Oliver Kazunga, Senior Business Reporter
GOVERNMENT has agreed to be the guarantor of bonds and loans worth about ZW$1 billion secured by some banks and parastatals from the local market last year.
The resources were raised to finance various infrastructural development and agricultural projects by the Infrastructural Development of Zimbabwe (IDBZ), Agricultural Development Bank of Zimbabwe (Agribank), First Banking Corporation (FBC), Silo Foods and CBZ.
In the prior year, IDBZ issued $300 million worth of bonds, Agribank ($200 million agrobills), Agribank and FBC jointly raised $100 million through the issuance of agrobills while Silo Foods Industries also went on the market to raise $350 million.
According to an Extraordinary Gazette dated 26 February 2021, Finance and Economic Development Minister, Professor Mthuli Ncube, notified that the Government guarantees for the above transactions were made in terms of section 300 (3) of the Constitution of Zimbabwe and read with section 20(1) of the Public Debt Management Act (Chapter 22:21)
“The Minister of Finance and Economic Development has issued a Government guarantee — binding the Government of Zimbabwe as surety for the repayment by IDBZ of the value subscribed through the bonds up to a total amount not exceeding $300 million being the aggregate value of the capital sum, in addition to accrued interest on the bonds issued by IBDZ in 2020, in the event that IDBZ default on their contractual obligations.”
The guarantee for the IDBZ bonds shall remain valid and in force until the 30th of June 2024.
On the Agribank and FBC agrobills, Prof Ncube said, “the guarantee shall remain valid and in force until 31st December 2020.”
Last year, Agribank and FBC issued agrobills to finance the 2020/21 summer cropping season.
On the Silo Foods Industries bills Prof Ncube said in the event that the parastatal defaults on their contractual obligations, the Government was the surety for the repayment of the subscribed value of the bills.
“The guarantee shall remain valid for a period of 12 months from the effective date of the bills.”
On Agribank’s $200 million agrobills, the Minister of Finance and Economic Development has issued a Government guarantee — binding the Government as surety for the repayment by the bank of the value subscribed being the aggregate value of the capital sum, in addition to accrued interest in the event that the bank defaults on contractual obligations.
“The guarantee shall remain valid and in force until 31st December, 2021,” reads part of Government Gazette Extraordinary. – @okazunga.