In May 1987, Zaire negotiated another economic reform program with the IMF, the World Bank, and its bilateral partners. Along with the usual fiscal and monetary restrictions, Zaire agreed to revise its investment code to streamline the incentive framework and to revamp the tariff structure. Mobutu also backed away from a threat to reinstitute the fixed exchange rate and agreed to sharp increases in fuel prices and taxes. The IMF in turn allowed a 20 percent public-sector wage increase as opposed to the 40 percent increase the government had originally sought.
This program, like past efforts, was subsequently supported by Paris Club rescheduling. The IMF agreed to a twelve-month standby credit of SDR116.4 million. The World Bank initiated a US$165- million loan in June 1987 to assist with structural adjustment and balance of payments. The loan was to support improvements in the management of public enterprises and public administration, agriculture, and transportation, and to provide support for the private sector. Disbursements were to occur in two drawings conditional on meeting performance criteria.
The Paris Club rescheduled US$884 million due between May 1987 and May 1988 over fifteen years with six years' grace. Monthly debt payments were expected to drop from US$15 million to US$7 million. This agreement was exceptional because the Paris Club usually set ten-year ceilings on repayment delays. Private lenders agreed to lower repayments from US$3.5 million a month to US$3 million. A Belgian bank provided a bridge loan of SDR100 million to clear Zaire's arrears to the IMF.
Soon after the 1987 program was under way, excessive deficit spending prevented Zaire from meeting the program's targets, and further credits were withheld by both the World Bank and the IMF. Continued excessive government spending through 1988 led to a decline in foreign reserves, and the black market again became active. In 1988 the zaire depreciated 100 percent against both the United States dollar and the Belgian franc. The budget deficit went from 3 percent of gross national product ( GNP--see Glossary) in 1986 to 12 percent in 1988. The growth in GDP from 1987 to 1989 averaged 2.5 percent a year, well below population growth, resulting in a decline in per capita income.
Data as of December 1993