Zimbabwe domestic borrowing jumped 40 percent in May

Government borrowing from the local market jumped nearly 40 percent in May this year, driving an increase in domestic credit by 21.1 percent on an annual basis to $8.45 billion from $6.98 billion, latest data from the central bank shows.

“The surge in net credit to government (by 38.67 percent), shows the fiscus’ heavy reliance on the banking sector, to finance its operations, on the back of subdued revenue collections,” RBZ said.

“In addition, the growth in credit to government also reflected banking sector holdings of Treasury bills, bought at a discount on the secondary market.”

In May, commercial banks and building societies held government securities, either treasury bills or bonds, worth of $1.74 billion and $168.2 million respectively, while other depository corporations held $1.97 billion worth of government securities.

However, credit to the private sector remain depressed, recording an annual growth of 1.99 percent to $3.5 billion from $3.4 billion.

Finance Minister Patrick Chinamasa in his MidTerm Budget Review last week said domestic debt has since grown to $4 billion as at December 2016.

The RBZ said Zimbabwe’s annual broad money supply grew by 23.24 percent in May to $6.2 billion, driven by an increase in transferable deposits.

Transferable demand deposits grew by 29.85 percent, offsetting a 14.28 percent and 0.07 percent decline in negotiable certificates of deposits and time deposits.

Broad money supply (M3), a measure of the money in circulation which includes physical currency and demand deposits, increased by 1.37 percent from $6.11 billion in April.

In terms of composition, broad money comprised of transferable or transitory deposits and time deposits which account for 71.04 percent and 25.13 percent respectively while bond notes, coins and negotiable certificates of deposits contributed 2.83 percent and 0.99 percent in that order.

Additionally, the value of transactions processed through the National Payments System (NPS) increased by 21.2 percent to $8.4 billion in May, from $6.95 billion recorded in April, largely on the back of an increase in RTGS transactions.

The value of transactions processed through the RTGS system increased by 19 percent to $4.9 billion in May from $4.1 billion in the previous month.

In the same period, cash transactions declined by 6.3 percent to $430.67 million from $459.61 million in April. – The Source

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