TBs auction a huge success – Finance Minister

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Harare, (New Ziana) – 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 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 and
raised almost $1 billion.

Use of TBs, among other windows to finance government, had been stopped
after the previous government abused the system to rake in billions in debt, which it struggled to repay.

Nine Treasury Bill auctions have been conducted since their re-introduction, with financial institutions among the main institutional
investors.

“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.”

He said 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 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 government “will certainly be back on the market” to try and
mobilise more funding.

Besides taxes, TBs are one major avenue through which Zimbabwe’s government, is financing its operations as it is not receiving any external budgetary support like most African countries.

Concerns have however been raised on the crowding out of private businesses from getting loans from financial institutions as banks invest in TBs.
New Ziana

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