BY FIDELITY MHLANGA
GOVERNMENT has floated Treasury Bills (TBs) valued at ZWL$60 million, the second auction in a month geared towards financing various programmes.
In a communique yesterday, the Reserve Bank of Zimbabwe invited financial institutions, asset managers and insurance and pension funds to subscribe to TBs with one-year maturity tenure.
“The Reserve Bank of Zimbabwe (RBZ) hereby invites financial institutions including commercial banks, building societies, POSB, Infrastructure Development Bank of Zimbabwe, asset managers, insurance and pension funds and other corporates to subscribe to Treasury Bills amounting to sixty million dollars (ZWL$60 000 000),” the central bank said in a statement.
Applications must be for a minimum amount of $1 million, with the number of bids per investor restricted to two.
The offer opened yesterday and closes on Thursday.
In its previous public auction of the sovereign paper early this month, the apex bank sought to raise $30 million within 91 days.
The auction was oversubscribed more than four times.
The economy is envisaged to contract this year as a result of poor performance in agriculture, erratic power supply, coupled with inflationary pressures, foreign currency shortages and limited external financial support.
According to Treasury, the stock of outstanding TBs as at June 2018 is US$6,7 billion, with a maturity value of around US$8,3 billion.
Previous auctions were held in secrecy, and as such, government has now instituted an open market borrowing to enhance transparency on its domestic debt.
The huge quantity of TBs issued during the period 2017 to June 2018 had posed a significant burden to the fiscus in terms of both interest and principal payments.
In some instances, this has resulted in a situation where the TBs were being discounted at ridiculous rates in the secondary market, hence undermining market confidence in government securities.
Through the Transitional Stabilisation Programme unveiled last October, Treasury resolved that all issuances of TBs and other public debt instruments would be guided by tighter monitoring and management, to ensure consistency with the budget framework as approved by Parliament, and that mobilised resources are channelled towards infrastructure development.
Through the TSP, government promised only to be issuing medium to long-term securities in view of the limited fiscal space, categorised into those for liquidity support, infrastructure development, and those for other purposes.