HARARE – Government’s issuance register for Treasury Bills (TBs) and bonds is in shambles, which makes it difficult to detect missing or unrecorded commercial paper.
This observation was made by the Auditor-General (AG) Mildred Chiri in her 2017 audited report tabled in the National Assembly last month.
In her audit of the Statement of Public Debt for the ministry of Finance and Economic Development for the year ended December 31, 2016, Chiri said an examination of the issuance register revealed that TBs/bonds with a total value of $679 701 741 were not serialised and had no issuance note numbers, tenure and coupon rates per good internal control practice.
Chiri went on to reveal that request to raise funds for payment of government creditors and programmes through issuance of TBs/ bonds originated from two offices.
“One office serialised and numbered issuance instructions while the other office did not, leaving some of the records incomplete. There is no coordination between the two offices,” Chiri noted.
“Further, Treasury Bills/ bonds issuances as per the RBZ Issuance Account for the year 2016 amounted to $356 316 100. However, issuances posted in the Public Finance Management System (PFMS) General Ledger were $337 516 100.
The resultant variance of $18 800 000 was not reconciled.
“Treasury Bills/bonds for 2016 as per the Statement of Public Debt were $ 1 827 619 442 while the RBZ Treasury Bills and government stock issuances report had $1 818 150 725 giving a variance of $9 468 717.
The back office issuance register had a balance of $1 171 973 808. A reconciliation was not performed.”
The Statement of Public Debt disclosed that TBs/bonds was $17 579 552 for two creditors resulting in over issuances by $5 675 597.
Chiri said all this had the risk of making it difficult to detect missing or unrecorded TBs where issuance notes were not numbered or serialised.
“The 2016 Treasury Bills and bond issuances may be misstated,” she said.
In its response, the ministry of Finance said there exist a technical committee comprising Public Debt Management office (PDMO), Financial and Capital Markets, Account General and Reserve Bank of Zimbabwe to ensure that TBs are matched with instructions given.
“Going forward, serial numbers will be appended by the PDMO on the minister’s letter head and will be used by both offices. RBZ will also adopt serial numbers on their issuance confirmations.
“Reconciliations are still in progress, so far the office has identified Treasury Bills amounting to $7 468 717 which are in the PDS and not on the issuance report.”
TBs are short dated securities used by government when borrowing from the market.
They are issued by the RBZ on behalf of government.
Through investing in TBs, clients earn fair returns at minimum risk since the securities are government-backed.