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Tawanda Musarurwa
The Reserve Bank of Zimbabwe (RBZ) is looking to raise $300 million, in what is the biggest Treasury Bills auction to date since the resumption of the auction system this August.

Treasury Bills (TBs) are negotiable instruments issued by Government through the central bank to finance the State’s short-term requirements.

The three previous auctions – two in August, and one last month – have so far raised a quantum of $190 million in batches of $30 million, $60 million and $100 million.

The country held its first TBs in early August – the first in a decade – after putting a stop to private issuances last year as excessive issuances of the paper had become a major source of macro-economic stability due to money supply growth.

Yesterday, the central bank floated TBs to the tune of $300 million, with the monies targeted for financing of “Government operations.”

The latest public auction is for 365-day TBs.

“The Reserve Bank of Zimbabwe (RBZ) hereby invites financial institutions including commercial banks, building societies, POSB and IDBZ, to subscribe to treasury bills amounting to three hundred million dollars,” said the RBZ.

Allotment of the latest auction is today.

The bills have an “open tender on a yield basis” interest rate and other special features which include prescribed and liquid asset status, tax exemption and acceptability as collateral for overnight accommodation at the central bank.

Although the RBZ has no problems in finding takers for the debt instrument, observers have cautioned that an increase of TBs on the market will perpetuate “a crowding-out effect” as financial institutions prefer to acquire the paper and generate guaranteed interest on them rather than lend to the private sector. And there are also concerns about excessive money supply growth, which can drive inflation. The International Monetary Fund (IMF) has warned against ‘expansionary monetary developments’.

“The key challenge is to contain fiscal spending consistent with non-inflationary financing and tighten monetary policy to stabilise the exchange