US sanctions don’t affect loans to Zimbabwe

By Lance Guma
26 February 2010

A diplomat at the United States Embassy in Harare has said sanctions imposed by his country on the Mugabe regime do not affect Zimbabwe’s relations with the International Monetary Fund (IMF) and the World Bank. During a roundtable discussion with journalists on Wednesday, James Garry the Economic Officer at the US Embassy said, “There is a widespread misunderstanding that the U.S. has some kind of veto at the IMF. It is not true.”

Garry explained that the IMF makes most of its decisions by majority vote, “and voting strength is assigned essentially according to the country’s financial interest in the Fund. The U.S. has just 16.77 percent of the voting power at the IMF, and it is not in a position to veto IMF decisions,” he said.

In 2001 the United States enacted the Zimbabwe Democracy and Economic Recovery Act (ZIDERA) which among other things bars US companies from doing business with targeted Zimbabwean companies. Garry said that even if ZIDERA was to be repealed Zimbabwe would still not be able to access loans because of its arrears with the IMF and World Bank. He said these arrears made Zimbabwe ineligible for loans even before ZIDERA became law in December 2001.

Following a request by Finance Minister Tendai Biti, the IMF this month decided to restore Zimbabwe’s voting rights, technically enabling the country to use resources from the IMF’s General Resources Account. Despite the restoration of the voting rights the country will not be able to access any of the resources until it settles close to US$140 million in arrears to the Poverty Reduction and Growth Trust of the IMF. Restoration of the rights simply opened the door to closer cooperation between Zimbabwe and the IMF.

On Wednesday hundreds of rowdy ZANU PF youths high on intoxicants marched through the streets of Harare calling for the removal of targeted sanctions against their party leaders. The mob assaulted journalist Andrison Manyere and political activist Tonderai Nyahunzvi. The MDC condemned the use of hired ZANU PF youths as ‘cheap grandstanding,’ and said their coalition partners were focusing ‘on petty issues which have nothing to do with the daily challenges facing the people of Zimbabwe.’