The Bankers Association of Malawi (BAM) has welcomed government move to introduce zero coupon bonds to contractors and suppliers who are owed by the government. Minister of Finance Goodall Gondwe announced in parliament last week that the government will issue zero coupon bonds to contractors and suppliers who are owed huge sums by the government particularly businesses, to discount their bonds with the commercial banks in order to immediately access money and improve the liquidity of their businesses.
BAM president Misheck Esau said the decision is welcome as it will help to fast track the repayment of the government arrears. “Bam believes that the bonds once discounted by banks will provide the much needed working capital to the private sector which in some cases has been denied them for a number of months if not years. In our view, this is one of the best ways to propel the economy on its path to recovery and sustenance and creation of jobs, under the circumstances where budget support from development partners will not be available to the govemmcnt,” said Esau. He further said all banks are ready to work with the government and the private sector in discounting the bonds.