NEWS | Wednesday, 19 September 2007

“Massive” bond issue in the offing

Speculation is rife among stockbrokers that Government may be considering a “massive” bond issue in the coming weeks primarily intended to mop up the excessive liquidity in the market ahead of the currency change-over in January next year.
The Finance Ministry yesterday was not in a position to comment having been caught up in discussions about the forthcoming budget, which will probably be pencilled in for the 15 October.
Excessive liquidity, most of it undeclared cash, has been a constant headache for Government in the run up to Euro adoption given the risk of higher inflation caused by a spending spree to ‘convert’ the cash into workable money.
Much of the excessive liquidity has over the last two years been invested in property. Government had also launched a registration scheme to draw out the cash and reap some dividends from it by charging a nominal tax rate.
It seems, however that the registration scheme has not been enough and Government may yet seek to kill two birds with one stone and declare a bond issue, to dry up liquidity and at the same time reach the deficit target for this year.