Treasury Bill tenders rejected again


Ngoni Chanakira

THE Reserve Bank of Zimbabwe (RBZ) has rejected all bids at the 90-day Treasury Bill (TB) tender, a situation gradually developing into a habit at the central bank.
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The TB tender which was for $10 billion was rejected last Thursday.

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 money market continued in deficit last week with the shortage exceeding $45 billion,” an investment analyst from Barnfords Investment Services said.


He said the RBZ had rejected all bids at the weekly Treasury Bill tender last Thursday, but had allotted $10 billion at an ad hoc 90-day tender held on Thursday afternoon at an average discount of 49,47% translating into a yield of 56,995.


The rejection of the TBs comes at a time when government is in serious need for cash to pay its fuel and electricity bills. It is also staring at bonuses for its bloated civil service next month end.


Insiders said this year’s bonuses would be staggered. They said bonuses would be paid beginning with senior officials down to the lowest ranks.


Meanwhile, lines of vehicles have resurfaced in Harare as fuel supplies have completely dried up and customers forced to sleep in their vehicles once again.


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 (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%.


Economist John Robertson said the TB rejection was becoming a norm at the RBZ because of the prevailing hyper-inflationary environment in Zimbabwe.


The country’s inflation has soared from about 100% at the beginning of the year to 455,6% for September.


Economists predict it will continue skyrocketing to hit the 1 000% mark by year-end.


Zimbabwe is however, surrounded by neighbours with single digit inflation figures, making trade very difficult.

Its largest trading partner South Africa has an inflation of 5,7%, Botswana 8,3%, Tanzania 4,4%, and Zambia 20,3%.


“The RBZ has been rejecting Treasury Bill tenders for most of the year,” Robertson told businessdigest.


“The RBZ is now only prepared to pay the least rate because of the spiralling domestic debt.”