Zimbabwe: government to borrow $ 147 billion in 2022
Senior Business Journalist
Finance and Economic Development Minister Professor Mthuli Ncube said the Treasury will borrow $ 146.8 billion using Treasury Bills (TB) and Treasury Bills in 2022 to fund key government projects.
“The gross financing requirement in 2022 is projected at 146.8 billion dollars, which will come from the issuance of government securities,” said the minister.
Of the TB to be issued, $ 8.7 billion will be for 180 days, with 270-day TBs worth 32.9 billion being issued in 2022. A total of $ 32.4 billion will be borrowed during the 360 ââday period. paper.
Borrowing will be done quarterly, with 180-day bills offered in the first and fourth quarters only, while other papers will be issued quarterly.
âRegarding domestic borrowing, the government will continue to issue treasury bills through the auction system at competitive prices, as well as to improve accountability and transparency.
“The expected stable macroeconomic environment, characterized by low and stable inflation, as well as a stable exchange rate should stimulate the absorption of medium and long-term government securities by investors,” Minister Ncube told lawmakers on Thursday. .
The Reserve Bank of Zimbabwe (RBZ) returned in September 2019 to the capital market with more TB to raise funds for government operations.
Without budget support, the government’s appetite for debt instruments has grown in recent years.
The Treasury said that in 2022 they would issue US $ 100 million 2 to 7 year T-bills on the Victoria Falls Stock Exchange (VFEX) denominated in US dollars at during the first quarter of 2022 as part of the deficit. funding.
VFEX is a subsidiary of the Zimbabwe Stock Exchange (ZSE), launched late last year as part of efforts to attract global capital, while helping to restore foreign investor confidence in the country’s capital markets. Zimbabwe and helping businesses raise capital in foreign currencies.
In his 2022 national budget, Minister Ncube said the bonds will be issued to lower the cost of borrowing and deepen capital markets, with a particular focus on developing the Victoria Falls Offshore Financial Services Center aimed at attracting foreign capital.
âAs part of the deficit financing, the government will issue 7-year US dollar denominated Treasury bonds of up to US $ 100 million, which will be listed on the Victoria Falls Securities Exchange (VFEX) during the period. first quarter 2022, intended for specific priority infrastructures. projects.
“The government has appointed the Infrastructure Development Bank of Zimbabwe (IDBZ) and the African Import-Export Bank (Afreximbank) as principal arranger / financial advisers,” the minister said.
The Treasury said that in order to improve the credit structure of U.S. dollar-denominated government bonds, it would establish a dedicated sinking fund to circumscribe identified carbon tax revenue streams for repayment of the carbon tax. government bond in US dollars.
“The bonds will be issued to supplement government resources needed for road rehabilitation, modernization and equipping of public health facilities, as well as investment in irrigation infrastructure,” he said. .
Said Minister Ncube, aware of statutory borrowing requirements, current high debt distress and debt sustainability analysis under National Development Strategy 1 (NDS1), the overall annual borrowing limit 2022 was set at 5.75 percent of gross domestic product (GDP), which is derived from budget deficit financing requirements, loan and securities amortization, and public entity project financing.