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– Herald

The Reserve Bank of Zimbabwe (RBZ) last week raised $380 million through Treasury Bills (TBs) after it issued a one-year paper that had targeted to raise $400 million.

TBs are short-term financial instruments issued by the Government Treasury to be paid at par-value after a particular maturity period, often a maximum of a year.

A stable macro-economic environment has seen market appetite for Government paper improving in recent months.

The authorities’ leaning towards TB issuances can be attributed to present budgetary constraints on the back of limited external credit support.

The TBs, which were issued on May 27, raised $380 million at an average rate of 20,2105 percent.

Lowest rate was 18,5 percent while the highest was 21 percent.

All bids were allotted.

The latest TBs issuance at one year (365 days) is longer paper than the 270-day paper issued in March (for the same amount).

In April, Government was again in the market seeking $500 million.

But unlike in previous years, where TB issuances were almost excessive, the current ones have been planned for.

The funds being raised through TBs are part of budgetary support that was announced by Finance and Economic Development Minister Mthuli Ncube in the 2021 National Budget Statement.

The 2021 Budget projected a deficit of $30,8 billion or -1,3 percent of gross domestic product (GDP).

And to cover that deficit, the Finance Minister announced a domestic borrowing plan which would see Government issue TBs $3,083 billion worth in the first quarter of the year to March.

According to the plan, there were plans to raise $1,233 billion through issuance of 180-days TBs, and a similar amount through 270-days TBs, as well as $617 million through 365-days TBs.

President Mnangagwa’s Government is preaching the “live within your concept” and has vowed not to use the RBZ overdraft window as a cash box whenever it wants to finance programmes and has insisted on sticking to set budget.

Ever-since it assumed office, the Treasury Department has never run supplementary budgets unlike the First Republic that at times presented supplementary budgets that were bigger than the initial budget as inflationary pressures took toll on the economy then.

But the new dispensation has maintained stranglehold on money supply and Government spending and policies that have been put in place have seen year on year inflation tumbling and hopes are it might strike single digits by year end.

The year on year inflation has been taking a deep since the July 2020 figures of 837 percent and expectations are the figures are likely to fall to below 100 percent by end of July this year.

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