‘Treasury Bill issuance spike by over 100%’

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    HARARE – Treasury Bill (T-bills) issuances by government have grown by a whopping 142% inside a year owing partly to dwindling fiscal revenue and an economic meltdown, the Reserve Bank of Zimbabwe (RBZ) has said.

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    RBZ

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    In its December 2014 economic review, the central bank said annual domestic credit continued to increase underpinned mainly by a 44,03% increase in net credit to government.

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    “Credit to the private sector registered a growth of 4,01%. Net credit to Government continued to be driven by Treasury bill issuances, which registered a 141,81% annual growth during the period under review (December 2014 and December 2013).”

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    The apex bank said the increase in T-bill issuances, partly reflected the slowdown in government revenue collections as a result of the economic downturn.

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    Due to lack of fiscal space government has resorted to paying its creditors with TBs, much to the chagrin of the market, which complains the money market instrument was funding no takers.

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    According to investopedia, T-bills are short-term most marketable money market securities that mature in one year or less from their issue date.

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    The RBZ said that growth in credit to the productive sectors of the economy also continued on an upward trend, reaching 4,01% in December, the highest annual growth in 2014.

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    “On a monthly basis, however, credit to the private sector declined by 0,72%, from $3 823,8 million in November to $3 796,3 million in December 2014,” the bank said.

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    Loans and advances constituted 81,81% of total credit to the private sector followed by mortgages at 13,51%, other investments at 1,70%, bills discounted at 1,69% and bankers’ acceptances at 1,29%.

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    During the period under review ( December last year), credit by banks  was mainly channelled to agriculture which got an allocation of 18,85%) services 16,04%), manufacturing 15,95%, distribution 14,59%), mining 7,34%, financial 4,54%, transport and communications 2,87% and construction 1,54%.

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    Households accounted for 18,09% of total credit to the private sector.

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    The credit advanced to the private sector was mainly utilised for working capital chewing up 74,85% while 11,17% was channelled towards the procurement of consumer durables with 9,98% used for other purchases.

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    Loans and advances utilised for fixed investment activity remained low, with the procurement of plant and equipment accounting for only 4% of total loans and advances.