Zimbabwe is offering bonds worth one billion five hundred and fifty million Zimbabwean dollars (ZWL$1,550,000,000) to fund government programs for a two years tenure until 2023.
A government bond is a debt security issued by a government to support government spending and obligations according to Investopedia.
Offer to the Zimbabwean government bonds opened on 2 September 2021 and closes fortnightly according to a statement by the country’s central bank
“Interest is payable to registered bondholders in the Central Securities Depository (CSD) at the Reserve Bank of Zimbabwe, Harare, through RTGS, after every six months from date of issuance,” the central bank says in a press statement.
The minimum application to the Bonds is ZW$1 000 000 with a coupon rate of 18% per annum payable semi-annually.
Zimbabwe releases local bonds at a time when the government targets a ZWL $30.8 billion (-1.3% of GDP) budget deficit 2021 a -0.5% increase of GDP anticipated in 2020 according to this year’s national budget.
The targeted fiscal deficit is also in line with the fiscal consolidation stance which strictly limits the fiscal targeted deficit to below 2% of GDP throughout the National Development Strategy 1 period according to Finance Minister Mthuli Ncube said in the national budget.
“In terms of financing, the entire deficit will be met through the domestic market,” Ncube said.
Treasury bonds worth ZWL$7,707 billion are also part of the government borrowing plan to finance the ZWL$30.8 billion deficit.
RBZ says that the Government decided to re-open treasury bonds following representations and requests by some investors.
Targeted investors include pension and provident funds, insurance companies, mutual funds, commercial banks, and other interested institutions and individuals.