Zimbabwe begins issuing new notes to help ease cash crunch

With prices in Zimbabwe rising faster than at any point in a decade amid rapid devaluation of the local currency, cash is king. (AP)
Updated 12 November 2019

Zimbabwe begins issuing new notes to help ease cash crunch

  • New notes the latest currency reform in the troubled southern African country’s constantly changing monetary framework
  • Zimbabwe now has the world’s second highest inflation after Venezuela, according to IMF figures

HARARE, Zimbabwe: Zimbabwean banks on Tuesday began issuing new notes and coins aimed at easing severe cash shortages, but they are severely limiting the amounts that people can withdraw.
“What can I do with such a pittance?” asked Shorai Tomu after withdrawing the equivalent of about $5. “It can only buy five loaves of bread.”
The new notes are the latest currency reform in the troubled southern African country’s constantly changing, and at times confusing, monetary framework.
Zimbabwe now has the world’s second highest inflation after Venezuela, according to International Monetary Fund figures. With prices rising faster than at any point in a decade amid rapid devaluation of the local currency, cash is king.
In 2009, Zimbabwe’s government abandoned the local currency amid hyperinflation and adopted a multi-currency system dominated by the dollar. In June the government outlawed the use of foreign currencies, opting for a local currency mainly consisting of electronic and mobile money and a trickle of bank notes.
President Emmerson Mnangagwa has struggled to fulfill promises to improve the economy two years after taking office following the resignation of the late Robert Mugabe.
Many retailers and service providers now demand payments in cash only. Others, including street vendors, charge a higher price for goods paid for using mobile money or bank cards.
The Reserve Bank of Zimbabwe says it will “drip feed” ZW$1 billion in the new small notes and coins to manage the cash shortages. The highest denomination is ZW$5. The notes are strikingly similar in design to the old ones.
“It is just like the old money, and like the old money it can’t buy anything of value,” said 81-year-old Filbert Sibanda after withdrawing his monthly pension, enough to buy a kilogram of beef.
Other customers left disgruntled.
“This is not an improvement,” said Wicknell Magidha, waving a few new notes and a plastic bag filled with coins. “These coins are just too heavy.”
People trooped out of one bank carrying similar bags of coins, shaking their heads. Others in line laughed.
Magidha said the small bills and coins leave him with another headache, that of haggling with traders who usually reject them.
“The same item can have three different prices: one for cash, one for mobile money and another one for those paying using small coins,” Magidha said. “The government should just print higher denominations to match this inflation.”


OPEC sees small 2020 oil deficit even before latest supply cut

Updated 12 December 2019

OPEC sees small 2020 oil deficit even before latest supply cut

  • OPEC keeps its 2020 economic and oil demand growth forecasts steady and is more upbeat about the outlook

LONDON: OPEC on Wednesday pointed to a small deficit in the oil market next year due to restraint by Saudi Arabia even before the latest supply pact with other producers takes effect, suggesting a tighter market than previously thought.

In a monthly report, OPEC said demand for its crude will average 29.58 million barrels per day (bpd) next year. OPEC pumped less oil in November than the average 2020 requirement, having in previous months supplied more.

The report retreats further from OPEC’s initial projection of a 2020 supply glut as output from rival producers such as US shale has grown more slowly than expected. This will give a tailwind to efforts by OPEC and partners led by Russia to support the market next year.

OPEC kept its 2020 economic and oil demand growth forecasts steady and was more upbeat about the outlook.

“On the positive side, the global trade slowdown has likely bottomed out, and now the negative trend in industrial production seen in 2019 is expected to reverse in 2020,” the report said.

Oil prices were steady after the report’s release, trading near $64 a barrel, below the level some OPEC officials have said
they favor.

The Organization of the Petroleum Exporting Countries, Russia and other producers, a group known as OPEC+, have since Jan. 1 implemented a deal to cut output by 1.2 million bpd to support the market. At meetings last week, OPEC+ agreed to a further cut of 500,000 bpd from Jan. 1 2020.

The report showed OPEC production falling even before the new deal takes effect.

In November, OPEC output fell by 193,000 bpd to 29.55 million bpd, according to figures the group collects from secondary sources, as Saudi Arabia cut supply.

Saudi Arabia told OPEC it made an even bigger cut in supply of over 400,000 bpd last month. The Kingdom had boosted production in October after attacks on its oil facilities in September briefly more than halved output.

The November production rate suggests there would be a 2020 deficit of 30,000 bpd if OPEC kept pumping the same amount and other factors remained equal, less than the 70,000 bpd surplus implied in November’s report and an excess of over 500,000 bpd seen in July. OPEC and its partners have been limiting supply since 2017, helping to revive prices by clearing a glut that built up in 2014 to 2016. But higher prices have also boosted US shale and other rival supplies.

In the report, OPEC said non-OPEC supply will grow by 2.17 million bpd in 2020, unchanged from the previous forecast but 270,000 less than initially thought in July as shale has not grown as quickly as first thought.

“In 2020, non-OPEC supply is expected to see a continued slowdown in growth on the back of decreased investment and lower drilling activities in US tight oil,” OPEC said, using another term for shale.