Report No. 4077-ZR ILE COPY

Zaire Economic MemorandumRZecent Economic and Sectoral Developmentsand Current Issues(In Two Volumes) Volume 1: Main Report 4077[)ecember 30, 1982 V0 L. 1[astern AfricaCountry Programs Department II

FOR OFFICIAL USE ONLY

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may not otherwisebe disclosed without World Bank authortzation

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CURRENCY EQUIVALENTS AND UNITS

Currency Unit: Zaire (Z) Z1.00 = 100 makuta

Exchange Rates 1/:

August 24, 1979 - February 22, 1980 Zl.00 = SDRO.375US$1.00= Z2.05Z1.00 = US$0.49

February 22, 1980 - June 18, 1981 ZI.00 = SDRO.2625US$1.00 = Z3.05

Z1.00 = US$0.33

Since June 19, 1981 Z1.00 = SDRO.1575US$1.00 = Z5.62 2/Z1.00 = US$0.18 2/

Weights and Measures: Metric System

Fiscal Year: January 1 - December 31.

1/ From March 12, 1976 to November 1, 1978, the zaire was pegged to theSDR at a rate of Zl.00 = SDR1.00. The zaire underwent a 62.5 percentdevaluation vis-a-vis the SDR in 5 stages between November 1, 1978 andAugust 24, 1979. All conversions to US dollars in this memorandum havebeen made at the average exchange rate prevailing during the periodcovered.

2/ As of September 1982.

FOR OFFICIAL USE ONLY

PREFACE

The last economic memorandum on Zaire covereddevelopments through 1980 and was issued in May 1981.This memorandum focuses on developments in 1981 and isbased on the findings of an economic mission that visi-ted Zaire in March 1982. The members of the missionwere Bension Varon (mission chief), Monique Garrity(economist) and Adriana de Leva (assistant economist).The sectoral chapters were prepared in cooperation withB. Mbida-Essama (Agriculture), V. Agius (Manufacturing),J. C. Crochet, C. Delvoie, G. Homsi anc J. van der Ven(Transport), J. Boutan and K. Mikitin (Water Supply),A. Aim,S (Education), and S. von Klaudy (Cotton).

This document has a restricted distribution and may be used by recipients only in the perfDrmance otheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

VOLUME I

TABLE OF CONTENTS

Page No.

INTRODUCT'ION ............................................ v

I. RECENT ECONOMIC DEVELOPMENTS . ........ 1

A. Determinants and Overview of Recent Trends 1B. The Main Aggregates .. 8C. Impact on the Private Sector . .19D. The Situation in 1982 20E. Conclusions . .23

II. ECONOMIC MANAGEMENT AND INSTITUTIONAL CHANGE ....... 24

A. Background ...... ........ 24B. Institutional Developments ................... .. 26C. Management of Domestic Resources .............. 28D. The Public Investment Program .................. 36E. Climate Surrounding the Private Sector ......... 38F. Conclusions ................... o ........... 40

III. SECTORAL ISSUES ......... .......................... 41

A. Background ................... ................... 41B. Common Problems and Issues ...... o ......... o .... 44C. Sectoral Issues ..................... 47D. Conclusions: The Issue of Priorities .......... 59

IV. PROSPECTS AND IMPLICATIONS ..................... 61

A. The Current Setting ................ - ......... 61B. The Changed Export Outlook ..... ................ 61C. Minimum Recovery Scenario .................... .. 63D. Implications for Zaire .- ...................... 69

STATISTICAL APPENDIX ... ......... .......................... 75

WORLD TABLES . ............................................. 145

LIST OF TEXT TABLES

Page No.

Table 1: Selected Economic Indicators, 1979-81 .... ...... 2

Table 2: Production Indicators, 1972-74 Averageand 1979-81, by Year ................. 9

Table 3: Selected External Debt Indicators, 1979-81 12

Table 4: Budgetary Revenues and Expenditures, 1980-81 ... 14

Table 5: Copper and Cobalt Export Estimates for 1982 .... 21

Table 6: Execution of the Investment Budget for 1981,by Ministry .................................. 35

Table 7: Composition of Public Investment Program,1981-83 and Investment Budget, 1982 .... ...... 37

Table 8: Export Projections in Current Prices .... ....... 62

Table 9: Minimum Recovery Scenario: Capital Requirements,1982-85 ..................................... 66

LIST OF CHARTS

Page No.

Chart 1: Terms of Trade and World Prices ofSelected Exports. 7

Chart 2: Price and Salary Indices, 1975-81 .18

Chart 3: Budgeted and Actual Central GovernmentOperations, 1974-81 .... .. . 29

Chart 4: Central Government Monthly Expenditures,1980-81 .34

Chart 5: Minimum Recovery Scenario, 1982-85 .... .......... 67

Page 1 of 2 pages

COUNTRY DATA - ZAIRE

AREA (Thousand Sq. Kn.) POPULATION DENSITY (1980)

2,345.4 28.3 million (mid-80) 11.7 per sq. km.Rate of Growth: 2.7%

POPULATION CHARACTERISTICS (1978-80) HEALTH (1978-80)Crude Birth Rate (per thousand) 45.9 Population per physician 15,529Crude Death Rate (per thousand) 17.9 Population per hospital bed 339

NUTRITION (1977) EDUCATION (1977)Calorie intake as % of requirements 102.4 Adult literacy rate % 57.9Per capita protein intake (grams/day) 35.7 Primary school enrollment % 90.0

GNP PER CAPITA in 1980 -/: US$220

GROSS NATIONAL PRODUCT in 1981 ANNUAL RATE OF GROWTH (%, constant prices)

US$ Mln. % 1972-76 1976-81 1981

GNP at Market Prices 4,958.3 100.0 -4.6 -0.2 1.0Gross Domestic Investment 1,361.2 27.4 -3.5 18.6 -49.8Gross National Saving 347.1 7.0 -38.2 66.8 57.3Current Account Balance -501.0 -10.1 - - -

Export of Goods, NFS 966.7 19.5 -3.8 -8.9 -44.6Import of Goods, NFS 1,661.1 33.5 -6.0 4.8 -62.8

Gross Domestic Product b/ 5,384.1 108.6 -0.1 -0.2 2.4Agriculture 1,722.2 34.7 1.9 1.4 2.7Industry 1,269.5 25.6 0.3 -1.8 4.8Services 2,183.7 44.0 0.8 0.4 0.4

GOVERNMENT FINANCE -/ (Central Government)

(Z Mln) % of GDP1981 1981 1976

Current Receipts 4,781.5 20.3 16.6Current Expenditure 5,964.0 25.3 22.9Current Deficit 1,182.5 5.0 6.3Capital Expenditures 539.7 2.3 5.3

a/ The per capita GNE estimate calculated by the same conversion technique as the World Bank Atlas. Allother conversions to dollars in this table are at the average exchange rate prevailing during the periodcovered.

b/ At market prices; components are expressed at factor cost and will not add due to exclusion of netindirect taxes and subsidies.

c/ Cash operations only; excludes foreign grants and expenditures financed by foreign sources.

