Gift Phiri 11 April 2017
HARARE – Hard-pressed President Robert Mugabe’s government is issuing
Treasury Bills (TBs) in a desperate move to raise money to pay restive
civil servants’ 2016 bonuses, Finance minister Patrick Chinamasa told the
National Assembly last week.
This comes as government buckled under pressure from the agitated public
workers, who turned down government’s residential stands among other
non-monetary offers in lieu of their 13th cheques and threatened to
strike, forcing it to add an extra unbudgeted for $180 million to its $4
billion 2017 National Budget.
“Government’s decision to pay the unbudgeted 2016 bonuses after pressure
from employee unions is likely to worsen the situation as TBs worth $180
million are expected to be floated in the market to finance these bonus
payments,” Chinamasa said in a 2017 budget analysis tabled in the National
He said the move will worsen government’s debt situation.
Chinamasa said the country was estimated to have about $2,1 billion worth
of TBs in the market as at February 28, 2017, issued to bridge the
government’s funding gap.
” . . . government decided to clear its contribution arrears to Nssa
spanning from June 2013 with TBs worth $180,9 million with tenure of seven
years and a coupon rate of 5 percent per annum,” he said.
Zimbabwe’s total external debt was estimated at $11,2 billion, or 79
percent of GDP, at the end of 2016.
More than half of it, or $7,5 billion, is in arrears.
The cash-squeezed government – facing a critical funding shortfall to
bankroll its commitments, including a bloated civil service wage bill,
government workers’ pension contributions and medical insurance
remittances – has turned to the TBs market, churning out millions of
dollars’ worth of the paper, with economists warning the move is akin to
minting fresh cash – a move that risks fuelling inflation and worsening
the liquidity crunch.
The bonus deal followed a lengthy deadlock after government was late in
paying civil servants, including the army, for several months in a row.
Last month, government paid the scandal-plagued State-run pension fund,
National Social Security Authority (Nssa), $181 million worth of TBs to
clear three-year arrears after failing to remit its contributions to the
fund as an employer.
Tendai Biti, a former Finance minister credited with overseeing Zimbabwe’s
impressive economic recovery between 2009 and 2013, said “it’s in Zanu PF
DNA to print money and just spend as if there is no tomorrow“.
“They are printing money owed to civil servants, they have issued $181
million worth of TBs to Nssa, Psmas (Premier Service Medical Aid Society)
is also owed, Zesa is owed over $200 million.
“They have to print TBs amounting to $250 million to pay local authorities
in utilities, they have to print to pay NetOne and TelOne $100 million,
and they have to print TBs. This is on the back of $800 million that have
been issued by Zamco (the Zimbabwe Asset Management Company – a special
purpose vehicle created to take over non-performing loans [NPLs] from
banks as a means of cleaning up their balance sheets),” Biti said.
He said government was also printing TBs to finance help extended to some
farmers with inputs under its targeted command agriculture – spearheaded
by Vice President Emmerson Mnangagwa – which aims to ensure the country’s
“They are printing over $500 million in TBs to finance this cantankerous
creature called command agriculture,” Biti said. “If you add these
figures, they amount close to $4 billion, almost the national budget. We
are back in a new regime of economic insanity. This is Chinamanomics,” he
said, taking a dig at his successor Chinamasa.
“Villagers from St Faith (in Rusape where Chinamasa comes from) can’t run
this economy, it’s not possible,” Biti said.
Early this year, the Reserve Bank of Zimbabwe said government had issued
TBs under four categories, long-dated TBs of $549 million issued to banks
for the acquisition of non-performing loans by the Zamco; long-dated TBs
amounting to $300 million issued for the capitalisation of institutions
that include the Reserve Bank, Agribank, IDBZ, ZB, Cottco and CAPS; medium
to long-dated TBs amounting to $780 million issued under the Reserve Bank
Debt Assumption Act for the central bank debt taken over by government;
and short-to-medium-dated TBs amounting to $450 million issued to finance
the gap between expenditure and revenue collection by government.