Zimbabwe Sells Treasury Bills for Debts Owed to Tobacco Farmers

Zimbabwe’s Finance Ministry issued Treasury bills to pay back tobacco farmers whose earnings were held by the government to bolster currency reserves.

The two-, three-, four- and five-year, tax-exempt notes were sold at 2 percent interest to 12 banks, including Standard Chartered Plc, Barclays Plc and Ecobank Transnational Inc., according to an e-mailed copy of a letter dated July 16 from the ministry to the Zimbabwe Tobacco Association. It follows a $200 million issue last month by the Reserve Bank of Zimbabwe.

The southern African nation’s central bank retained as much as 25 percent of tobacco earnings from farmers in an effort to raise foreign currency between 2006 and 2008. The ministry and the bank are selling the debt as part of a repayment deal struck with the growers.

“Most of the debt owed to farmers from 2007 has been repaid and about $19 million or so is outstanding,” Rodney Ambrose, chief executive officer of the Zimbabwe Tobacco Association, said by phone from Harare, the capital. “We’re very encouraged by the move and appreciate that under the current economic climate, government isn’t in a position to repay immediately.”

Zimbabwe’s state-controlled Herald newspaper reported today that the government issued $30 million in bills to pay tobacco farmers, without saying where it got the information. The ministry’s letter didn’t give an amount.

Calls to Andrew Matibiri, CEO of the Tobacco Industry and Marketing Board, weren’t immediately answered. Willard Manungo, secretary for finance at the ministry, didn’t answer a call to his phone.

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