NOTE: Zairian statistics have numerous shortcomings and should be used with caution.

Page 2 of 2

COUNTRY DATA - ZAIRE

MONEY, CREDIT and PRICES 1976 1977 1978 1979 1980 1981

(Million B outstanding end of period)

Money Supply 738.1 1153.9 1854.5 2084.9 3367.3 4644.9Bank Credit to Public Sector 831.6 1054.8 1578.3 2062.2 2329.4 3783.6Bank Credit to Private Sector 385.7 537.0 641.0 878.7 1014.3 L342.4

(Percentage or Index Numbers)

Money as % of GDP 25.8 29.2 33.8 18.8 20.2 18.8General Price Index (1975=100) 180.7 305.4 453.9 912.7 1313.3 L813.1

Annual percentage ahanges in:General Price Index- 80.7 69.0 48.6 101.1 43.9 38.1Bank Credit to Public Sector 86.7 26.8 49.6 30.7 13.0 62.4Bank Credit to Private Sector 18.1 39.2 19.4 37.1 15.4 32.3

BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVG. 78-81)US$ Mln %

1978 1979 1980 1981 Copper 750 43.7(Millions US $) Cobalt 355 20.7

Diamonds 97 5.7Exports of Goods, NFS 1639.7 1904.5 2056.0 1575.5 Zinc 33 1.9Imports of Goods, NFS 1562.9 1738.0 1909.2 1756.9 bther minerals

and petroleum 224 13.1Factor income (net) -198.3 -219.3 -278.3 -425.8 Coffee 144 8.4

Palm gfl 12 0,7Net transfers 38.8 67.6 133.3 106.2 Other- 99 5.8Balance on Current Account -82.6 14.8 1.8 -501.0 Total 1714 100.0

Net MLT Borrowing EXTERNAL DEBT, DECEMBER 31, 1981Disbursementa, 483.3 198.5 403.8 200.5 US $ MlnAmortization- 360.6 248.1 380.0 359.7 Public Debt, inc. guaranteed '4254.0Subtotal 122.7 -49.6 23.8 -159.2 Non-guaranteed Private Debt 350.0

Total Outstanding and Disbursed 4604.0Other Capital (net)

and capital n.e.i. 35.8 82.8 6.2 443.4 NET DEBT SERVICE RATIO for 1981-change in Reserves 1

(-=increase) -75.9 -48.0 -31.8 216.8 Public Debt Inc. guaranteed 14.2f/ Non-guaranteed Private Debt 3.3

Petroleum Imports-f 103.9 178.0 241.3 263.0 Total Outstanding and Disbursed 17.5Petroleum Exports- - 152.7 228.2 259.9

RATES OF EXChANGE IBRD/IDA LENDING SEPTEMBER 30, 1981ANNUAL AVERAGES END PERIOD (Mlii US $)

1980 1981 Jan-Aug, 1982 Aug 82 IBRD IDAUS$1.00=B 2.800 4.384 5.680 5.874 Outstanding and Disbursed 76.9 200.31B1.00=US$ 0.357 0.228 0.176 0.170 Undisbursed - 237.67

Outstanding inc. Undisbursed 76.9 437.98

a/ Consumer price index for the city of Kinshasa.b/ Reflects other exports, as well as marketing costs and balance of payments adjustment.c! Preliminary estimates.d/ Due before debt rescheduling.e/ Debt service as a percentage of exports of goods and non-factor services. Represents actual payments.fT/ Crude and derivatives.

INTRODUCTION

A. Background

1. The economic history of Zaire since Independence (1960) can bedivided into three periods: (i) the years 1960-67, which were marked bypolitical strife and economic turmoil; (ii) the. years 1968-74, whIen GDPexpanded at a rate of about 7 percent per annum in an environment ofrelative political and economic stability; and (iii) the period 'since 1975,which can be labeled "the crisis years", as it witnessed serious economicand financial imbalances, a decline in per capita income, a deteriorationof productive capacity and infrastructure, a weakening of institutions, andan erosion of internal and external confidence.

2. Although it is too early to take a historical perspective of thecrisis years, this period can, in turn, be subcLivided into two: 1975 to1978 and 1979 to the present. The first one was characterized by theslowness of thie Zairian authorities and the majority of the external donorsto recognize the severity of the crisis and by the weakness as well asuncoordinated nature of the internal and external responses. Twostabilization programs, supported by the IMF, were not implemented, and twodebt rescheduling agreements under the Paris Club brought limite(d relief.Thus, in 1978 Zaire's GDP was 10 percent below the pre-crisis (1972-74)level. In contrast, the more recent period -- 1979 to the present --witnessed bettier focused and more coherent efforts by Zaire and the majordonors to deal with the crisis. The implementation of a stabilizationprogram in 19810 led to the approval by the IMF of an "extended facility" onJune 22, 1981 in support of a medium-term recovery program; moresubstantive debt rescheduling agreements were negotiated with the membersof the Paris Club and the syndicated private banks; and a substantialeffort was made to improve the institutional base of Zaire with the supportof the international community. These developments were facilitated byfrequent international consultations during this period, such as the ad hocBrussels Conference of November 1979 (the third in two years), two meetingsof the Paris Club (December 1979 and July 1981)1, and three meetings of theWorld Bank Consultative Group for Zaire (May 1980, June 1981 and June1982).

3. Despite the more active interventiones of the last few years,Zaire's performance since 1979 has been uneven both from year to year andfrom field to field. Although some of the performance indicators (e.g.,tax collection and inflation) have improved, the overall constraints ofZaire are undiminished compared to 1979 -- in many respects, they are morebinding and thie uncertainties about the future are greater. It is,therefore, neciessary to dwell a little longer cn the past in order tooutline a more certain and better future.

