The IMF resident representative in Zimbabwe expressed concerns to parliament about the Zimbabwe Asset Management Corporation (ZAMCO) taking on large amounts of debt from insolvent state-owned and private companies. This could potentially become a significant liability for the Zimbabwean state. The IMF representative said they have also raised concerns about rising treasury bill issuance to finance budget deficits and proposed reforms not being implemented. Their views appear to contradict an earlier positive assessment of ZAMCO by the IMF, indicating their position may be shifting ahead of further reviews of Zimbabwe's economic program.

1. By Tawanda Musarurwa
HARARE – The International
Monetary Fund (IMF) appears
to have shifted positions
ahead of the completion of
an ongoing third review of
Zimbabwe’s Staff Monitoring
Programme after it raised
‘new’ concerns about current
reforms.
IMF resident representa-
tive in Zimbabwe Mr Chris-
tian Beddies told a special
meeting with the Parliamen-
tary Portfolio Committee
on Budget and Finance that
they had concerns with the
broader implications of the
role of the Zimbabwe Asset
Management Corporation
(ZAMCO). Mr Beddies appeared before
the committee together with
visiting IMF head of delega-
tion Mr Dominique Fanezzi.
He said the IMF was con-
cerned that the debts being
accrued by ZAMCO would
become a “liability to the
State.”
“From a point of view of the
ZAMCO operation, the latest
monetary policy review by
the governor of the Reserve
Bank they are taking over
about half a billion worth of
debt from the commercial
banks, which strengthened
the balance sheets of the
commercial banks.
“But much of this debt being
held by ZAMCO is being held
on corporations which are
essentially insolvent. If you
look at the list of companies,
Cottco, CSC....these private
sector and state-controlled
News Update as @ 1530 hours, Wednesday 02 March 2016
Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw
IMF shifting gears on Zimbabwe?
Mr Christian Beddies

2. companies are essentially
insolvent and I am deeply
concerned that the Govern-
ment is taking over debt
which could eventually
become a liability to the
State,” said Mr Beddies this
morning.
“And I think that the liabili-
ties taken over by the State
on the domestic market in
the last two years, you have
your $1,7 billion worth of
debt from the RBZ which will
be assumed by the Ministry
of Finance, you have the half
a billion dollars, and Gov-
ernment tells us it’s going
to be $800 million worth of
debt in ZAMCO, which should
technically be a liability to
the State.”
As at the close of 2015,
ZAMCO had acquired and
restructured NPLs worth
$357 million, the main focus
being on distressed compa-
nies in critical sectors such
as mining, agro-processing
and manufacturing, which
Government believes have
good prospects of being
turned around.
The restructuring has
involved extending the loan
repayment period, grace
periods for capital repayment
as well as reducing interest
rates and in some cases the
conversion of debt to equity.
The ‘new’ reservations by the
IMF appear to contradict its
observations on ZAMCO fol-
lowing the second review of
the staff-monitored program
last October.
At the time the multilat-
eral financier said:“ZAMCO,
which is now functional,
has begun acquiring eligible
NPLs, financed by long-term
government securities. This
should help restore financial
sector viability by strength-
ening banks’ balance sheets
and providing them with
much needed liquidity...The
work of ZAMCO is being com-
plemented by the recently
introduced credit registry
and reference system. To
cement financial stability and
reinforce confidence, NPLs
need to decline further. The
authorities expect that their
multipronged approach will
further reduce NPLs to 5 per-
cent by end – 2016.”
Mr Beddies also told the
Parliamentary Portfolio Com-
mittee that the issuance of
treasury bills was increas-
ingly becoming a major
concern.
“You have a budget deficit
in 2014 of $1 billion, you
have a budget deficit in
2015 of nearly $1,5 billion.
Much of this debt is financed
with treasury bills and we
do not know what the stock
of treasury bills are at this
juncture.
But the treasury bill issue
is a major emerging factor,
interest on treasury bills this
year will be a quarter of a
billion dollars. It’s a major
item in the budget now
“You can’t afford to have
these treasury bills as a
semi-permanent domestic
debt element, and I am con-
cerned about that,” he said.
He also said proposed labour
law reforms were yet to
take off, while clarifications
on the indigenisation policy
were ‘superficial’.
Following the completion
of the second review last
year, Mr Fanizza said if
Zimbabwe succeeded in the
third review, it would get a
three-year credible reform
programme, raising optimism
that the country’s economic
fortunes were based on the
successful completion of
the SMP as it will pave way
for the country to pay off
its $1,8 billion arrears to
three preferred creditors,
as agreed during the Lima
meetings last year.
Mr Fanezzi told the commit-
tee that the SMP is just an
initial step to shows that
the country could implement
some reforms that were
required for a “real pro-
gramme with the fund.”●
2 news

