Home » Industry » Govt Repays U.S $405 Million

Government closed 2014 with net domestic financing of $315,34 million after having made repayments of $405,2 million comprising both treasury bills and loans.

Latest data from the Accountant General’s Department shows that loans taken up by Government amounted to $450,06 million and TB inflows were at $270,5 million, however, repayments made during the year saw the net domestic financing close at $315,34 million.

A total $224,54 million was made in repayments for TBs while $180,7 million was for loan repayments.

According to the Reserve Bank of Zimbabwe monthly report for January, net credit to Government increased by 51,62 percent to $544,03 million in January 2015 from $358,80 million in January 2014. The increase was largely on the back of issuances of Treasury bills by Government to supplement its revenue collections, and to retire part of accrued domestic debt.

As a result, domestic credit grew by 6,16 percent in January 2015 to $4,23 billion from $3,98 billion.

Government pushed up the domestic credit amount while credit to the private sector recorded a lower growth of 1,57 percent to $3,62 billion from $3,56 billion.

The persistent liquidity challenges and subdued economic activity have seen Government expand its space in the credit arena in order to finance mostly recurrent expenditure.

However, work is underway to reduce the country’s wage bill which is chewing up over 80 percent of the country’s national budget. Government’s revenue target for 2015 is $3,951 billion. Of that amount $3,76 billion is supposed to come from taxes.

Finance and Economic Development Minister Patrick Chinamasa recently said a civil service audit will soon be undertaken with a view of reducing the wage bill.

He said the country will continue to stimulate growth in the economy by undertaking measures that restore confidence such as reducing production costs, normalising relations with

creditors and strengthening the country’s financial system.

Economic prospects remain challenging with growth expected to remain subdued this year. However, analysts say Government’s commitment to the policy reform agenda is encouraging.

The agenda, the analysts say consists of balancing primary fiscal accounts, restoring confidence in the financial sector, improving the investment climate and garnering support to clear arrears with multilateral institutions.

Meanwhile, the RBZ monthly report also says credit to the private sector was made up of loans and aances, 81,48 percent mortgage aances 14,12 percent other investments, 1,92 percent bills discounted, 1,54 percent and bankers’ acceptances, 0,93 percent.

Loans and aances were largely channelled to agriculture (19,05 percent), manufacturing (17,12 percent) and distribution (15,99 percent). Households accounted for 16,55 percent of total loans and aances to the private sector.

Credit to the private sector was mainly utilised for asset purchases, 41,74 percent and inventory build-up, 34,15 percent.

Loans and aances utilised for capital investment remained low, with the procurement of plant and equipment accounting for 3,62 percent and pre and post shipment financing at 0,55 percent of total loans and aances.

Source : The Herald