B. Some Lessons of the Past

4. Several events or trends of the past have left a mark on thepresent. No event in the last decade had a more negative and lingering

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effect on the economy than the zairianization and nationalization measures

of 1973-74 which, though rescinded since, destroyed the distributionnetwork and infrastructure which linked the urban and rural areas and

severely undermined private sector confidence. This network has not beenfully restored or rehabilitated to date. Another important event was the

heavy external borrowing of 1973-74, much of it at unfavorable terms and

for projects of questionable benefit, which persisted through the first two

years of the crisis. More than half of Zaire's current outstanding debt

dates from borrowing decisions made during that period. A third important

development was the erosion of the ability of Gecamines (the state-ownedmining company and by far the largest foreign exchange earner of Zaire) to

rehabilitate or renew its productive capacity. This situation, which

threatens a sharp drop in export earnings and budgetary revenues, currently

confronts the Government and Gecamines with a huge financing need beyondtheir ability to meet, yet beyond their freedom to ignore. Agricultural

development was also neglected during the crisis (although the trend had

started earlier), with Zaire changing from a net exporter of agriculturalproducts to a net importer. Last but not least, the crisis saw an

expansion in the Government's expenditures far beyond its means, as theGovernment assumed a bigger role in the economy and as expenditures of anon-economic character proved difficult to control.

5. A number of general conclusions can be drawn from the experiencewith the crisis so far and the national and international attempts to cope

with it; these conclusions have influenced the scope and structure of thereport and are, therefore, set forth below:

(i) The major issue regarding Zaire has been and continues to be thedeficiency of economic management, the term encompassing bothdecision making and execution. Execution is a more immediate

problem than decision making or policy design for two reasons:(a) with the cooperation of the international community(including the international organizations) significant progresshas already been made in defining the policy actions necessary

for recovery, and a number of appropriate decisions have alreadybeen announced by Zaire; (b) the important execution problems

encountered have not only delayed or prevented results but have

also put into doubt the credibility of recent and future

decisions.

(ii) Because of the complexity and diversity of the problems facing

the Zairian economy as well as the limitation of resources, Zaireneeds to concentrate its efforts on selected, priority problems.

A selective approach would also assure better execution and a

build-up of external confidence. Such an approach, however, must

be based on a broad policy framework -- a development philosophy-- which has been lacking.

(iii) The donors need to continue to cooperate with Zaire in preparing

the ground for sustained recovery; however, the major work needsto be undertaken by Zaire itself. Although some of Zaire's

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constraints are beyond its control, t:here are a large number ofsteps that Zaire can take, both to iElprove the situation and totranslate many donors' reservoir of goodwill into an effectiveincrease in aid flows.

C. Focus and Structure of the Report

6. This economic memorandum is the third in four years dealing withthe crisis facing the Zairian economy. The firstl/ dealt with the causesof the crisis and the main constraints facing Zaire, such as the shortageof imports, the external debt burden and institutional shortcomings. Thesecond2 / focusied on the prerequisites for sustained recovery, such as theliberalization or adjustment of prices, the foreign exchange rate andinterest rates; the need to execute a public investment program focused onthe rehabilitation of existing capacity; and the urgency of stimulating theprivate sector. The current memorandum focuses on "execution".

7. This memorandum is in two volumes: V'olume I contains the mainreport, while VJolume II is devoted to six sectors and three case studies.Chapter I of the main report examines the recer.t economic developments.Chapter II discusses the experience with economic management andinstitutional change. Chapter III summarizes and integrates the sectoralanalyses of Vo:Lume II. Chapter IV presents medium-term projections andillustrates the constraints posed by foreign exchange earning capacity andthe external debt burden; it also discusses the implications of themedium-term outlook for Zaire. In addition to the standard statisticalappendix, the raemorandum includes "world tables" on selected commodities ofinterest to ZaiLre, as some of them, such as cobalt and diamonds, do nothave the benefiit of wide exposure.

8. A caveat on the projections is in order. The large uncertaintiestraditionally surrounding Zaire are currently significantly magnified.Vast uncertainties attach to: (i) the timing and amount of renewed IMFsupport, following the difficulties encountered in implementing the lastmedium-term recovery program; (ii) the timing and terms of the next debtrescheduling agreement, following the non-implementation of the mid-1981agreement with the Paris Club and the difficulty of complying wit:h the 1980agreement with the syndicated private banks; (iii) the timing, cost andmodality of external support for Gecamines' urgent rehabilitation program;

1/ The Zairian Economy: Current Situation and Constraints (Report No.2518-ZR), October 19, 1979.

2/ Recent Economic Developments and the Path to Recovery (Report: No.3287-ZR), May 20, 1981.

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and (iv) the overall aid environment, following recent changes in Zaire'sexternal political relations. Singly each factor is powerful enough to

affect the outlook and in combination even more so. Moreover, experience

has shown that the outcome will be shaped in most cases through a processof "negotiation" and its form is, therefore, as yet indeterminate. Forthese reasons, the projections presented in this memorandum are intended

solely to highlight the main constraints and issues; they do not -- andcannot -- constitute predictions.

I. RECENT ECONOMIC DEVELOPMENTS 1/

1. Developrnents through 1980 were examined in the last economicmemorandum (May 1981). This chapter concentrates on developments in 1981 andthe first few months of 1982 focusing on the quantitative picture. Theevolution of policies, institutional reforms and their execution during thisperiod will be examined further in Chapters II and III dealing with economicmanagement and the sectors, respectively.

A.. Determinants and Overview of Recent Trends

2. Four factors had a major influence on the internal and ext:ernalenvironment in which the Zairian economy operated in 1981. These are: (i) theperformance of the economy in 1980, which shaped expectations for 1981; (ii) themedium-term program of adjustment, encompassing the years 1981-83, adopted inJune 1981 with the support of the IMF; (iii) the debt rescheduling agreementreached with the E'aris Club in July 1981; and (iv) the evolution of the terms oftrade. These factors, which are interlinked both in their origins and in theireffects, are outlined below.

1. PerformaLnce in 1980

3. The year 1980 saw some improvement in economic performance which,though modest compared to the difficulties faced by the Zairian economy, was themost positive since the onset of the crisis, as it was manifested on a ratherbroad front. After contracting sharply between 1975 and 1978 and stagnating in1979, GDP expanded. by 2.4 percent in real terms in 1980, aided by a strongrecovery in copper production (Table 1). Exports rose in nominal terms as didofficial imports.2/ In addition, the external current account balance showed asmall surplus for the second straight year, in sharp contrast to the averageannual deficit of nearly US$600 million registered during 1976-78. Governmentfinances also improved during the year. Whereas budgetary revenues roughlydoubled in nominal terms, expenditure growth was kept below 70 percent. As aresult, the budgetary deficit was reduced by about two-fifths in nominal termsand amounted to 1.9 percent of GDP compared to 5.2 percent the year before. Netgovernment borrowing from the domestic banking system was at the lowest levelrelative to GDP since the beginning of the crisis. The easing of the supplysituation, together with the restraint in government borrowing, contributed tolowering the annual rate of inflation by more than half -- to about 44 percent-- despite the devaluation of the zaire by about 31) percent vis-a-vis the SDRearly in the year.

