Government’s 2-year Treasury bond was oversubscribed 144 per cent on Wednesday data from the central bank reveals.
The over subscription send two messages to Tanzanians the first is that there is enough money in the market (improved liquidity condition) as compared to what it is portrayed by majority Tanzanians that since President John Magufuli came into power there have been little cash in circulation.
Another message can be that key players in purchasing government securities -which are commercial banks and Insurance companies- have diverged lending from lending normal Tanzanians to lending a risk free government.
For years commercial banks have been experiencing high default rates forcing them to offer loans with high interest rates.
Data from the Bank of Tanzania reveals that the government in its 2-year bond intended to raise only Sh128.5 billion but investors responded by tendering a whooping Sh313.5 billion 144 per cent higher than the requested amount.
Treasury Bonds are debt instrument that was introduced to the market as one of the mechanisms used by the government to raise money for implementing long term projects.