|
Zaire Debt
The external debt quintupled between 1967 and 1973.
Massive and
rash spending and borrowing when revenues were high,
rampant
corruption and fiscal mismanagement, and lack of
understanding and
concern about the rapidly deteriorating economic situation
by
Mobutu, the political elite, and foreign lenders
characterized the
period. The debt stood at US$1.5 billion in 1973.
Debt-service
payments jumped 353 percent between 1967 and 1973, or in
absolute
terms to US$81 million. By 1976 the external debt was more
than a
third of total expenditure and 12 percent of GDP. In 1977
debt
service amounted to 43 percent of export earnings and 49
percent of
total revenues.
At the end of 1988, Zaire's debt was estimated at US$7
billion
(excluding what was owed to the IMF). Unlike many other
debtor
nations, most of Zaire's debt was owed to bilateral
government
creditors; multilateral institutions accounted for only 14
percent
and commercial banks for only 6 percent. Mobutu and his
government
regularly pointed to this fact when seeking debt
forgiveness or
other relief. Without debt rescheduling, Zaire would have
had a 50
percent to 60 percent debt-service ratio. However, debt
reschedulings reduced debt-service payments, resulting in
an actual
debt-service ratio of between 12 percent and 19 percent.
This ratio
fell to 7.3 percent in 1988 because Zaire stopped most
debt-service
payments to bilateral creditors in May and accumulated
substantial
arrears. Zaire's debt was again rescheduled in June 1989.
Altogether, there had been sixteen multilateral debt
reschedulings
since 1975, more than for any other African nation. Zaire
regularly
threatened to suspend debt-service payments but invariably
resumed
payments in the context of renewed reform efforts and
rescheduling.
The local currency cost of external debt-service
payments
increased substantially with the depreciation of the
zaire.
Payments of external debt service amounted to 11 percent
of total
government expenditures in 1988 and were thought likely to
account
for 23 percent of government expenditures in 1989.
In 1989 foreign debt was US$9.2 billion. Zaire's total
foreign
debt in 1990 amounted to US$10.1 billion, with the
external debtservice ratio at 15.4 percent. By the year's end, all of
Zaire's
main bilateral and multilateral lending partners had
frozen their
financial aid programs as Zaire's political and economic
situation
deteriorated (and specifically as a direct result of the
killing of
student demonstrators at the University of Lubumbashi in
May 1990.
(The World Bank did, however, continue to make
disbursements to
Zaire so long as Zaire kept up debt-service payments.) In
1991
Zaire's external debt stood at US$10.7 billion, including
US$9.1
billion in long-term public debt. In 1992 Zaire virtually
ended all
payments on its foreign debt, paying only US$79 million of
the more
than US$3.4 billion due.
In February 1992, the IMF issued a Declaration of
Noncooperation with Zaire, signaling that Zaire's arrears
had made
it ineligible for further borrowing. In July 1993, the
World Bank
froze all disbursements to Zaire because of arrears on
debt-service
payments to the bank. Previously Zaire had kept up with
debtservice payments to the World Bank, which had as a result
not cut
off financial flows to Zaire. Moreover, it appeared that
so long as
President Mobutu remains in power, the country's lending
partners
are unlikely to agree to reschedule or cancel its debts,
as
analysts argue that debt cancellation will encourage bad
economic
practices from the past.
Data as of December 1993
|