1/ Zairian statistics have numerous shortcomings and are subject to frequentrevisions. The statistics cited in this chapter may differ from those inthe last economic memorandum or other documents because of differences indefinition and in the source and date of the estimates.

2/ Although official imports (i.e., imports recorded in the balance ofpayments) declined in real terms, total physical imports probably increasedby about 4 percent due to the relaxation of the regulations applying toS.A.D. imports (imports financed without recour-se to the foreign exchangeresources of the banking system), as explained in the last economicmemorandum (Report 3287-ZR, p. 2).

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Table 1: Selected Economic Indicators, 1979-1981

1979 1980 1 9 8 1 1/Actuals Targets Estimates-

Real GDP (% change p.a.) 0.2 2.4 2.0 2.4

Mdse. Exports (US$ million) 1,834 1,955 1,9143/ 1 494-3/ '~ 21Mdse. Imports (US$ million) 1,107 1,201 1,327- 1,097-3/ 2/Trade Balance (US$ million) 727 754 587- 397-

Current Account Balance (US$ million) 14.8 1.8 -330-/ -501(% of GDP) (0.2) (-) (-7.0) (-9.3)

BudgetRevenues (Z million) 1,944 3,777 5,117 4,782Current Expenditures (9 million) 2,392 3,850 5,617 5,964Capital Expenditures (9 million) 129 246 350 540Deficit (9 million) -577 -319 -850 -1,722

(% of GDP) (-5.2) (-1.9) (-4.5) (-7.3)

Net Gov't. Borrowing from DomesticBanking System (S million) 484 267 850 1,454(% of GDP) (4.4) (1.6) (4.5) (6.2)(% of Broad Money Supply,beginning of period) (26.1) (12.8) (20.5) (43.2)

Growth of Money Supply 12.4-/ 61.5- 23.2 37.9

Inflation Rate-/ 101.1 43.9 45.0 38.1

6/ 7/Copper Production- (000 m.t.) 399 459 465-7 505World Price (&/lb) 90 99 93 79

1/ Preliminary official estimates.2/ Mission estimate.3/ Converted at the exchange rate of US$1 = SDR1.2736 used for the targets in the IMF

program.4/ Rates for these years reflect the impact of the demonetization measures oE December

25, 1979.5/ Based on yearly averages.6/ Gecamines and Sodimiza.7/ Exports.

Sources: Bank of Zaire, OGEDEP, IMF, and mission estimates.

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4 Three factors associated with the above positive performance generatedsome optimism about the future of the Zairian economy, both within and outsideZaire, at the end of the year. First, Zaire observed all the performancecriteria under the IMF-supported stabilization program for 1980 and was able topurchase the full amount (SDR 118 million) allowed under the Stand-byArrangement. Second, Zaire complied with the debt rescheduling agreementssigned with the Paris Club (December 1979) and the syndicated privat:e banks(April 1980) by nearly doubling its external publia debt service payments.Third, Zaire continued the process of institutional reform started in 1979,including the gradLual establishment of a public investment approval, programmingand monitoring process. The problems of the economy were hardly over, however:in 1980, real GDP was still 10 percent below its pre-crisis (1972-74) level;real imports (even after allowing for the expansion in unrecorded imports) stoodnearly 40 percent below the level of the same period; and the rehabilitationneeds of the economy, especially Gecamines, were unadiminished. In addition, theimprovement in public finances experienced in 1980 was achieved partly bypostponing salary adjustments (real wages and salaries fell for the sixthconsecutive year), and by delaying the signing of some of the bilateral externaldebt rescheduling agreements. The improvement was also aided by the devaluationof February 1980 which helped to boost government revenues. Thus, while theprogress achieved in 1980 was real, it was at the same time fragile, and thequantitative "balance sheet" of the year overstated the progress. This was tobecome apparent very early in 1981.

2. The Medium-Term Program

5. In mid-1981, Zaire adopted a three-year program of economic andf:ilnancial adjustment supported by an "extended faci'lity" from the IMF in anamnount equivalent to SDR 912 million.l/ The program had three basic objectives:(i:) to achieve an average annual growth rate of real GDP of 3 percent; (ii) toreduce the rate of domestic inflation to 25 percent: by 1983; and (iii) tocontain the external current account deficit in 1983 to 5 percent of nominalGDP. In order to attain these objectives, the Zairian authorities took a numberof supply-oriented measures -- such as the decontrol of most prices (at theproducer, wholesaler and retailer levels) and the launching of an updated andrevised public investment program -- and affirmed t:heir intention to pursueprutdent demand management and incomes policies over the medium term. Theauthorities undertook, in particular, to curb budgetary expenditures in relationto GDP; to strengthen budgetary controls and to ext:end them over all governmentfinLancial operatio:ns; to review the tax system and its administration, with theassistance of IMF specialists, with a view to implementing appropriate reformsin 1982-83; to contain the annual growth of the money supply (broad definition)to a lower rate than that of nominal GDP; to adjust: interest rates so as toinduce savings; and to implement a flexible exchange rate policy. Iln accordancewith the last intention, the zaire was devalued by 40 percent in terns of theSDR on June 19, 1981.2/

G. The objectives of the medium-term programi for 1981 were considerablymore modest than those for the terminal year, however, namely: a real GDP

'Li' Subject to observing the performance criteria under the arrangemesnt, Zairewas to purchase SDR 275 million in the balance of 1981, SDR 300 million eachin 1982 and 1983, and SDR 37 million in 1984.

21 This brought the cumulative devaluation (vis-a-vis the SDR) since October1978 to 84 percent.

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growth of 2 percent, an inflation rate of about 45 percent and an externalcurrent account deficit limited to 7 percent of nominal GDP. The principalreasons for this were (i) the unfavorable short-term export outlook, coupledwith a sharp increase in external debt service due, and (ii) domesticdevelopments in the first 3-4 months of the year. The program foresaw noincrease in exports (in terms of SDRs) in 1981. On the domestic side, the mostimportant development influencing the program was the widening imbalance betweenbudgetary revenues and expenditures earlier in the year. The weakening of theexport markets and a decline in Gecamines' tax payments dampened the expansionof revenues. At the same time, the granting of a general salary increase of 15percent to government employees (which, though justified, was not budgeted), theaddition of as many as 15,000 primary and secondary school teachers to thegovernment payroll in a period of less than three months, and a weakening offiscal discipline in some other areas as well pushed total outlays beyond thebudgeted levels. As a result, net government borrowing from the domesticbanking system in the first four months was about three times larger than in theentire year before. The Zairian authorities could do little about thedeterioration in the export sector, but they took or announced a number ofcorrective measures between March and June 1981 to deal with the growingbudgetary imbalance. These included: increases in various specific importduties to take account of past inflation; freezing of outlays for salarypayments to primary and secondary school teachers at their December 1980 level;and cuts in non-priority government imports and travel as well as in theoperating expenditures of decentralized agencies, regional governments, certaindepartments, the Presidency, and political institutions.

