Minister Chinamasa
Business Reporter
THE Reserve Bank of Zimbabwe has floated Treasury Bills worth $103 million meant to clear part of Government’s $1,35 billion debt assumed from the central bank.
Some of the features of the TBs include a 3-5 year tenure at a rate of 2 percent per annum, prescribed asset status, liquid asset status and tax exemption.
Government last year assumed the RBZ’s $1,35 billion debt made up of domestic debt of $754,3 million, domestic stock of $390 million and $596,02 million external debt .
Last week Finance Minister Patrick Chinamasa announced that the central bank will float TBs to clear foreign currency balances owed to the corporate sector.
“This is to facilitate the proper functioning of the interbank lending because the banks will use the TB as collateral when they are borrowing from each other,” Minister Chinamasa said.
The RBZ debt was affecting the apex bank to a point where it failed to offer the lender of last resort function and this weakened the financial services sector. The issuance of the TBs is one of the measures the Government is introducing to address liquidity challenges in the banking sector.
TBs will give banks access to tradable paper they can use as security to borrow and lend against each other.
This scenario will help revive the dormant interbank market.
Last week the Government and the Afreximbank launched the US$100 million interbank market guarantee facility.
The primary objective of the interbank facility is to unlock deposits held by banks with surplus liquidity by making them available to those banks facing short-term liquidity challenges.
By so doing, the liquidity which is lying idle will be used to stimulate the interbank market.
This is expected to have a multiplier effect on the circulation of the money in the financial system.
The facility is intended to alleviate the liquidity challenges in order to promote the proper functioning of the economy of Zimbabwe and the stability of the financial markets.