The Reserve Bank of Zimbabwe is in the process of finalising modalities around the return of the auction system for Treasury Bill with indications showing the platform could start operating in April. RBZ governor Dr John Mangudya told The Herald Business that discussions around the resuscitation of the system were ongoing with April the most likely start date. He said the move to re-introduce the tender system was part of efforts by the central bank “to raise fresh capital for economic transformation which subsequently leads to an improved liquidity situation.”
Government has, for nearly two years now, been issuing TBs to fund various economic programmes and to pay off state-owned company debts. For instance, in a bid to address viability concerns in the gold sector, Government settled outstanding obligations to gold miners under the RBZ Debt Assumption Act in 2015, through the issuance of treasury bills. The central bank said the issuance of these treasury bills was meant to unlock liquidity to the gold sector and boost confidence in the economy.
The TBs auction system previously failed in 2012 after primary institutions failed to take up the tenders which were offered.
The Herald Business understands that discussions are currently centred around the acceptable rates for the tender with the central bank already indicating that rates around 13-15 percent would be rejected and whether only banks should be allowed to bid in the primary market to allow the creation of a secondary market where TBs would then be sold to the rest of the market.
There are TBs which are currently being traded in the market and these could have a bearing on the price of the auctioned bills.