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Demand for Government securities, Band-Aid solution.

The Centre for Trade Policy and Development (CTPD) is of the view that the move by the bank of Zambia to increase demand for government securities locally may not be effective or sustainable.
CTPD researcher Bright Chizonde says factors behind reduced subscriptions for the securities cannot be solved through sensitization.
He was responding to a press query by Money FM News over the move by the Bank of Zambia to has embarked on a sensitization programs to educate the public about Government Bonds and treasury bills and to encourage them to invest in them.
Mr. Chizonde says the increased cost of living and increased taxes which are reducing disposable income are behind the reduced appetite for people to save and this should be remedied using economic interventions.
He says the move by the Central Bank may have been triggered by the recent reduction in subscription to government securities.
Demand for government securities reduced from 33% to 29% during the first quarter of 2019, while none-residents’ demand increased by 0.6%.
He says “government needs to also improve its credit worthiness through dismantling domestic arrears owned to the private sector in order to increase liquidity and investor confidence.”

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