Both the US and EU imposed sanctions on Mugabe after they alleged he rigged his re-election in 2002.
"Clearly, those who believe that the only free and fair election is where the opposition wins, have been excluded since the ruling party, ZANU-PF, is poised to score yet another triumph," Mumbengegwi said.
The minister said a number of regional bodies such as the African Union would be invited, as would representatives from countries such as China, Iran and Venezuela.
Set to vote
Zimbabwe, which is in the middle of an economic crisis, is set to vote in presidential, parliamentary and council elections.
The most important contest will be between Mugabe, who has ruled since independence from Britain in 1980, Simba Makoni, a former Mugabe ally, and Morgan Tsvangirai, longtime rival and leader of the main wing of the opposition Movement for Democratic Change.
The Herald said Russia was the only European country invited while 23 African and several Asian nations would also monitor the polls, along with teams from regional economic blocs.
Mumbengegwi said all diplomats, including those from the West, accredited to Zimbabwe on a full-time basis could observe the polls.
"Only those diplomats who are accredited on a full time basis - and not those on temporary assignment - and wish to observe the March elections, will be granted accreditation upon their request to the ministry of foreign affairs," he said.
The government frequently accuses Western countries, especially Britain and the US, of plotting to unseat Mugabe, mainly over his seizure of white-owned farms for redistribution to Zimbabwe's blacks.
Analysts say an economic crisis marked by the highest inflation rate in the world at above 100,000 per cent and shortages of food, fuel, and electricity have increased the pressure on Mugabe, but he could still claim victory against a divided opposition.