THE Reserve Bank of Zimbabwe (RBZ) says it has so far issued $153 billion worth of bearer’s cheques onto the cash-starved market as it frantically battles to try and solv
e the cash crisis.
“To date $153 billion has been issued in bearer’s cheques and the bank continues to issue both bearer’s cheques and notes depending on public demand and currency denomination preferences,” the RBZ said in response to questions from businessdigest.
The bank however, refused to shed light on market speculation that it had stopped printing travellers’ cheques for non-travellers and reduced supplying notes because they were expensive to print.
Speculation is also rife that the RBZ is failing to raise sufficient foreign currency from the market to cover the printing costs of the new $500 and $1 000 notes introduced in Zimbabwe last month.
“Both cheques and notes are printed using imported note paper and inks,” the RBZ said in response to the allegations. “Therefore, the issue of foreign exchange does not arise.”
Asked why the central bank had now developed a habit of rejecting Treasury Bills, the RBZ said it did not have to accept bids.
“Treasury Bills are used to raise government funding and for open market purposes,” the RBZ said. “Depending on the market liquidity situation and funding needs of government, the RBZ does not necessarily take up tenders.”
The RBZ recently rejected all bids at the 90-day TB tender for $10 billion.
Bills were also thrown out on September 18 when the RBZ rejected TBs for $2 billion.
Analysts said the central bank had rejected the bids because the rates being offered were too high at a time when the RBZ was desperate for cash to bail government out of its financial mess.
The rejection of TBs comes at a time when government is in serious need of cash to pay its fuel and electricity bills. It is also staring at bonuses for its bloated civil service next month end.
Zimbabwe’s domestic debt, which stood at $346 billion in December last year, rose dramatically to $593 billion as at August 15.
Bankers say with TBs accounting for 96% (about $491 billion) of the debt, interest costs are likely to continue to be a burden on the fiscus.
They said the increased borrowing had tied up a high percentage of the nation’s savings.
“In its efforts to keep rates low, the central bank is refusing to accept high bids and ironically refusing to give banks overnight accommodation, which has had the effect of raising interest rates as the banks have been forced to seek funds from the open market,” a Barnfords Securities Services (Pvt) Ltd financial analyst said.
The money market has continued to be short and with overnight ratios firming significantly to levels between 93% and 110%.
Economists said the TB rejection was becoming a norm at the RBZ because of the country’s prevailing hyperinflationary environment, which was leading to a soaring domestic debt.
The country’s inflation has risen from about 100% at the beginning of the year to 455,6% for September.