3. BH243

4. By Funny Hudzerema
HARARE – Areas that have
been put under maize pro-
duction for the 2015/2016
season have declined sharply
compared to the last season
statics from the Zimbabwe
Farmers Union show.
ZFU said maize production
for this season has been
mainly affected by low
rainfall and dry spells which
hit the country during the
season.
“There seems to be a sig-
nificant decline in the area
placed under maize espe-
cially in the 2015/2016 sea-
son with Matebeleland South
having the least area.
“Midlands and the Masho-
naland provinces have the
biggest area although it is
below the area covered in
the previous seasons,” said
ZFU.
This year a total of 40 000
hectares was placed under
maize production in Masvingo
compared to 18 000 hectares
planted the same period last
season, while in Midlands 14
000 hectares were placed
under maize production
compared to 27 000 hectares
the prior year.
ZFU also said all provinces
received below normal rain-
fall and the general maize
condition is poor, 75 percent-
age of the crop is write off
in Masvingo while in Matebe-
leland South 65 percent has
been written off.
Mashonaland West which
is well known for produc-
ing highest yields of maize
has reduced its hectarage
11 000 hectares than 22
thousand hectares during the
2014/2015 season.
Statistics from ZFU indicated
that land which is placed
under maize production is
declining every season this
means maize production is
declining.
Currently Government is
importing maize to supply
the required maize to feed
the nation with 700 000 met-
ric tonnes needed.
. ●
4 news
2015/2016 maize hecterage declines

5. BH245

6. BH24 Reporter
HARARE - The Ministry of
Youth Indigenisation and
Economic Empowerment in
partnership with the Zim-
babwe National Chamber of
Commerce (ZNCC) last week
launched the Youth Entrepre-
neurship Desk which is aimed
at assisting youths to open
business and new markets
and improve youths partic-
ipation towards economic
development.
The desk will also be used as
a platform to assist youths
with innovative ways of rais-
ing capital to finance their
business ideas.
This is part of the youth
empowerment strategy which
was launched by Govern-
ment late last year aiming to
empower youths and inden-
tifying specific needs for the
youths across the country.
ZNCC chief executive officer
Mr Christopher Mugaga said
the objectives of the Youth
Entrepreneurship Desk are to
reduce unemployment, assist
youths in formalising their
small businesses, to create
international markets for
them, to advocate and lobby
for young entrepreneurship
and to mentor them.
Youth, Indigenisation and
Economic Empowerment
Minister Patrick Zhuwao said
the platform will go a long
way in assisting youths with
entrepreneurship and finance
sourcing skills.
“Young people should not
wait for the youth fund in
order to get money to kick
starts their business ideas
because right now the fund
does not have money.
“Youths should learn to pack-
age and present their busi-
ness ideas in a way that will
attract funding from success-
ful business people across
the country,” he said.
He added that youths should
learn to create partner-
ships to start their business
because owning 100 percent
shares of a company is not
realistic if one does not have
enough capacity to raise the
needed capital.
“I don’t know who said to be
successful one has to own
100 percent shares, most
stock exchange listed compa-
nies are controlled by people
who sit on 5 to 7 percent
shares,” he said.
Youths in business also
complained about the non
compliance of companies
who are failing to honour the
youth quota which entails 25
percent of all companies to
accord them to the youth.●
6 news
Youth Entrepreneurship Desk launched

7. BH247

8. BH24 Reporter
HARARE –The training of
tobacco farmers courtesy of
the Empowerment Trust fund
is set to commence in May
and is expected to benefit
150 farmers annually.
The training which is being
sponsored by BAT and the
Government, is aimed at
improving tobacco production
and quality and will be car-
ried out in Mount Darwin.
Speaking during a recent
breakfast meeting to
announce the commencement
dates for the training BAT
project manager Mr Vimbai
Makumbe said the project
is set start in May this year
targeting 150 students as a
feasibility study.
“We are going to enrol 150
tobacco growers annually
and we are targeting to
empower youth and women
in the tobacco business.
“This programme is more
aimed at creating entrepre-
neurs which will assist other
tobacco farmers in their
areas and they will also work
as experts,” he said.
He added that the tobacco
courses will be registered
with the Bindura University
of Science Education and the
certificates and diplomas will
be issued by the university.
The program is part of BAT’s
compliance with Indigenisa-
tion and Economic Empower-
ment Act.
In his remarks during the
same event BAT Technical
Empowerment Trust secre-
tary Mr Stephen Nyabadza
said the trust holds 10, 76
percent of BAT Zimbabwe
which translates to 2, 2
million ordinary shares in the
country’s largest cigarette
manufacturer.●
8 news
Tobacco Empowerment Trust fund to commence in May

