Govt switches to long-term infrastructure bonds

BY MTHANDAZO NYONI

GOVERNMENT is expecting to issue long-term infrastructure bonds at an interest of about 10% to promote infrastructural development in the country, Finance and Economic Development minister Mthuli Ncube has said.

Speaking at the mid-term budget review meeting hosted by Alpha Media Holdings (AMH) in conjunction with Zimbabwe Economics Society in Bulawayo recently, Ncube revealed that government was reducing issuance of Treasury Bills (TBs) for long-term bonds.

He said in order to support the prior budget deficits, which were quite huge, especially in the last four years, government issued TBs.

In the last four years, government issued short-term TBs amounting to $9,5 billion by end of December last year.

“I’m happy to report that we have curtailed the issuance of TBs, we have only issued something in the order of $230 million just to manage cashflows, but also
to test the market and I’m pleased that we are getting very good yields of well below 20%,” Ncube said.

“So we think that the yield curve is heading in the right direction. Going forward, we are aiming to issue a longer-term gap at a much lower rate. We expect
that, perhaps we could issue 10-year, 15-year bonds somewhere around 10% and we are going to do that,” the Treasury boss said.

In the budget, Ncube said he had a provision to issue an infrastructure bond called Vaka/Yakhani infrastructure bond that would be used for infrastructural
development.

He said they had stopped using taxpayers’ money in the form of TBs and focused on bond resource.

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