Govt paper scaling meant to fund ambitious budget – Zanaco
By BUUMBA CHIMBULU
SCALING up of Government paper by about 53 percent is meant to fund the 2022 national budget as Zambia’s international credit lines are currently constrained due to its default status.
The budget has to be financed and one of the ways is the domestic market which is linked to the Government paper prospectus while at the same time there is also taxation, according to the Zanaco plc Chief Risk Officer, Mutisunge Zulu.
According to the 2022 first quarter auction calendar for government securities, the Bank of Zambia will now offer K2.0 billion worth of Treasury Bills every fortnight from the K1.4 billion, while its monthly bond offerings has widened to K2.6 billion from K1.5 billion in 2021.
Responding to this measure, Mr Zulu explained that the increase was meant to fund an ambitious budget for this year.
In October last year, Government proposed to spend K173.0 billion in 2022, out of which K72.3 billion will be raised from external and domestic sources.
“There is a way in which the Ministry of Finance raises funding from the domestic market, of course it has its own cons but then you can understand that there is a lot that is going on with Zambia such as the narrowing of credit lines.
“Zambia cannot get credit lines externally because of its default position so the stance is to raise that money within the domestic market until we get it right with debt restructuring, among others. As at now, we have to make do with the resources that we have in this country and one of them is the domestic market,” Mr Zulu said in his analysis for 2021.
He however stressed that over using the domestic market led to overcrowding which later deprived the private sector of the liquidity in loans which they needed to tap in to grow the economy.
BoZ prospectus
If you look at that prospectus, it is showing an increase in risk appetite by about 53 percent. So let me take you back to the 2022 national budget, it has to be financed and one of the ways is the domestic market which is linked to the prospectus you are talking about while at the same time there is also taxation. So that increase is to fund an ambitious budget for this year
and then the rating agencies after June because it is actually estimated that full restructure would have happened by June , then can the rating agencies then step in and improve ratings then Zambia can now access credit lines from outside but as at now we have to make do with the resources that we have in this country and one of them is the domestic market and the other is
because if you over use the domestic market, you overcrowd it and deprive the private sector off the liquidity in loans of which they need to tap in to grow this economy
BoZ prospectus
If you look at that prospectus, it is showing an increase in risk appetite by about 53 percent. So let me take you back to the 2022 national budget, it has to be financed and one of the ways is the domestic market which is linked to the prospectus you ate talking about while at the same time there is also taxation. So that increase is to fund an ambitious budget for this year
There is a way in which the Ministry of Finance raises funding from the domestic market, off course it has its own cons because if you over use the domestic market, you overcrowd it and deprive the private sector off the liquidity in loans of which they need to tap in to grow this economy
but then you can understand that there is a lot that is going on with Zambia such as the narrowing of credit lines. Zambia cannot get credit lines externally because of its default position so the stance is to raise that money within the domestic market until we get it right with this IMF deal, debt restructure and then the rating agencies after June because it is actually estimated that full restructure would have happened by June , then can the rating agencies then step in and improve ratings then Zambia can now access credit lines from outside but as at now we have to make do with the resources that we have in this country and one of them is the domestic market and the other is