9. BH249

10. HARARE - The mainstream
industrial index retreated
0.84 to settle at 98.94,
bucking gains since the
beginning of this week.
Cigarettes producer BAT
lost a significant $0,3917
to trade at $11,0462, while
Natfoods eased $0,1000 to
close at $2,4500 and seed
manufacturer SeedCo slipped
$0,0225 to $0,8000.
Simbisa was $0,0039 weaker
at $0,1311.
There were no trades in
the positive territory, while
activity was limited to four-
teen counters.
The mining index was flat
at 19.14 as Bindura, Fal-
gold, Hwange and RioZim all
maintained previous price
levels at $0,0095, $0,0050,
$0,0300 and $0,1040
respectively
- BH24 Reporter ●
ZSE10
Industrials fall into the red

11. BH2411

12. Movers CHANGE Today Price USc SHAKERS Change TODAY Price USc
Natfoods -3.92 245.00
BAT -3.42 1,104.62
Simbisa -2.88 13.11
SeedCo -2.73 80.00
Index Previous Today Move Change
Industrial 99.78 98.94 -0.84 points -0.84%
Mining 19.14 19.14 +0.00 points +0.00%
12 zse tables
ZSE
Indices
Stock Exchange
Previous
02 03
ADD TO CART
Save big on selected
Products of your choice
PAYMENT
You can purchase
whenever, wherever
using:
DELIVERY
Spend $30 or more
on your purchases
and get free
delivery
01 Hello Convenience
www.hammerandtongues.com
BIG CONVENIENCE+
BIG SAVINGS+
BIG OPPORTUNITIES
= BIG HAPPINESS
SHOP ONLINE!!
today

13. 13 DIARY OF EVENTS
The black arrow indicate level of load shedding across the country.
POWER GENERATION STATS
Gen Station
02 March 2016
Energy
(Megawatts)
Hwange 271 MW
Kariba 451 MW
Harare 30 MW
Munyati 33 MW
Bulawayo 0 MW
Imports 0 - 450 MW
Total 1122 MW
• Thursday 24 March 2016 - Annual General Meeting of Willdale Limited; Place: Boardroom, Willdale Administration
Block, 19.5km peg Lomagundi Road, Mount Hampden; Time: 1100 hours...
THE BH24 DIARY

14. JOHANNESBURG - - South
Africa's rand steadied
against the dollar in early
trade on Wednesday as risk
appetite returned after gains
in oil prices and a batch
of positive economic data
calmed fears of a global eco-
nomic slowdown.
At 0710 GMT, the rand
traded at 15,5705 versus the
dollar, 0,13 percent firmer
from Tuesday's New York of
15,5900.
"Rand gains have come on
reduced global fears over
an economic downturn and
reduced local fears over pol-
itics," Rand Merchant Bank
currency analyst John Cairns
said in a note.
"Globally it has been
risk-on," he added.
Since Monday, the rand
has recovered after Pres-
ident Jacob Zuma said he
supported Finance Minister
Pravin Gordhan, following
reports of a fallout between
the two on Friday that sent
the currency to its biggest
daily loss since 2011.
In fixed income, and the
yield for the benchmark
instrument due in 2026 down
7.5 basis points to 9,275
percent.
On the stock market, the
Top-40 index was up 0,9
percent while the broader
all-share rose 0,6 percent in
early trade.
Shares in South Africa's
fourth-largest lender Ned-
bank were up 1,5 percent
after it reported an 8,5
percent rise in annual profit,
meeting estimates, as
growth in fee income offset
muted growth in lending.-
Reuters●
regioNAL News14
Rand steady on global risk appetitie, stocks rise

