Zimbabwe fires entire revenue board

Issuance of Treasury Bills

16. To date, Treasury Bill issuances have increased from US$2.1 billion in 2016 to a cumulative US$7.6 billion, by end of August 2018.
17. In 2014, Treasury Bills to GDP ratio was at 4.4% and has increased sharply to 36.5% by end of August 2018.
18. This is a cost to Government. Excessive issuance of short-term debt instruments at high interest rate also crowds out the private sector and compounds the increase in Government recurrent expenditure.
19. Accordingly, Government in its management of domestic borrowing, is reviewing the use of Treasury bills in support of socio-economic development programmes.
20. Going forward Treasury will seek to finance Government’s vital socio-economic development programmes by use of instruments that “crowd in” the private sector, including public private partnerships or Government guarantees to financial institutions.
21. Such guarantees will only be a contingent liability to Government, unlike Treasury Bills that have a direct and immediate cash flow implication on Government.
22. In addition, recourse to the guarantee scheme would require demonstration by a financial institution that they have made best effort in seeking to recover the loan from a borrower
23. Precisely, any issuance of Treasury Bills, in the future will only be through the auction system, a more market oriented system. This will improve the process of price discovery and better pricing.
24. The duration profile of the current domestic debt will also be lengthened in line with inflationary expectations.

Infrastructure Bonds

25. Government shall be encouraging the issuance of publicly traded infrastructure bonds in order to crowd in the private sector and diaspora participation in national infrastructure programmes. This will contribute to deepening the fixed income market.

Reforms of State Owned Enterprises

26. Government has carried out an exercise of categorising all State Owned Enterprises according to their degrees of viability, profitability and balance sheet strength. The process of privatisation will be accelerated for those State Owned Enterprises that rank highly on privatisation scale. This will not only improve their viability but also strengthen the public private partnership character of the Enterprises and generate much need revenue to government.

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