7. Yet, despite these measures, the objectives set for 1981 wereconditioned by the increase in expenditures and other developments that tookplace in the first few months of the year. The medium-term program, therefore,foresaw a temporary setback in 1981, before the program began to take hold in1982. It anticipated, for example, a change in the external current accountbalance from a small surplus to a substantial deficit; an increase in thebudgetary deficit relative to GDP; an expansion in net government borrowing fromthe domestic banking system relative to both GDP and the money supply (broaddefinition) at the beginning of the year; and no significant reduction in therate of inflation (Table 1). Even this constrained scenario was cruciallydependent on: (i) the assumptions regarding exports and net movements ofmedium- and long-term capital;'/ (ii) the vigorous implementation of themeasures taken in the second quarter (para. 6); and (iii) the pursuit of theinterrelated set of policies outlined in the medium-term program (para. 5). Asnone of these assumptions fully held up, Zaire did not observe most of theperformance criteria under the extended arrangement beginning in the thirdquarter.2 / Given the limited recovery-content of the 1981 program, itsunderimplementation denotes not so much a setback in recovery as it does a

1/ For example, an important assumption of the program for 1981 was thedisbursement of SDR 100 million from anticipated new (1981) loan commitmentsto Gecamines.

2/ Zaire purchased SDR 100 million immediately following approval of theextended arrangement on June 22, 1981 and another SDR 75 million in November1981, based on compliance with the performance criteria for end-June. Nopurchases under the extended arrangement have been possible since then,although Zaire purchased SDR 106.9 million under the Compensatory FinancingFacility in March 1982, as explained later.

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renewed and seriouts destabilization of the economy, or a widening of bothexternal and internal imbalances. The consequent loss of access to IMFresources under the extended arrangement complicated both compliance with thelatest (July 1981), debt rescheduling agreement with the Paris Club and theautlook for a new rescheduling.

3. Debt Rescheduling

8. At its penultimate meeting (December 1979), the Paris Club hadrescheduled outstanding arrears as of that date (including insured short-termtrade arrears) and maturities falling due in 1980, and it had agreed to meetagain to consider 1981 maturities. That meeting was held in July 1981, roughlytwo weeks after thie approval of the extended arrangement by the IMF and a fewdays after the mee!ting of the World Bank Consultative Group for Zaire (June23-25) which, while expressing satisfaction with Zaire's performance, had drawnattention to the urgent need for a more substantive and lasting solution to theexternal debt problem. At its July 1981 meeting (the fourth in five! years), theParis Club agreed reluctantly to the rescheduling of some of the previouslyrescheduled maturities, and it rescheduled the new (not previously rescheduled)maturities falling due in 1981 and 1982 on terms largely similar to thosegranted in 1979.1/ The external public debt service due (excluding uninsuredshort-term trade avrrears and IMF repurchases) was reduced from about: US$740million to US$410 million in 1981 and from about US$750 million to US$500nillion in 1982.2/

9. Although the creditors showed genuine interest in helping Zaire,the rescheduling proved inadequate because the underlying export forecasts nevermaterialized, as explained later. The rescheduling proved unrealist:ic inanother respect: as Zaire had paid only US$110 million in external public debtservice in the first half of the year, it implied -a more-than-doubling ofpayments in the second half. As a result, although the Paris Club agreementurged Zaire and thLe creditors to conclude the necessary bilateral agreementsbefore the end of 1981, this did not prove possible because of resourceconstraints, and Zaire began accumulating arrears sven on the non-rescheduleddebt. Thus, instead of reducing the uncertainties regarding Zaire's? resourceavailabilities and allocation, the last round of rescheduling ended up extendingthem. Not having been implemented, the agreement provided no practical basisfor resource budgeting.

4. Terms of Trade

13. The history of the Zairian economy from the early 1970's through 1981has been one of maladjustment to changes in the terms of trade. The! differencein 1981 was that while the scenario for the year depended so crucially on theaccuracy of the trade forecasts, no one inside or outside Zaire fore!saw the

1/ The rescheduling terms were: 10 percent to be paid in four equal annualpayments beginning in 1981 and 90 percent to be paid in 12 equal semi-annualpayments after 4.5 years' grace.

2/ Based on estimates prepared during the Paris Club meeting. The estimatesmay vary depending on the US dollar conversion rates used and thte interestrates assumed.

extent of the deviations experienced. According to preliminary information,Zaire's terms of trade declined by 16 percent in 1981 to their lowest level inten years, or to more than 10 percent below the trough of the last majorcommodity cycle (1973-77).1/ As depicted in Chart 1, whereas average exportprices fell by 6 percent, average import prices increased by 12 percent ('both inSDRs). The largest declines from 1980 levels were registered -- in descendingorder -- by cobalt (30 percent), coffee (25 percent), copper (20 percent), anddiamonds (10 percent).2/ The largest shortfalls from the program targetsoccurred in coffee (17 percent), copper (15 percent), diamonds (13 percent), andcobalt (5 percent). Among other major exports only petroleum registered a pricegain. (However, Zaire is a net importer of petroleum and petroleum products interms of value.) Most mineral prices continued to slide in 1982.

11. The above changes permitted Zaire to purchase SDR 106.9 million underthe IMF Compensatory Financing Facility (CFF) in March 1982. In its underlyinganalysis, the IMF staff estimated the export shortfall for 1981 (from the1979-83 geometric average) at about SDR 215 million, 80 percent of which wascontributed by the principal minerals. The earnings shortfall for copper wasentirely attributable to price; that for diamonds about equally to price andvolume; and while that for cobalt was mainly related to a drop in volume, itwas, nevertheless, principally caused by a drop in world demand. The purchasesauthorized under the CFF brought much needed relief but only partially oi-fsetthe loss of potential purchases under the EFF, which was cancelled on June 21,1982.

