Gvt to issue 730-day securities for borrowing ZWL$800m

Government will facilitate the issuance of a 730-day government through which it will borrow ZWL$800m on July 29, ZWL$1.550bn on August 12 and ZWL$2.3bn on September 30, the Zimbabwe Public Debt Management Office (ZPDMO) has revealed.

Government securities are either treasury bonds, bills or dated securities issued by the central government or bonds and dated securities issued by the state government. This kind of investment is issued by the government at no risk and it offers fixed interest rate.

In its annual public debt bulletin, the ZPDMO has revealed that the bulk of the issued government securities mature this year and 2022.

“The concentration of the maturities in 2021 and 2022 is attributable to the preferences of investors for short-to-medium-term instruments in government securities, as they desire to hedge against inflation, which in turn translates into Treasury’s refinancing risk,” reads the bulletin.

The bulletin has further revealed that the domestic debt maturity profile shows that about ZWL$4.1bn (25% of total domestic debt) and ZWL$4.6bn (28% of total domestic debt) will mature in 2021 and 2022 respectively, before receding to ZWL$700m in 2023.

The government last year proposed issuing a long-term sovereign bond, a process where the government sells bonds to investors on either domestic or international financial markets to raise funds.

Since 2018, Zimbabwe has been issuing government securities through the auction system. The plan was disrupted last year when the government was forced to use the private placement on its securities due to the Covid-19-induced lockdowns.

Although the government cleared most its arrears with the International Montary Fund in 2016, it is still struggling to settle debt to other international financial institutions, including the World Bank and African Development Bank hence the domestic financial and capital markets remain the major source of its financing.

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