‘Govt not under pressure to borrow’

BY FIDELITY MHLANGA

GOVERNMENT says it no longer has pressure to borrow on the local market after it repaid in excess of $1,5 billion of its domestic debt, a Treasury official has said.

Ministry of finance permanent secretary George Guvamatanga told a recent business meeting that government was liquid and had only issued around $300 million treasury bills between September last year to July 2019,

According to the 2019 National Budget, the country’s domestic debt stood at $9,6 billion at the time of the statement, and the total debt stood at $17,2 billion as at September 2018.

“From September 2018 to July 3, 2019, we have repaid over $1,5 billion of domestic debt predominantly in treasury bills. We have only issued just below $300 million of treasury bills.
So we have reduced the extent of our borrowing as government from the domestic market. At any given time these days government sits on credit balances. Not only credit balance on RTGS,
my accountant general will tell you that we have credit balances in US dollars. And this is completely different from where we were in 2008,” Guvamatanga said.

He said there was no fear of the repeat of 2008 era of hyperinflation as government was carefully monitoring printing of money.

“This is a very liquid government. With no pressure whatsoever to borrow from the market (there is) no pressure to create money. So on a monthly basis we are paying government
salaries which are an excess of $400 million from credit balances. We don’t have to come to the market; we don’t have to go the Reserve Bank of Zimbabwe because the funding is now
available. What created the challenges we had in 2008 was money (creation), so where we are today is completely different from where we were in 2008 because government is not
printing money,” he said.

About $10 billion is estimated to be in circulation.

Guvamatanga said government was living within its means.

“A surplus for government is just like your gross profit in business. So you cannot say that you cannot record a gross profit because you have a debt. So even if you are borrowing in
your business, are you not recording a profit in your business? You are recording profit. So we do acknowledge that as government we do have debt and we owe money. But a surplus simply
means that within our revenues that we are receiving, vis a vis our expenditure — the recurrent expenditure, we are remaining with a balance, that has never happened in this country.”

“That’s a good starting point because when you have a surplus it means that there is no recourse to the market or to inflationary funding mechanism for government,” he said.

3 Comments

  1. Go back to corporate world George, where you its a waste of time and career. Zanu Pf will change BABA.

  2. Go back to corporate world George, where you are its a waste of time and career. Zanu Pf will change BABA.

  3. Guvamatanga like hiss boss Mhtuli has now fully graduated into the zanupf way of applying lipstick on a crocodile, the ONLY truthful government officer who calls a spade by its name is the Auditor General M. Chiri and her team. Not surprising that the former banker is mum on the 2018 AG’s report which does not support the hogwash he is outlining here. Presidential foreign travels are not re-current expenditure add that and you will realise your surplus is a miscalculation or mis-representation of facts. Also add the LCs (Letters of Credit) the RBZ is issuing out (in place of TBs) then you will realise there is no tangible surplus (as a matter of fact its not as a result of increased production) to talk about.

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