Central bank issues $400m Treasury Bills
THE Reserve Bank of Zimbabwe (RBZ) has gone to the market seeking to raise $400 million through the issuance of 270-day Treasury Bills to fund Government programmes and cashflow management.
The central bank floated the tender, which was closed yesterday, through a public notice issued last Friday where it invited bidders from the financial services sector to subscribe to the TBs.
“RBZ on behalf of the Government of Zimbabwe hereby invites commercial banks, building societies, POSB (People’s Own Savings Bank) and IDBZ (Infrastructural Development Bank of Zimbabwe) to subscribe to Government Treasury Bill Tender amounting to $400 million,” said the monetary authority.
The TBs, which were allotted to successful bidders yesterday, have special features including prescribed asset status, liquid asset status, tax exemption and acceptability as collateral for overnight accommodation at the central bank.
Allotment was at weighted average rate while interest rate on the TBs was calculated at an ‘open tender’ on a yield basis.
Although the Government has committed to maintaining a high level of fiscal discipline, the Treasury has resorted to issuing TBs in a bid to raise funding to support key development operations amid concerns of lack of external credit support to meet Zimbabwe’s budgetary needs.
In his 2021 monetary policy statement, RBZ Governor Dr John Mangudya said the bank would continue to implement a conservative monetary targeting framework in order to contain money supply growth, reduce pressure on the exchange rate and stem inflationary pressures in the economy.
“In this regard, the bank achieved a conservative quarterly growth in reserve money of 18,6 percent in 2020, against a target of 25 percent per quarter,” he said.
“Containment of reserve money way below the set quarterly targets is attributable to the bank’s active mopping-up programme through open market operations and the strong fiscal consolidation measures that have seen Government completely refraining from resorting to the overdraft window at the Central Bank.”
As at end of December 2020, reserve money was $18,76 billion, compared to a year-end target of $25,20 billion.
The TBs have been floated in varying amounts with the debt instruments having among other features, a prescribed asset status, liquid status and tax exemption.
Market analysts have attributed the strong appetite for TBs by the Government to the budgetary constraints on the back of limited external credit support.-herald.l.zw