12. As noted earlier (para. 2), the events outlined above were closelyinterrelated: the improved performance of 1980 opened the way to the approvalof the extended arrangement by the IMF; the continued presence of the ]MF inZaire -- with a monitored program and very substantial resources -- led to a newdebt rescheduling; however, the evolution of the terms of trade, together with aweakening of economic management (discussed later) reversed the spiral. If themedium-term program and the last debt rescheduling agreement were soshort-lived, it is perhaps because both were adopted at a time when thesituation had already started to deteriorate and when, despite the correctivesteps taken, the deterioration had established a momentum due to internal andexternal factors. The experience with 1981 points to, inter alia, thedifficulty of making projections and fine-tuning actions in a situation whichremains so variable and where the shortcomings of the data base make itdifficult to establish precisely and with confidence where the economy stands ata given time.

1/ Based on figures expressed in SDRs. Trends in the last quarter of 1981suggest that the final estimates for the year may show an even graterdecline.

2/ These rates of change are based on prices denominated in US dollars -- thecurrency in which world prices of coffee, cobalt and diamonds are normallyquoted. The changes in terms of most European currencies or the SDR weresmaller because of the appreciation of the dollar.

CHART IZAIRE: TERMS OF TRADE AND WORLD PRICES

OF SELECTED EXPORTS 1/250--

-- WPR PRICE DVEXJfw~M PRICE DMX

---- TR5 OF TRAMDE MMEX

208- .-

1873 1874 1875 1976 1977 1978 1878 128e 1881

UORL CO11M PRICE INDICE Ro"TA CoFFEE PRXD2

-~~~n

ea- _79-~~~~~-

50 -

197 1974 107 07 977t i108 Io 1l80 1lo

POUR PND PRCE AVERAGE WORD COBALTU CES

Is -

-- L~~~~~~~~~~9

3-~~~~~~~~~~~~~~~6

1 Ion tO77 1 S-;t l t9tl J N 1645 a N Oi ttJ S 04

I/ Trade indice-; based on figures expressed in SDR's; copper and cobalt prices refer to

LME and U.S. market prices, respectively; diamoncL prices reflect a weighted average

of Zaire's di'fferent quality diamonds; and coffee prices refer to robusta coffee.

Source: Statistical Appendix, Table 3.7 and World Ta~bles 9.5, 9.11, 9.14 and 9.15.

-8-

B. The Main Aggregates

1. Growth and Utilization of GDP

13. According to preliminary official estimates, Zaire's commercia:Lized(monetized) GDP grew by 2.4 percent in real terms in 1981. While some growthdid take place, the above estimate may be on the high side. Zaire's nationalaccounts are subject to a wide margin of error, and experience has shown that itis hazardous to attempt estimation after such a short interval.l/

14. In Zaire's current situation, the relative evolution of the varioussectors is a far more meaningful measure of progress toward economic recoverythan a change in GDP. Even the official estimates reveal that of the cumulativegrowth of 4.8 percent in commercialized GDP achieved between 1979 and 1931,nearly three quarters were contributed by mining; the rest of the economy grewby less than 1.5 percent in the two years combined. Among the productivesectors, agriculture and manufacturing registered little or no growth. Withinagriculture, although cotton production expanded and the way this was achievedis encouraging (see Volume II, Chapter VII), there was little change in theproduction of the three main staples in the Zairian diet (manioc, maize andrice). Within mining, the increase in copper production was made possiblepartly through "high-grading" and, therefore, mortgaging future production,and roughly half of the production of cobalt (a by-product of copper in Zaire)in the last two years went into stocks (see Volume II, Chapter II). From thisperspective, the output performance of Zaire in 1981 was little better than in1979.

1/ The official national account estimates have been revised frequently anddrastically. To illustrate, the revisions made in 1980 and 1981 resulted inreducing the estimates of real commercialized GDP by an average of 5 percentper year for the period 1972-76 and 2 percent per year for the period1977-79. Under both revisions, government services and indirect taxes werethe most affected. The former underwent a decrease of 22 percent per yearin 1972-76, while the latter was cut by over 60 percent per year in1976-79. The estimate for commerce from 1974 onward was also reduced by ayearly average of 10 percent. On the other hand, mining was adjusted upwardby 5 percent per annum for the period 1976-79. The year 1976 showed thelargest adjustment: commercialized GDP was reduced by 6 percent, revzisingthe annual growth rate from -0.3 percent in the old series to -5.9 percentin the present series.

-9-

Table 2: Production Indicators, 1972-1974 Average and 1979-1981, by Year(1970=100)

Average 11972-1974 1979 1980 1981-

I. Value-added (constant prices)Commercialized GDP 113.8 100.2 102.5 105.0

Agriculture 110.3 103.4 104.9 107.6Mining 113.6 97.7 104.4 111.9ManufacturiLng 120.6 88.0 87.1 87.7Construction 115.7 80.3 80.3 80.6Electricity and water 112.6 133.3 135.6 132.1Transport/Communications 110.1 78.0 83.0 88.3Commerce 119.0 91.1 9L.7 91.5Non-government services 119.7 76.0 60.2 47.5Government services 107.1 157.2 17L.1 176.4

II. Volume of Outpul:A. Agricultural goods

Coffee 111.5 100.4 118.9 108.5Cotton fibers 102.1 35.0 56.9 62.1Palm oil 90.7 57.8 54.6 54.1Manioc 97.0 120.7 122.7 124.7Maize 164.8 142.2 144.8 146.8Rice 137.0 145.3 16.3.6 162.6Sugar cane 125.2 117.0 114.9 114.9

B. Mining productsCopper 122.6 95.5 110.0 121.3Cobalt 109.2 100.3 103.9 78.8Diamonds 94.6 55.9 57.6 43.9Gold 2/ 74.5 32.6 22.0 n.a.Crude petroleum- - 83.0 72.5 80.2

C. Manufactured goodsTextiles 105.0 63.3 67.2 68.0Plywood 98.2 98.8 69.0 67.4Beer 143.3 87.8 77.4 n.a.Petroleum refining 106.4 56.8 58.9 49.9Cement 139.2 100.7 108.4 n.a.

C. ServicesONATRA traffic 98.2 95.0 93.8 99.3SNCZ traffic 121.1 95.9 93.4 95.3

1/ Estimated.2/ Index based on 1976 volume of 9.1 million barrels (first year of commercial pro-

duction).

Sources: Bank of Zaire and mission estimates.

