Transparency needed over treasury bills, forex Dr Jinya
Dr Jinya

Dr Jinya

The Bankers Association of Zimbabwe (BAZ) says there is need for greater transparency in respect of the issuance of treasury bills and management of foreign currency.TBs are short-term debt obligations backed by the Government with a maturity of less than one year, with various maturities are typically issued at a discount from par.

They are generally considered low-risk, with Government using monies raised from selling TBs to fund public projects, but some in the local financial services sector have raised concern about a general lack of information on the level of Government-issued TBs currently floating in the market.

BAZ president Dr Charity Jinya told the Parliamentary Portfolio Committee on Finance that despite an earlier engagement with the Reserve Bank of Zimbabwe (RBZ) on the matter, the issue was not addressed in the first Monetary Policy Statement (MPS) of 2017.

Dr Jinya also said the market needed to know exactly how allocations of foreign currency were being done.

“We urged the central bank to revisit the auction system of treasury bills and allocations of foreign currency by the Foreign Currency Management Committee so as to ensure that there is transparency

“The issue was not covered in the Monetary Policy Statement, we however believe that it is important to transparently advise the market of treasury bills issued to enable it to take informed decisions around the issuance and quantum of treasury bills in the market,” she said.

Although the TBs issuance was absent in the MPS, earlier this month the central bank governor said there is currently around $2,1 billion worth of treasury bills in the market, issued to bridge Government’s funding gap and clear the central bank’s debt.

But what the BAZ has called for is a system that allows financial sector players to constantly monitor the issuance and levels of TBs.

The Government has since moved to ease market concerns by stating that it would place a moratorium on TB issuances.

“With regard to the Foreign Currency Management Committee the indications we received are this awaited the promulgation of the new Reserve Bank Act,” said the BAZ president.

Meanwhile, Dr Jinya has warned that the RBZ’s move to regulate interest rates as a standalone strategy will not help address the funding issue in the sector.

She said low interest rates may force banks to further cut on lending and rather invest in short-term securities.

“We would not like to see financial institutions locking up their resources in treasury bills, which are relatively risk-free.

“We have already noted a downward trend in credit creation by banks since the beginning of 2014, while at the same time amounts in treasury bills appear to have been increasing,” she said. – BH24

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