15. Oil closed at a two-month
high in New York as global
equities rallied and OPEC
crude production dropped
from a record.
West Texas Intermediate
crude rose 1,9 percent.
Stocks advanced on optimism
central banks from Asia to
Europe will follow China’s
in adding to stimulus, while
data suggests that Ameri-
can consumers can power
the world’s largest economy.
Iraq and Nigeria led produc-
tion declines in the Organi-
sation of Petroleum Export-
ing Countries last month, a
Bloomberg survey showed.
"The market continues to
push higher after China low-
ered reserve requirements,"
said Gene McGillian, a senior
analyst and broker at Tra-
dition Energy in Stamford,
Connecticut.
"We’re up on bullish expecta-
tions. There’s a feeling that
either non-US producers will
agree to a cut or that low
prices will eventually have a
big effect on US production."
Oil has slipped about 7 per-
cent this year and averaged
less than $32 a barrel during
the past two months, the
longest stretch below that
level in more than 12 years.
OPEC output slid by 79 000
barrels to 33,06 million bar-
rels a day in February.
WTI for April delivery rose
65 cents to $34,40 a barrel
on the New York Mercantile
Exchange. It was the high-
est settlement since Jan. 5.
Futures touched $34,76, the
highest intraday level since
Jan. 28. Total volume traded
was 12 percent above the
100-day average at 4:38
p.m.
Futures retreated after the
settlement when the Ameri-
can Petroleum Institute was
said to report US crude sup-
plies rose 9,9 million barrels
last week. WTI traded at
$33,84 at 4:39 pm.
Market Stimulus
Brent for May settlement
increased 24 cents, or 0,7
percent, to $36,81 a barrel
on the London-based ICE
Futures Europe exchange. It
was the highest close since
Jan. 4. The global benchmark
crude ended the session at
an 66-cent premium to May
WTI.
Prices climbed after China’s
central bank cut its reserve
requirement ratio by 0,5
percent on Monday, free-
ing up the amount of cash
the nation’s banks can lend
in an effort to stimulate
demand. China is the biggest
crude-consuming country
after the US.
US crude stockpiles prob-
ably increased 3,4 million
barrels from an 86-year high
last week, according to a
Bloomberg survey before an
Energy Information Admin-
istration report Wednesday.
The agency is projected to
report that supplies of gas-
oline and distillate fuel, a
category that includes diesel
and heating oil, dropped.
Ample Inventories
"WTI is attracting a bid
despite expectations for a
further build in US inven-
tories," said Tim Evans,
an energy analyst at Citi
Futures Perspective in New
York. "The price action
suggests that a bottom is
in place. The market move
itself acts as positive rein-
forcement."
US crude stockpiles grew to
507,6 million barrels in the
week ended Feb. 19, the
most since 1930, EIA data
show. Supplies at Cushing,
Oklahoma, the biggest US
oil-storage hub and delivery
point for WTI traded in New
York, rose to a record 65,1
million barrels during the
period.
"Inventories are going to
continue to go up for a
month or so, which will be
a headwind for the market,"
said Rob Haworth, a sen-
ior investment strategist in
Seattle at US Bank Wealth
Management, which oversees
$128 billion of assets.
"It looks like we’re no longer
in danger of taking a dive
to the low $20s, but that
doesn’t necessarily mean
that we’re heading for a big
rally."
.-Bloomberg●
internatioNAL News15
Oil closes at two-month high as equities rise, OPEC output slips

16. By Nawar Alsaadi
What if I told you that there
was a period in history where
oil demand declined by 5 mil-
lion barrels per day and non-
OPEC supply increased by 5
million barrels per day, yet
oil price rallied more than 50
percent? Would you believe
me? If your answer is yes,
then you guessed right.
This was the period from
1979 to 1985; it was a
period during which global
oil demand declined from
over 61 million barrels to 56
million barrels and non-OPEC
supply increased from 32
million barrels to 37 million
barrels. Yet prices rallied
from $17 a barrel in 1979 to
$26 a barrel in 1985, while
reaching as high as $35 in
1981.
This illogical world of rising
prices, collapsing demand
and expanding non-OPEC
supply was made possible
by a 15,5 million barrels
reduction in OPEC’s supply
between 1979 and 1985 as
OPEC cut production from
30,5 million barrels in pro-
duction in 1979 to 15 million
barrels in 1985, and most of
that reduction was voluntary.
The maintenance of this
artificially high price band
by OPEC (at the expense
of its production) led the
oil majors to increase their
capex from $24 billion in
1979 to as high as $44 bil-
lion by 1982, which naturally
resulted in a drilling explo-
sion with annual O&G wells
drilled increasing from 66
000 in 1979 to a peak of 107
000 in 1984. This investment
and drilling frenzy lead to
more than a doubling in the
Finding and Development
(F&D) costs from $5 per bar-
rel in 1979 to around $12 by
the mid-1980s.
The increase in the F&D cost
during that time was not the
result of resource scarcity,
or extraction complexity, it
was the product of a sub-
stantial inflation in service
costs due to an unexpected
surge in activity caused by
manipulated prices. Once
OPEC ceased manipulating
the market, prices quickly
reverted back to their
pre-manipulation economic
equilibrium level in the mid-
teens, while F&D costs set-
tled back into the $5 a barrel
range.
This unfortunate price
manipulation episode by
OPEC led to the creation of
substantial overcapacity in
the petroleum industry as it
brought forward and accel-
erated the development of
unneeded oil resources, it
greatly reduced demand, and
it created significant excess
capacity within OPEC itself.
It took the world until 1991
to achieve the same level of
oil demand reached in 1979,
then from 1991 it took the
world a decade and a half
of demand growth and the
emergence of China in the
early 2000s, to exhaust all
that non-OPEC excess capac-
ity and OPEC spare capacity
that was created during the
1979 to 1985 timeframe.
The birth of a new bull mar-
ket
The 1979-1985 oil bull mar-
ket is what a manipulated
market looks like, and this
market has no resemblance
to the bull market that
preceded the current price
collapse. Unlike the early
80s price surge, oil prices
were not manipulated higher
in the early 2000s, but rose
due to natural supply and
demand forces.
In 2005 oil prices averaged
$54 per barrel, a near dou-
bling from the $28 per barrel
at the start of the decade.
2005 is often mentioned as
the official start of the 2000s
raging oil bull market that
lasted for almost ten years,
except for a brief interrup-
tion following the financial
crisis.
Between the years 2000 and
2005 OPEC increased its
crude and NGL production
by 4 million barrels per day,
inching up total production
from 30,7 million to 34,8
16 analysis16 analysis
Why oil booms and busts happen

