BY MISHMA CHAKANYUKA
GOVERNMENT has issued Treasury Bills (TBs) valued at ZWL$100 million aimed at financing various programmes.In a statement yesterday, the Reserve Bank of Zimbabwe (RBZ) invited financial institutions, asset managers, insurance and pension funds and other corporates to subscribe to TBs with maturity tenure of 92 days.
“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 one hundred million dollars (ZWL$100 000 000),” the central bank said.
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 auctions of the sovereign paper last month, the apex bank wanted to raise $30 million within 91 days, which was oversubscribed more than four times and another one which sought to raise ZWL$60 million.
The economy is envisioned to contract this year due to poor performance in agriculture, unreliable power supply, combined with inflationary pressures, foreign currency scarcities and limited external financial support.
According to Treasury, the stock of outstanding TBs as at June 2018 amounts to US$6,7 billion, with a maturity value of around US$8,3 billion.
Prior auctions were held in secrecy, and as such, government instituted an open market borrowing to improve transparency on its domestic debt.
The huge quantity of TBs issued during the period 2017 to June 2018 had posed a burden to the fiscus in terms of both interest and principal payments and in some instances it caused a situation where the TBs were being reduced at absurd rates in the secondary market, hence undermining market confidence in government securities.
Through the Transitional Stabilisation Programme (TSP) unveiled last October, Treasury decided 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 agreed by Parliament, and that organised resources are directed towards infrastructure development.
Through the TSP, government promised to issue medium to long-term securities only, in view of the narrow fiscal space, categorised into those for liquidity support, infrastructure development and those for other commitments.