Treasury bills not the best way of funding, Biti warns Chinamasa

zwnews.com Business Correspondent

People’s Democratic Party leader, who once served as Minister of Finance during the Government of National Unity Tendai Biti has warned the Minister of Finance Patrick Chinamasa over his excessive use of Treasury bills (TBs) as he funds government expenditure.

Biti’s says this in response to Chinamasa’s Ministerial statement on the issuance of Treasury Bills that he produced recently. A Treasury Bill is a short term debt obligation backed by government with a maturity of less than one year.

“With respect to issuance of Treasury Bills, the total value of TBs issued since 2014, stands at US$4.417 billion. A total of US$1.102 billion has since matured and been liquidated leaving an outstanding amount of US$3.315 billion as at 3rd March 2017,” he said.

The minister said the government had been using TBs to raise funds its critical expenditures such as infrastructure, production and recurrent expenditure, wages, legacy debt, among others, including projects like Tokwe-Mukorsi.

He pointed out that under normal circumstances the project could have been funded by long term loans from developmental financiers such as the World Bank of African Development Bank.

But Biti explains that TBs which are documents similar to a cheque and issued by government as a guarantee that it will honour a debt, is not the best way to raise funds, at the moment as there is now saturation of these in the market, chasing the real money away.

He says the best way is to grow the economy with good policies that encourages investment. He is even on record saying that too much TBs in the market is a sign of the dying economy and poor planning on the part of the government of the day.