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Finance and Economic Development Minister, Professor Mthuli Ncube said on Wednesday the Treasury Bills auction system re-introduced mid-this year to mobilise funding for government operations has been a “huge success under very difficult economic environment.”
President Emmerson Mnangagwa’s government, through the Reserve Bank of Zimbabwe, has floated bills worth about $1.8 billion since August this year and has raised almost $1 billion.
Use of TBs among other windows to finance government programs had been stopped after the previous government abused the system to rake in billions in debt, which it struggled to repay.
Nine treasury bill auction have been conducted since the re-introduction of the public auction system, with financial institutions among other institutional investors taking part.
“Overall, I am very pleased with how the auction system has taken off.
We are having to do it in an environment where obviously interest rates have been high but also inflation has been high, so we have been getting very good pricing under the circumstances on the T bills,” Ncube told reporters.
“It’s safe to say the auction system has been a huge success in a very difficult economic environment.”
Ncube said the government was still in the process of building a yield curve, and was not interested in borrowing at “punitive rates.”
“Remember we are borrowing on behalf of the people so the lower the interest rates the better so that taxpayers do not have to carry a huge burden,” he said.
Meanwhile, results of the ninth TBs auction conducted on Tuesday in which the RBZ sought to raise $300 million showed that the government rejected all the offers.
Total bids amounted to a measly $30 million, with the highest coming at an interest rate of 15.5 percent and lowest at 15 percent.
For the first time since the auction resumed, all bids were rejected.
Commenting on the development, Prof Ncube said, “Well that’s the market, isn’t it. So depending on the pricing we can accept or reject bids.”
He said the government “will certainly be back on the market” to try and mobilise more funding.
Besides taxes, TBs are one major avenue through which the Zimbabwe government is financing its operations as it is not receiving any external budgetary support like most African countries. – New Ziana
Online Reporter