- 10 -

15. Data on the utilization of GDP are normally available with a lag ofabout a year and are very deficient, as noted in the last two economicmemoranda.l/ In addition to giving rise to serious questions regarding the sizeand share of the main components, the official data reveal anomalous changesregarding particularly gross fixed investment which are hard to reconcile withother indicators (e.g., disbursements of project aid) or other trends in theeconomy. The estimates through 1980 (the last year for which data areavailable) show a continuation of two well-established trends since the adventof the crisis: (i) a decline in the share of private consumption, and (ii) anincrease in that of public consumption due to a constant shift of resources to"wages and salaries" because of the expansion of government employment. Nomeaningful conclusions beyond these can be drawn from the available data. Thesetrends have probably continued in 1981. A major change last year was probably abig expansion in stocks due to the decline in effective demand.

2. External Transactions

16. For the reasons already noted (paragraphs 10-12), Zaire's merchandiseexports (f.o.b.) fell by about US$460 million, or 24 percent, in nominal termsin 1981 and stood below the level of 1978 -- the worst year of the crisis.Although exports of all major minerals declined, the loss of revenue from cobaltwas the most significant both for the present and for the future. Cobaltearnings were more than halved and accounted for more than 50 percent of thedecline in total exports. The cobalt export value was about US$400 million lessthan the all-time peak of 1979, and its share of total export earnings was 20percentage points lower: 11 percent in 1981 compared to 31 percent in 1979.The level and share of cobalt exports in the more recent period are perhaps moreindicative of the future. While export volume (4,500 tons) was unusually lowpartly for cyclical reasons, the unit price (US$17/lb) was above the long-termprice, which is probably closer to US$10/lb (in real terms) or less. Mo-reover,Zaire's estimated year-end stocks were equivalent to more than two years of itsown production and one year of world consumption.

17. Although the decline in nominal imports was kept to 10 percent, realimports were lower than at any year during the crisis and, indeed, 40-50 percentbelow the pre-crisis level. It should be noted in this connection that since1978 Zaire has had a large trade surplus because of the inevitability ofcurtailing imports in the face of sharply diminished capital inflows and risingdebt service obligations. In 1978-80, the trade surplus averaged US$680million, or more than a third of merchandise exports; this was partly off-set bya large deficit in non-factor services, which averaged about US$550 million; and

1/ The statistical problems relate to, inter alia, the unreliability of thedeflators used and of data on imports of capital goods, theirreconcilability of net trade with BOP estimates, and the derivatior. ofprivate consumption as a residual. Even the Bank of Zaire, which preparesthe estimates, cautions against their strict interpretation. (See BEnk ofZaire, Information Memorandum, December 1981, p. 9.)

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the resource balancel/ was in surplus by about US$130 million, or 2. percent ofGDP. In 19181, while the trade balance remained positive, the resource balancechanged from about +US$150 million to nearly -US$200 million.

18. Largely because of developments in the trade sector and an increase incontractual. debt service obligations, the current account registered a deficitof US$500 million in 1981. The medium and long-term capital account registereda deficit also (compared to a small surplus the year before) and pushed theoverall balance of payments deficit to more than US$700 million. The deficitwas financed through debt rescheduling, accumulation of external debt arrears,net credit from the IMF, and a decline in net reserves. (Statistical AppendixT'able 3.1)

19. The main external debt parameters interacted with trade and capitalflows as follows, Zaire's external public debt service payments fell both inabsolute terms and relative to exports of goods and non-factor services in 1981(Table 3). Debt service payments that year totaled about US$230 m:Lllion, ofwhich near:Ly two--thirds represented interest payments, compared to a debtservice due of about US$410 million.2 / Zaire began accumulating arrears on itsexternal public debt soon after the new (July 1981) debt rescheduling agreementand, by the end of December, these reached an estimated US$175 million._/However, these flgures, which cover public debt only, understate Zaire's debtservicing effort in 1981, because during the same year Zaire met aLso itsrepurchase obligations vis-a-vis the IMF, which amounted to about US$130million; in addition, it reduced its long-standirg arrears on commercial debtand invisibles by about US$50 million.4 / If these two categories of paymentsare included, Zaire's debt service ratio in 1981 comes to 26 percent andexceeds the ratio for 1980.

20. Recent changes in Zaire's debt situation reveal the continuation oftwo negative trends which first appeared in 1979/'80 and were highlighted in the

1/ The difference between exports and imports of goods and non-factor services.

2/ Including US$33 million "postponed" from 1980) because of delays in thesigning of the bilateral agreements implementing the December 1979 ParisClub consolidation.

3/ This estimate (which is preliminary) refers 1:0 arrears on thenon-consolidated debt only, i.e., it assumes that the July 1981 Paris Clubagreement is eventually implemented. Moreover, the following distinction isin order: the Paris Club had rescheduled cer-tain maturities falling due in1981 and 1982, with the rescheduling of the L982 maturities dependent onZaire's continued eligibility to draw under 1:he IMF's Extended Facility.Although the rescheduling of the 1981 maturil:ies did not carry the samecondition, the necessary bilateral accords were not signed by the end of theyear. Therefore, these maturities, which amounted to about US$370 million,were technically but not legally in arrears at the end of the year.

4/ The total amount of such arrears is not precisely known. In mid-1981 thefigure was estimated at about US$350 million. (Bank of Zaire, InformationMemorandum, December 1981, p. 70).

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Table 3: Selected External Debt Indicators, 1979-81

1979 1980 1981 1/

1. Debt Outstanding 1/Disbursed only 3,780 4,228 4,349Undisbursed (pipeline) 791 745 669

Total 4,571 4,973 5,018

2. Commitments and Disbursements -

Commitments 366 290 184Disbursements 216 284 263Difference 150 6 -79

3. Debt Service and Arrears 1/Debt due 580 341 -' 409 -'

Debt paid 168 308 230Principal (73) (135) (85)Interest (95) (173) (145)

Arrears (end of year) 1,006 (33)3/ 175

4. Other Debt ServiceShort-term arrears 26 65 48IMF repurchases 40 84 130

5. Total Debt Service 234 457 408

6. Net Transfers 48 -24 33

7. Debt Service Ratios (%)Contractual public debt service 30.5 16.6 25.4Actual public debt service 8.8 15.0 14.6Total debt service 12.3 22.2 25.9

Memo:Exports of goods and NFS 1,904 2,056 1,576

1/ External public debt only.

2/ Post rescheduling and on the basis of bilateral accords signed.

3/ Postponed and, therefore, not considered legal arrears.

Source: OGEDEP.

