Biti warns banks on Treasury Bills

HARARE - Zimbabwe's Finance minister Tendai Biti has said lenders, including units of Barclays and Standard Chartered banks, had a last chance to support the central bank’s Treasury bill sales or they would be compelled to buy negotiable certificates of deposit (NCDs).

The Reserve Bank of Zimbabwe yesterday offered $30 million worth of 91-day Treasury bills after two failed offerings and one partially successful sale last month.

The sales are the first since 2008, shortly before the country abandoned its currency in favour of the dollar in a bid to curb an inflation rate that had risen to 500 billion percent, according to the International Monetary Fund.

“I am giving the banking sector a last chance to fully support the Treasury bills,” Biti said in an interview on Saturday. “If they don’t support it, I will issue NCDs and that’s it.”

Barclays Bank of Zimbabwe is the biggest lender by market value on the Zimbabwe Stock Exchange with a capitalisation of $62m.

Units of London-based Standard Chartered as well as Standard Bank Group and Nedbank Group operate in the country. CBZ Holdings is the biggest locally-owned bank.

Biti is also in negotiations to secure funding to recapitalise the country’s banks and plans further regulation of the industry.

In September, Global Emerging Markets, a $3,4 billion investment company with offices in London and New York, said it had proposed setting up a $1 billion fund in a venture with the finance ministry to fund banks, mainly the smaller local ones.

“There are discussions with parties, but it’s not anywhere near the $1 billion,” Biti said.

“I can’t tell you the figure, but what I can say is there are various negotiations taking place.”
Biti is also in talks with South African finance minister Pravin Gordhan in an attempt to secure funding to help speed up Zimbabwe’s economic recovery.

“The South African government is firmly committed to assist us. I can’t put a figure on how much they would give us,” Biti said.

“I spoke to Pravin Gordhan about two days ago and I am optimistic it would come through.”

Last Friday, Biti cut his forecast for Zimbabwe’s growth this year to four percent from an earlier estimate of 5,6 percent, citing a smaller than expected crop harvest.

“There are no signs that we are providing sufficient leadership,” Biti said.

“You can’t continue doing things over and over again. There has to be a paradigm shift or else we will continue limping.”

Biti’s statement comes as the African Development Bank says the country risks engaging in excessive borrowing and the possibility of rollovers in the event that it fails to redeem its TB’s.

The TB market, which last operated in 2008 was reintroduced last month in a bid to raise funds to enable government to smoothen its revenue and expenditure streams under the current cash budgeting systems.

Its re-establishment was also meant to assist in reactivating the interbank market, money market and benchmarking the pricing of other financial securities.

The tender conducted early last month was worth $15 million but was restricted to financial institutions on Real Time Gross Settlement (RTGS).

The minimum tender was $100 000 and institutions were limited to one tender.

The characteristics of the TBs included the 91-day maturity tenor and no option of a buy-back. — Business writer/Bday

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