17. 17 analysis17 analysis
million barrels, however this
was insufficient to meet the
over 7 million barrels per
day growth in global demand
growth during this period,
with OPEC excess capac-
ity virtually eliminated, the
additional increase in supply
had to come from non-OPEC
sources.
However, after rising from
46 million bpd to 49 million
bpd (all liquids) from 2000
to 2004; non-OPEC supply
stalled at around 49 million
bpd for 3 years from 2004 to
2006, before finally crossing
into the 50 million bpd mark
in 2007. The pressure on
non-OPEC to increase pro-
duction could only translate
into a sizable increase in
prices, which in turn encour-
aged the industry to signif-
icantly increase its capex
spending.
World supply hits a wall …
US supply to the rescue
Yet, as prices exploded
higher and capex spend-
ing hit record after record,
something curious happened:
Non-OPEC all liquids supply
(ex-US) ground almost to
a halt, after crossing 43,4
million bpd barrels in 2007,
non-OPEC (ex-US) all liquids
supply increased by a measly
1,5 million bpd over a 7
years period, a period during
which demand increased by
over 6,6 million bpd.
As a matter of fact, between
2010 and 2014 non-OPEC
(ex-U.S.) supply did not
grow at all as it averaged
around 44.5 million bpd for
five years, while demand
increased by 4,1 million bpd
during this time. OPEC did
marginally better than non-
OPEC supply (ex-US), OPEC
production stagnated at 34,6
million bpd from 2007 to
2010, before increasing to
36,6 million bpd by 2014, or
increasing by 2 million bpd
from 2007 to 2014 (OPEC
did cut supply in late 2008
and 2009 in response to the
financial crises).
Powered by the shale rev-
olution, US supply was a
different story, from 2010
to 2014 US all liquids supply
grew by 4,2 million bpd,
thus meeting the totality
of global demand growth in
the 5 years preceding the
current crisis. Eventually,
the strong increase in shale
production combined with
the resumption of growth in
OPEC production led to prices
collapsing by late 2014.
So very different, so very
the same
This brief oil market history
illustrates the substantial
difference between what
transpired in 1979-1985
and what happened between
2005 and 2014.
While the 1980s oil bull mar-
ket was an unquestionably
manipulated market that was
bound to collapse at some
point, the 2000s oil bull
market was mostly driven by
market fundamentals.
The resolution to the last oil
bull market was delivered
by market forces as high
prices unleashed new sources
of supply, namely US shale
oil. This was different from
the 1986 oil price collapse
which was triggered by OPEC
ceasing its doomed effort to
artificially inflate oil prices.
Yet, OPEC hands are not
completely clean in this
price collapse episode. The
oil price collapse of 2014
was compounded in 2015
by the arrival of geopolit-
ically restricted oil from
several OPEC countries. Iraq
increased its production by
650 000 bpd in 2015.
This supply should have been
added to the market many
years ago, but due to dec-
ades of turmoil, this oil only
made it to the market last
year. Saudi Arabia’s decision
to bring in some of its spare
capacity to the market (450
000 bpd production increase)
last year also added to the
oversupply situation that was
created by market forces.
Additionally, politically
restricted oil from Iran is
being introduced to the mar-
ket in 2016 - Oilprice.com●,
To be Continued ....