Reserve Bank of Zimbabwe (RBZ) on Wednesday morning floated ZWL$150 million worth of Treasury Bills to financial institutions with a tenure of 365 days, the fifth time in less than 90 days Government has sought to raise funds to finance its programs.
The latest round of TB issued has now surpassed the half a billion dollars mark, reaching ZWL$ 640 million.
The auction is expected to close by mid-day Thursday, the 10th of October.
“The Reserve Bank of Zimbabwe (RBZ)hereby invites Commercial banks, Building Societies, POSB and IDBZ to subscribe to Treasury Bills amounting to One Hundred and Fifty million dollars (ZWL$ 150 million),” read the statement from the Bank’s financial markets division.
The TBs will assume prescribed asset status, liquid asset status, tradable, tax exempted, acceptable as collateral and accepted as collateral for overnight accommodation by the RBZ.
Since the reintroduction of the auction based system, Treasury conducted two auctions in the month of August in ZWL$ 30 million and ZWL$ 60 million batches, auctioned ZWL$ 100 million worth of TBs in September before floating another ZWL$ 300 million last week.
Observers have raised concern over Government’s penchant for raising funds using this debt instrument.
“Banks are releasing money at a low price. Banks are lending depositors’ money. For me it’s an unfair arrangement. They are exploiting banks. When they give the banks their money it will be reduced in value,” economic analyst John Robertson was quoted recently.
The Zimbabwean dollar has been on a downward path since being floated in February this year and this raises high risks for banks to lend long term.
On the fiscal side, market watchers say Government is accruing debts at a fast pace and this will make it difficult to repay, derailing progress in balancing its book.
Since beginning of year, Government has been realizing monthly fiscal surpluses but it’s already sliding into deficits since Third Quarter.