The Sunday News
Judith Phiri, Business Reporter
THE Government has announced a plan to borrow $146,8 billion in 2022 to fund various infrastructure development projects.
According to the Statement of Public Debt tabled in Parliament last Thursday together with the 2022 National Budget, the debt will add to the existing stock of US$13,7 billion.
Minister of Finance and Economic Development Professor Mthuli Ncube said the debt will be sourced through issuance of government securities, utilisation of the International Monetary Fund Special Drawing Rights (SDRs) allocation and external loan disbursements.
The IMF SDRs were received in August as part of a big global package announced to stabilise the global economy in the aftermath of the Covid-19 pandemic.
“The 2022 gross financing requirement is projected at ZWL$146,8 billion, which will be sourced through issuance of government securities, utilisation of the IMF’s 2021 (SDRs) allocation and external loan disbursements. On domestic borrowing, Government will continue to issue Treasury Bills through the Auction System for competitive pricing, as well as to improve accountability and transparency.
The projected stable macroeconomic environment, characterised by low stable inflation, as well as stable exchange rate is expected to spur the uptake of medium to long-term government securities by investors,” said Prof Ncube.
He said as part of deficit financing, Government will issue seven-year US$ denominated Treasury bonds of up to US$100 million, to be listed on the Victoria Falls Securities Exchange (VFEX) during the first quarter of 2022, earmarked for specific priority infrastructure projects.
The Minister said Government has appointed the Infrastructure Development Bank of Zimbabwe (IDBZ) and African Export- Import Bank (Afreximbank) as the Joint Lead Arrangers/Financial Advisors.
“To enhance the credit structure of the US$ denominated Government bonds, Treasury will establish a dedicated sinking fund to ring-fence the identified carbon tax revenue streams for repayment of the US$ Government bond.”
He said in addition, projected total external loan disbursements towards the 2022 budget financing requirements is estimated at US$25 million.
The Minister said projects under BADEA (Covid-19 Response), IFAD (Smallholder Agriculture Cluster Project), Kuwait Fund (Zhove Irrigation Scheme) and OFID (Smallholder Irrigation Revitalisation Programme) are disbursed through the budget.
Zimbabwe’s public external debt stock was estimated at US$13,2 billion at the end of September 2021. Of this total public external debt, US$5,4 billion was owed to bilateral creditors, US$2,7 billion to multilateral creditors, US$221 million to creditors under the 2015 RBZ Debt Assumption Act and US$4,9 billion is the RBZ’s balance sheet external debt.
RBZ balance sheet external debt of US$4,9 billion comprised of US$1,4 billion guaranteed debt, US$72 million non-guaranteed debt and US$3,3 billion of blocked funds.
The total public debt as at end September 2021 amounted to US$13,7 billion, comprising of public external debt of US$13,2 billion and domestic debt of US$532 million.
Prof Ncube said the total public debt stock excludes contingent liabilities of US$3,5 billion for the compensation of former farm owners, which will be incorporated on completion of cession agreements with former land owners.
Domestic debt stock as at end September 2021, amounted to ZW$46,6 billion (US$443,8 million), with Treasury Bills (TBs) having the largest share of 80 percent of the total domestic debt.
Treasury bonds represented 12 percent of the total domestic debt while domestic arrears represented 8 percent. During the period January to September 2021, Treasury made debt service payments to external creditors amounting to US$44,2 million.
