Conrad Mwanawashe Business Reporter
THE Government has issued more Treasury Bills worth $32,1 million towards the clearing of FCA and tobacco retention balances owed by the Reserve Bank of Zimbabwe.
Details obtained by The Herald Business show that $25,5 million TBs will go towards FCA balances while the other $6,6 million will go towards clearing tobacco retention balances owed by the central bank.
The $32,1 million TBs bring the total paper issued towards clearing FCA and tobacco retention balances to $135,1 million as the Government seeks to clean the bank’s balance sheet.
Last month Government floated $103 million TBs of which $92,9 million targeted FCA balances while $10,1 million went towards tobacco retentions.
The TBs were subscribed for 100 percent based on the market share that was prevailing during the Zimdollar era. For tobacco retentions, more paper worth about $14 million will be issued to clear the $30 million debt.
Banks had all along been advocating for the liquidation of FCAs that were used by RBZ on strategic national interests.
Officials familiar with the developments said the TBs were being issued after a validation process of individual claims against the RBZ.
“We are validating the individual claims and then issue instruments to banks worth the value of the claims. The banks can use the TBs as security and are tradable,” the officials said.
The validation process involves writing to every creditor to present their claims against the central bank and verifying the debt before approval for payment. It is being conducted by the Zimbabwe Debt Management office.
The TBs attract an annual interest of 2 percent, have prescribed asset status, liquid asset status and are tax exempt.
Clearing the debt is the first step towards the capitalisation of the RBZ, which will be followed by raising the bank’s capital threshold to about $200 million.
Last week the Permanent Secretary in the Ministry of Finance, Mr Willard Manungo told Parliamentarians who make up the Portfolio Committee on Public Accounts that Government was working on raising resources to capitalise the central bank so that it can perform the lender of last resort.
Mr Manungo said the validation process is expected to be completed by the first half of this year.
The RBZ owes $1,35 billion debt split between domestic debt of $754,3 million, domestic stock of $390 million and $596,02 million external debt.
The RBZ debt assumption Bill is currently going through Parliament approval process. The instruments are the Government’s steps towards cleaning the RBZ’s debt overhang.