eBusiness Weekly
Business Writer
THE Reserve Bank of Zimbabwe (RBZ) says it has reopened the $1,55 billion two-year Treasury Bond (TB) after receiving requests from some interested investors while the instrument will now be closed after every two weeks.
The Treasury bond, which initially closed on August 18, 2021, is meant to raise funds to finance key Government programmes, which have been a common feature across the country since the new administration came into office in 2017.
The 2021 national budget is premised on revenue projections of $390,8 billion (16,4 percent of GDP) and expenditures of $421,6 billion (18,2 percent of GDP) with a targeted budget deficit of $30,8 billion, to be raised on the open market.
Finance and Economic Development Minister Mthuli Ncube indicated 33 percent of the national budget would this year be spent on key public infrastructure across the country, chief among them dams, roads, health and educational institutions.
“Following representations and requests by some investors, the Government of Zimbabwe wishes to advise that it has decided to re-open Treasury bond 2023 (No.1/2021) on a Tap Basis, closing after every fortnight,” the central bank said in a statement.
TBs are instruments of indebtedness issued by central Governments to back up the Governments’ spending and they generally include a commitment to pay interest as well as the face value on the maturity date.
According to the RBZ, the bond will be redeemed at par in Zimbabwean dollars at the RBZ on the maturity date and the transfer of the bond must be done through registered custodians who hold accounts within the Central Securities Depository at the central bank.
The acceptance of applications started Thursday, 2 September, and the offer closes after every fortnight.
The applications according to the central bank must be for not less than $1 000 000 nominal value of the bond and the bank said reserved the right to reject any application or part thereof.
Zimbabwe’s access to external financing has remained largely constrained due to economic restrictions and Treasury has said that domestic financial markets remain the major source of budget financing for the Government.
According to the central bank, the eligible investors include pension and provident funds, insurance companies, mutual funds, commercial banks and other interested institutions and individuals.
The Treasury Bond has special features that include prescribed assets status, liquid status asset, tradable and acceptable as collateral.
The country’s economy is projected to grow by 7,8 percent this year, led by recovery of agriculture and mining while businesses adjust to limitations caused by the Covid-19 pandemic and inflation slowing down.
Government in the five-year development strategy, the National Development Strategy 1 (NDS) is largely focusing on mobilizing domestic financing to fund the projects.
