Zaire Table of Contents
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