to rise, driven by small-scale farmers. This year’s output has surpassed 213 million kg as the rebound continues.