‘Govt issues $4,4bn worth of TBs since 2014’

Source: ‘Govt issues $4,4bn worth of TBs since 2014’ – NewsDay Zimbabwe April 13, 2017

FINANCE minister Patrick Chinamasa has said $4,417 billion worth of Treasury Bills (TBs) have been issued since 2014.
In a ministerial statement yesterday, Chinamasa said $1,102 billion TBs had matured and been liquidated, leaving $3,315 billion outstanding by March 3, this year.


“Government issued TBs to raise money to fund its programmes, service debts, the Reserve Bank of Zimbabwe (RBZ) debt and recapitalisation of public institutions, and we also took over collateralised non-performing loans by the Zimbabwe Asset Management Corporation,” he said.

“Twenty five percent of the amount raised went towards financing of government programmes, while 75% went towards dispersing legacy debts, and government has been honouring its obligations on maturing TBs, as demonstrated by a total $1,102 billion so far repaid timeously.”

TBs are debt instruments that have to be paid on maturity in one year, on the other hand, bonds can take more than a year to mature.
Chinamasa said the government had never defaulted in honouring TBs that had matured.

The Finance minister said the government occasionally went to the market to raise money to fund critical areas such as infrastructure, production and recurrent expenditure.

He said the government funded projects such as Tokwe-Mukosi using TBs, adding in the past infrastructural development was funded by the World Bank, African Development Bank and others.

“[A total of] $1,105 billion was raised since 2014 and of this $641,6 million has matured and been repaid, leaving $463,2 million. On financing of legacy debts, government draws services from private and public institutions, which should be paid for. Unfortunately, government has been consuming services without paying, resulting in accumulation of domestic arrears, which negatively impacted operations of industry,” Chinamasa said. He said as a result, a number of firms had resuscitated production.

Chinamasa said TBs worth $925,5 million were issued to RBZ and of this $59,2 million had since been repaid, while $866,3 million remained outstanding since March 3, 2017.

For loan capitalisation of public institutions, he said the government extended $196,87 million towards their recapitalisation.

“With respect to issuance of TBs for the financial services sector, we noted that non-performing loans threatened to cripple them and as at March 3, 2017, the total non-performing loans amounted to $503 947 700, and banks ended up imposing stringent conditions to customers. Government has made a decision to resuscitate Caps Holdings and Cottco through warehousing the companies’ debts,” Chinamasa said.

He said his explanations should end speculation in the market regarding the amount raised through TBs.