07-12-19 by Spotlight Zimbabwe

Zimbabwe to revamp investment markets after treasury bill auction

Tawanda Karombo 

INTERNATIONAL – Zimbabwe is seeking to revamp its investment markets after it held its first treasury bills auction on Tuesday to revamp capital markets.

Unchained treasury bills issuance under former leader Robert Mugabe worsened the country’s economic plight as they were used to fund the government’s expenditures.

Permanent secretary for treasury George Guvamatanga said yesterday that the treasury bills and bond markets were now being re-shaped.

Guvamatanga said that the first auction in years was held on Tuesday.

The highest bid rate was 47percent against 13percent stacked against a weighted average of 16.5percent to 19percent.

“We will be coming to the market with an Infrastructure Bond soon to be supported by a ring-fenced structure utilising Zimbabwe National Roads Authority (Zinara) cashflows to support road construction,” added Guvamatanga.

Investment analyst Steve Charangwa said there would be no withholding tax or any taxes on payoffs on the infrastructure bond be levied.

He said that a government guarantee would appeal to foreign fund managers.

“Issue size matters for liquidity and please get Zinara to also make the market for its bonds,” he explained.

Brokerage and investment advisory firm IH Securities said that the “Zimbabwe government had successfully relaunched the bills auction, despite testing the market in a period where the treasury has no need for the money”.

Finance Minister Mthuli Ncube has been touting a budget surplus of nearly ZWL500million (R19.6m) as signalling the government’s success in effectively managing fiscal spaces.

“The government is no longer running huge fiscal deficits.

“Inflation or other challenges on the exchange rate are caused by the creation of money,” Guvamatanga said.

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  • Government increased the civil servant wages by 22% three months ago and has just increased the wages again by 40%. We all know government was spending up to 80% of paying the wage bill and that the Zimbabwe economy has been shrinking. So, where has government got the money to pay these wage increases and still have a budget surplus of Z$ 500 million? This surplus is just creative accounting!