RBZ issues $0,5bn bonds, TBs

HARARE - The Reserve Bank of Zimbabwe (RBZ) has issued nearly half a billion dollars’ worth of bonds and Treasury Bills (TBs) since the beginning of the year to repay part of the central bank’s decade-long debt to financial institutions, corporates and farmers.

John Mangudya, the RBZ governor in his maiden monetary statement on Monday said the central bank was working to eliminate government debt to local institutions.

“As the agent for the State in terms of issuance of government securities (bonds and Treasury Bills) RBZ has issued a cumulative total of $406 million TBs since the beginning of the
year with the bulk of the TBs pertaining to the RBZ debt takeover programme by government.

“It is pleasing to note that government has been able to settle all TBs ($213 million since 2013) timeously on maturity, including capital and interest on TBs that were issued in 2012 in lieu of statutory reserves,” Mangudya said.

This comes as Meikles Holdings Limited (Meikles) last week indicated that it received payments of a 16-year-old debt from the central bank.

John Moxon, the Meikles chairman said the group was in receipt of Treasury Bills of $49,6 million in funds of deposit from the central bank as part of repayment of the $87,2 million debt which has since ballooned to $90,8 million.

The debt, which has been growing since 1998 when it originated, has accrued interest since the economy was formally dollarised in February 2009.

Moxon noted that the group has “been advised by relevant authorities that upon completion of the required process, Treasury Bills of similar terms to those in their position will be
issued for the balance”.

It originated from deposits made to RBZ following Meikles listing on both the local bourse and the London Stock Exchange in 1996 and the raising of funds from a number of substantial
investors for the benefit of the company.

However, government’s issuance of the TBs has been questioned by analysts, as Parliament is yet to approve the central bank’s debt assumption bill, which Cabinet has passed.

Some analysts have said it was not prudent for the apex bank to issue TBs when the Bill has not been passed.

Currently, the central bank has a $1,35 billion debt, to gold miners, banks and exporters after raiding their foreign currency accounts to fund the cash-strapped government.

Zimbabwe’s currency was eroded by hyperinflation, which reached 500 billion percent in 2009, forcing government to adopt a basket of foreign currencies.

According to Willard Manungo, Finance ministry permanent secretary, the ministry’s debt management office was in the process of validating government debt.

“What we are doing … is to go over each and every single debt and validate it and so at the end of the exercise we will be able to confirm the exact indebtedness of the Reserve Bank,” he said.

Comments (2)

Looks like someone and or some institutions are being given worthless paper in a you take it or leave it.

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GALLERYCARTIDGES - 28 August 2014

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