Bank of Zambia limits participation of non-resident investors in primary market for govt securities to 5%

The Bank of Zambia (BoZ) has with immediate effect limited participation of non-resident investors in the primary market for government securities to no more than five percent of the planned total annual issuances.

In a circular to all heads of commercial banks dated June 21, 2023 and signed by the BoZ deputy Governor-Operations, Francis Chipimo, this was part of the debt substantiality efforts.

“The bank of Zambia wishes to announce that, with immediate effect and until further notice, primary issuances of government securities to non-resident participants as a group shall be limited to no more than five percent of the planned total annual issuances.

“This limit will be applied on the cost and not face value,” Chipimo said.

Chipimo, however, clarified that this measure would not affect secondary market trading.

He explained that this meant that secondary market trading of government securities by non-residents will continue as per the current practice.

“In view of this measures, all custodians and commercial banks are hereby directed to submit, as received, all bids on behalf of non-resident investors directly to the Central bank.

“The bank will then apply the limit taking account of the performance of the previous and current auctions. The bids shall be submitted by 10:00 hours on the day of the auction. Custodians and commercial banks are advised to bring the above information to the attention of their respective clients,” Chipimo said.

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