The government of Zimbabwe issued more Treasury Bills through the Reserve Bank of Zimbabwe. This time around ZWL$300 million worth of 182-day paper was issued. Once again the Treasury Bill’s were issued for funding government projects. The continuous issue of Treasury bills since their reintroduction in June has stirred more than a little concern with those paying attention to movements in the monetary space.
The Reserve Bank of Zimbabwe has issued Treasury Bills prolifically since the auction system was reintroduced in the June monetary policy statement. The apex bank has issued Treasury Bills in July, August, September, October and the latest issue in November. ZWL$30 million worth of 91-day Treasury Bills were issued on July 31st. This issue was followed swiftly by an issue of ZWL$60 million worth of 365 day Bills issued on the 31st of August. Another ZWL$300 million worth of 365-day Bills were auctioned in September. Wednesday the 9th of October ZWL$150 million worth of bills were introduced with a 365-day tenure while the latest issue worth ZWL$300 million has a 182-day tenure.
The purpose of the Treasury Bills has in each case been to fund government programmes. Unfortunately, no detail has been offered beyond that and this has brought up questions as to what these government programmes are. To date, government programmes have necessitated the asking the market for ZWL$540 million. The two issues with 365-day tenures were however undersubscribed with the $150 million issue only managing to raise 51 million while the $300 million issue of September only managed to raise $81 million. This is understandable due to current inflation levels, long term lending denominated in Zimbabwean dollars is simply not viable.
While the monetary policy committee, in its inaugural meeting press statement made an admission that the reason behind exchange rate pressure was simply that money supply has grown they did not venture into how it has grown. Treasury bills, in the recent past, were an avenue through which money supply grew and played a major part in the cash crisis we find ourselves in today. The problem of lack of trust is always going to haunt the RBZ and government until they show more transparency.
I suppose its point asking about the surplus or the ubiquitous Intermediated Money Transfer Tax which according to finance minister Mthuli was used for everything from infrastructure to cyclone Idai relief. The issue of Treasury bills presents a pattern. Each time they come back for more. At the first instance of auction for the 30 million the finance minister told us they were issuing bills to test the market. He emphasised that the government did not need the money. That surely has changed.
Public expenditure continues to be a problem for both the government and the people. Many believe the government is simply insolvent and using these opportunities to acquire funding for the foreseeable future. All in the meanwhile capable of funding vehicles for legislators and retreats to discuss an impending budget that we simply do not have the means to finance if we take the signs at face value. Of course, ultimately the burden of the government’s debt lands squarely on the shoulders of the citizen taxpayer.