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Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya has said Zimbabwe remains under economic sanctions that have hampered the movement of funds and trade in the past two decades.
On Monday, Mangudya said there are no sanctions on Zimbabwean imports and exports, including on gold, and this was interpreted by some commentators as an admission by the central bank governor that the country is not under sanctions.
Speaking in an interview with The Herald on Tuesday, Mangudya said sanctions in the form of the Zimbabwe Democracy Recovery Act (ZDERA) remain.
He said, “Sanctions on Zimbabwe are through ZDERA and augmented by OFAC through placing entities on the designated list of sanctions.”
What this means is that whilst these sanctions are not directly on trade per se they negatively affect the movement of funds within the international banking system.
The Zimbabwean banking sector has lost a substantial number of corresponding banking relationships over the past 20 years, through de-risking, because of the OFAC sanctions.
OFAC sanctions also affect the smooth flow of funds across borders as financial institutions are obligated to comply with OFAC sanctions.
ZDERA on the other hand is designed to put a credit freeze on official financial flows to Zimbabwe.
ZDERA was passed by the United States government in 2001 in response to what was described as the “fast-track land reform” in Zimbabwe.
In 2021, the U.S. Embassy in Harare said ZDERA calls for the Government of Zimbabwe to restore rule of law, hold free and fair elections, commit to equitable and transparent land reform, and subordinate military and national police to civilian government.