The Bank of Zambia’s planned K2.2 billion Treasury bill auction this week is expected to provide an important indication of investors’ appetite for Government debt as authorities prepare to implement a supplementary budget, Access Bank has said.
In its latest market commentary, the bank said the central bank would auction the Treasury bills on October 29, with settlement scheduled for November 2, 2026. The auction will offer securities across four maturities worth a combined K2.2 billion, equivalent to about US$109 million.
The offering comprises K440 million in 91-day Treasury bills, K500 million in 182-day bills, K530 million in 273-day bills and K730 million in 364-day bills, with the one-year tenor accounting for about one-third of the total issuance.
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“Investors would closely watch bid-to-cover ratios and the yields accepted at the auction, as they could provide insight into the extent to which government’s additional spending under the proposed supplementary budget would be financed through the domestic debt market,” Access Bank said.
The bank also noted that payments under the Farmer Input Support Programme (FISP) and by the Food Reserve Agency (FRA) were expected to inject additional kwacha liquidity into rural areas.
It cautioned that, depending on how the payments were financed, they could increase the money supply and place marginal pressure on the local currency.
Despite these concerns, Access Bank said Zambia’s decision to build up food stocks following a strong agricultural harvest was a prudent strategy aimed at cushioning the country against the risk of a weaker farming season.
The bank observed that while the policy should help keep inflation subdued in the near term because of ample food supplies, it would also increase pressure on public finances at a time when economic growth expectations were being revised downward.
It warned that the main risks were likely to emerge in 2027, when an unfavourable rainy season could simultaneously reduce agricultural output, constrain electricity generation and slow economic growth.
Access Bank said the manner in which the Government financed the additional expenditure, and the domestic market’s ability to absorb increased borrowing, would remain key indicators for investors and policymakers in the months ahead.
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