Government has issued about $200 million worth of Treasury Bills to settle debts owed by parastatals and local authorities to the country’s power utility, Zesa Holdings.
This is part of the $535 million worth of the TBs that the Ministry of Finance and Economic Development intends to issue to settle obligations by parastatals, line ministries and departments to the power utility.
The issuance of the instrument would slightly reduce — by 50 percent–the $1 billion that Zesa is owed.
“The TBs are being released in batches and just over $200 million have been issued and these have been used to pay suppliers,” said one source who spoke on condition of anonymity.
No official comment could be obtained from Zesa by the time of going to print yesterday.
The Government has been heavily relying on domestic markets to finance budget deficit.
Already, TBs worth $2,5 billion have been issued on the market. The bulk of the TBs were used for expunging the central bank’s legacy debt of $826,8 million, about $262 capitalised State entities and over $843 million financed Government programmes, including drought and recurrent expenditures while bills worth $568 million were issued for the Zimbabwe Asset Management Company debts assumption activities.
In its second quarter performance review of the budget released this week, the Parliamentary Budget Office warned the country runs the risk of defaulting as the deficit widens thus putting local banks, which hold the bull on TBs stock, at a precarious position.
The International Monetary Authority said restoration of confidence was essential for attracting the necessary dollar inflows to the economy. As such, refraining from financing deficit and containing the issuance of debt and quasi-currency instruments was vital.