A local financial analyst has urged the Government of Zimbabwe (GoZ) to exercise extreme caution following the announcement to borrow a total of US$5 million from the local market via the issuance of a 90-day tenure Foreign Currency Treasury Bill (TB).
The TB issued by the GoZ through the Reserve Bank of Zimbabwe (RBZ) has since invited Financial Institutions, Corporates and individuals to subscribe to the 90-day Foreign Currency TB Tender amounting to US$ 5 million.
TB's are government backed debt obligations floated in a bid to raise funds and are generally a global best practice due to their attribute of being a low risk and secure investment.
"Applications must be for a minimum US$50 000 for financial institutions and Corporates and US$5 000 for individuals. Non- competitive bids for corporates and individuals through the banks.
"Maximum of 2 bids per Financial Institution. Copies of the Application Form are available from Banks and RBZ Local dealers," the GoZ notice reads in part.
Accordingly, the offer opens Thursday 12 October 2023 at 8 am and closes at 12pm.
Notably, a TB by tender is when investors place a bid for the amount of the offering they are willing to buy in terms of quantity and price.
For instance, a given investor can offer to buy a TB worth US$5 000 by extending a US$4 800 payment effectively translating to an interest quantum of US$200.
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But speaking to NewZimbabwe.com on condition of anonymity, a local financial analyst urged the government to exercise extreme caution on the latest move.
"There is a need to practically honor the TBs repayment obligation within the tenure stipulated. I wouldn't want to speculate that the government will not own up, but my concerns are that at the end of this real monetary payments will be made to keep the US$ ecosystem balanced," he said.
He underscored that given Zimbabwe's country risk factors which have seen a few global lenders willing to lend to the country, the GoZ is currently threading between a rock and a hard place which has left very few options except to turn to the local market for borrowing.
"There is also the need to expeditiously honor repayment considering that already, the economy is saddled with a huge local debt stock. Such fundraising initiatives often crowd out the local private sector and risk stifling local productivity," he said.
He added that as a positive, the fact that the TBs are by tender implies that raising the funds will be expeditious.
