Harare — The Grain Marketing Board is coming onto the market tomorrow to raise US$2,5 million through grain bills issued to finance the purchase of grain.

Financial advisers, CBZ Bank Limited, said the 90-day tenure bills would be calculated on a tender basis and coupon-based system.

"CBZ Bank as the financial advisors hereby invites investors including, but not limited to pension funds, insurance companies, life mutual, commercial banks and other interested institutions as well as individuals in Zimbabwe to subscribe for grain bills amounting to US$2,5 million," read part of the statement.

Applications would be in multiples of US$1 000.

GMB is coming at a time when the market is starved of funding due to the systematic risk that remains embedded in all local financial markets.

Liquidity on the market remains at critical levels as indicated by the thin deposit base on the local financial sector estimated at below US$1 billion.

Lending rates, as indicated by quotations on Bankers Acceptances for 30 to 90 days, continue to trade in the eight percent to 15 percent range, while deposit rates are being quoted in the region of six percent to 12 percent for the said period.

Activity on the money market therefore remains subdued as the huge appetite for funding is not met by corresponding supply to ensure the viability of the short-term debt instruments market.

GMB has failed to pay farmers for grain delivered to its depots throughout the country due to the liquidity crunch.

The parastatal announced a maize floor price of US$265 per tonne in a bid to lure farmers through competitive prices.

Due to cash problems, GMB resorted to offering inputs as part-payment to the farmers who delivered their maize to the parastatal's depots.

The farmers are getting fertilizers and chemicals instead of cash for grain delivered to its depots countrywide.

This year, GMB is competing with other private buyers to purchase grain from the farmers and is among those offering high prices.

The majority of the buyers are offering prices ranging from US$100 to US$180 per tonne, resulting in some of the farmers holding onto their grain in anticipation of better prices.

The local money market conditions, characterised by liquidity constraints and high interest rates, contrast those prevailing in other regional and international markets.