THE Minister of Finance and Economic Development Herbert Murerwa admits targeted sanctions are now hurting and causing havoc to the country’s battered economy. <
President Robert Mugabe and his close allies were last year slapped with targeted sanctions by the European Union and the United States for human rights abuses and electoral fraud.
The president, however, at numerous gatherings including funerals insisted sanctions would not derail his government’s fast-track land resettlement programme which was supposed to end last month.
Mugabe says his “successful” land programme where he confiscated land from thousands of white commercial farmers and parcelled it out to “landless” black peasants riled the West.
The programme has been blasted by the international community who point out that while the idea was noble most of the recipients were either government heavyweights, or businessmen with strong political connections.
Mugabe has now been forced to “audit” the land apportionment facility through his confidant and former secretary Charles Utete who had retired from government.
Murerwa told the nation that sanctions were hurting when he presented the $672 billion Supplementary Budget to parliament last month.
The minister said the reality of sanctions on the economy and following the withdrawal of international donor support as well as the drying up of foreign lines of credit, made “tackling challenges even more urgent”.
Riled by Zimbabwe’s poor macroeconomic fundamentals and its failure to make timely payments, the International Monetary Fund (IMF) suspended balance of payments support for the cash-strapped country.
“The country continues to experience difficulties on the balance of payments,” Murerwa said.
“The performance on both the current and capital accounts has weakened considerably, owing to poor export performance and reduced international balance of payment support, respectively. This situation is further complicated by the sanctions that have been imposed on us, making it difficult for the country to obtain external assistance.”
Other major international donor organisations including the World Bank immediately also suspended donations, resulting in Zimbabwe becoming isolated economically and politically.
As of the end of June this year, Zimbabwe’s total external payment arrears were estimated at US$1,6 billion, up from US$1,3 billion at the end of December 2002.
As a result of the accumulation of external arrears, Zimbabwe is now ineligible to borrow from international financial institutions such as the IMF and the World Bank.
Murerwa said as inflation escalated and economic performance worsened, a growing proportion of the population was now living below the poverty datum line – further deteriorating standards of living.
“Mr Speaker Sir, the reality of the sanctions the economy is under, following the withdrawal of international donor support as well as the drying up of foreign lines of credit, make tackling these challenges even more urgent,” Murerwa told fellow MPs.
Last week Renaissance Merchant Bank chairman Professor Christopher Chetsanga said the country’s lack of access to external financial resources had contributed to the current foreign exchange shortages which had resulted in Zimbabwe failing to meet critical import requirements for fuel and electricity.
“In order to solve the external debt crisis, there is need for government to re-engage external financiers and partners,” Chetsanga said.
Government has now turned to the opposition Movement for Democratic Change and the African Union to persuade the international community to lift the sanctions imposed on Zimbabwe.