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Farirai Machivenyika Senior Reporter
The country’s economy has generally been negatively affected by illegal sanctions with the Balance of Payment position deteriorating significantly since their introduction at the turn of the millennium.

This is contained in a paper on the effects of the sanctions prepared by the Ministry of Foreign Affairs and International Trade and presented to Cabinet recently.

“Zimbabwe’s access to international credit markets was blocked after the enactment of ZIDERA. The country has been forced to virtually operate on hand to mouth, and there has been a significant build-up of external debt arrears,” the ministry said in the paper.

“This unfavourable development has worsened the country’s creditworthiness as the country’s international financial risk profile escalated. This subsequently led to the drying up of traditional sources of external finance from the International Financial Institutions (IFIs), with the country receiving no support from the African Development Bank since 1998, the International Monetary Fund (IMF) since 1999 and the World Bank since 2001.

“In essence, the IFIs stopped their support to Zimbabwe by instituting a number of suspensions on Balance of Payment support, technical assistance, voting and related rights by the IMF, and declaration of illegibility to access fund resources.”

The ministry also said due to Zimbabwe’s failure to honour its obligations since 1999, the IMF and the World Bank had suspended BoP and technical assistance.

“Consequently, the country’s external payment arrears continually increased from US$109 million in 1999 to US$5,4 billion in 2017. The arrears have been rising, now at more than 70 percent of total public and publicly guaranteed external debt.

“Regrettably, the lending programme from the World Bank is inactive due to accumulated arrears and sanctions. With effect from October 2000, the World Bank placed all its International Bank of Reconstruction and Development loans and International Development Association credits to, or guaranteed by, Zimbabwe in non-accrual status, resulting in the country being unable to access any loan,” the ministry added.

The ministry said the arrears and the sanctions had made it difficult for companies to access external lines of credit.

“The combined effect of the arrears situation and sanctions has resulted in Zimbabwean companies finding it extremely difficult to access offshore lending, thus crippling their operations.

“Pre-sanctions era, loan inflows to Zimbabwean companies increased from US$134 million in 1980 to US$480 million in the 1990s but fell significantly to an average of US$80 million between 2000 and 2008. Currently, where the private sector manages to secure offshore financing it is usually at punitive and exorbitant interest rates,” the ministry                                        said.