'Mugabe's govt to blame for cash shortages'

Banks' purchase of Treasury Bills and public sector borrowing may have triggered liquidity shortages prevailing in the market, a World Bank report has said. Government has been borrowing on the domestic market to plug the fiscal deficit and repay the central bank and State-owned entities' arrears.

In the first six months of the year, the fiscal deficit was $623 million, with Treasury warning that the hole would surpass $1 billion by year-end if expenditure was left unchecked.  

The wage bill for the civil services accounted for 96,7% of the total revenue generated in the first half of the year.  

In a latest report entitled, Macro Poverty Outlook for Zimbabwe, the World Bank said from March 2015 to June 2016, government borrowing from the banking sector increased by $1,4 billion or about 10%.

It said the borrowing was financed by TBs, which were purchased by commercial banks at a discount.