- 13 -

last economic memorandum: (i) net transfers,1 / which had averaged US$425million a year during 1976-78 but were reduced to less than US$25 million during1979-80, totaled only US$33 million in 1981 despite the accumulation ofarrears. (If Zaire had paid all of the debt service due in 1981, net transferswould have been negative by about US$150 million.) (ii) Disbursements exceedednew commitments by about US$80 million, causing the reduction of the projectpipeline to just US$670 million, compared to total outstanding debt (includingundisbursed) of U'S$5.0 billion and a debt service due in 1983 alone of more thanUS$700 million. The decline of disbursements to about US$260 million during theyear, though disappointing, had been anticipated.2! Much more sign:ificant wasthe reduction of commitments -- the source of future disbursements --- to aboutUS$185 million, or less than half of the average of the preceding three yearsCrnd the lowest level since 1972.3/ Thus, like the developments in ithe exportsector, especially cobalt, developments affecting capital flows in 1981 not onlyhurt Zaire that year but, other things being equal, also pointed to continuedre!source constraints in the next several years.

3. Public Finance

21. As stated in paragraph 6, Zaire's public finances had been expected todeteriorate in 1981 as a result of the adverse export outlook and increased debtservice obligations, especially interest payments. However, the deterioration,cis measured by thea size of the budgetary deficit, was greater than anticipated.Although the deveLopments in the external sector described above contributed tothe deterioration, they do not fully explain it, because (i) some of theuinforeseen external factors offset each other (e.g., the negative iimpact of theexport shortfall on budgetary revenues was compensated by the accumulation ofexternal debt arrears); and (ii) expenditure performance worsened much more thanrevenue performance.4/ While both expanded in nonkinal terms because of-.nflation, expenditures rose twice as fast as revenues (55 percent, compared to27 percent); and whereas revenues increased slower than commercialized GDP,expenditures increased faster (Table 4). Although the Authorities made someattempts to correct the situation in the course of the year, these provedinsufficient.

22. The expansion of revenue was constrained by the drop in receipts from:naxes on exports and in Gecamines' total budgetary contribution, both of whichEell relative to GDP. The decline in Gecamines' contribution was partly due to

L/ Net transfers, as defined here, refer to the difference between.disbursements of project aid and external pub:Lic debt service payments.

'2/ IBRD, Report No. 3287-ZR, p. 43.

3/ Multilateral creditors accounted for about 40 percent of total commitmentsin 1981, compared to 28 percent in 1978-80; bilateral creditors represented53 percent, compared to 40 percent in the preceding three years; while theshare of private creditors (suppliers and banlks) declined from 32 percent to11 percent between the two periods. (Appendix Table 4.3).

4/ In this chapter, external debt amortization iS included in expenditures,i.e., it is treated "above the line" in calculating the budgetary deficit.

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Table 4: Budgetary Revenues and Expenditures, 1/

1980 and 1981

Z million % of Comm. GDP1980 1981 2/ 1980 1981 2/

Revenues 3,777 4,802 2/ 28.4 24.7

Taxes on net income & profits 1,233 1,753 9.3 9.0

Taxes on domestic prod. & cons. 471 739 3.5 3.8Taxes on international trade 1,461 1,530 11.0 7.9

(Imports) (779) (1,277) (5.9) (6.6)

(Exports) (682) (253) (5.1) (1.3)Other taxes & non-tax revenue 612 780 4.6 4.0

Expenditures 4,096 6,374 30.8 32.7

Wages & Salaries -31 1,527 2,339 11.5 12.0(Education 4/) (687) (1,036) (5.2) (5.3)

Presidency & Polit. Inst. 213 456 1.6 2.3

External debt 780 880,/ 5.9 4.5

Domestic debt 73 295- 0.5 1.5

Transfers & subsidies 294 576 2.2 3.0

Other current expenditures 6/ 963 1,267 7.2 6.5

Capital expenditures 246 561 1.9 2.9

Deficit -315 -1,572 2.4 8.1

Memo items:

Gecamines revenues 908 723 6.8 3.7Central gov't employees ('000) 397 429Inflation rate (%) 44 38

Commercialized GDP (E million) 13,299 19,480

1! Based on Treasury statistics which may vary from data published by the Bank of

Zaire.

2/ Preliminary.

3/ Includes pensions and scholarships.

4/ Primary and secondary school teachers only.

5/ Includes 'other financial charges' which, for 1980, are included in 'other

current expenditures'.

6/ Includes centralized expenditures (electricity, gasoline, equipment, etc.),

materials, transfers to regions, travel, external expenditures, etc.

Sources: Ministry of Finance, IMF and mission estimates.

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the rebate of about Z 170 million of its tax obligations in compensation forexpenditures which the company had incurred in the past on behalf of theGovernment, although it also reflected the growing disparity between itsfinancial means andi its urgent rehabilitation needs,. (For more information onGecamines' tax payments, see Volume II, Chapter II.) The latter led theGovernment in September 1981 to suspend all export duties payable by Gecaminesuntil December 1983. The Government took a number of revenue-raising measuresduring the year. These included: the increase of payroll taxes on expatriatesfrom 10 percent to 15 percent; the introduction of presumptive taxation on theincome of some liberal professions; the increase of the domestic turnover taxfrom 15 percent to 18 percent; the upward adjustment of some specific importdulties and of excise taxes on beer and cigarettes; and the furtherliberalization of S.A.D. imports, which had contributed significantly to raisingcustoms revenues in 1980. These measures did not help as much as expected,however, because of the constraints on the tax base. For example, S.A.D.imports declined sharply in the second half of the year because of the shortageof liquidity (to purchase foreign exchange) and the weakness of effectiveconsumer demand.

23. Significant increases in expenditures were registered by thetraditional problem categories (Presidency and Political Institutions, namely"dotations", wages and salaries, subsidies) and capital expenditures. Theincrease in wages and salaries was due to increases in both pay rates and numberof employees. Salaries for all government employees were increased by 15percent on January 1, and those for employees below the rank of director wereraised by a further 15 percent effective August 1981 to provide somecompensation for the effects of the June devaluation. While the Government alsointroduced measures to curb the expansion of outlays on primary and secondaryschool teachers, these had a limited impact and such outlays were nearly Z 200million more than anticipated. Two other factors which boosted expenditureswere the provision of Z 185 million as working capital to Petro-Zaire upongranting this company the import monopoly for petroleum (see Volume II, ChapterVIII), and the uncontrolled "consumption" of petroleum products, particularly bythe Army.

24. The funding of the capital budget has traditionally been givensecondary priority, especially during difficult years. The sharp increase inbudgetary capital expenditures compared to 1980 (128 percent) and to the budget(56 percent) is, therefore, a priori welcome. However, the increaste over thebudget was due entirely to expenditures in the energy sector which were morethan three times greater than the formal appropriations, reflecting very largelythe continued priority given to, and the vast cost overruns incurrecd by, theInga-Shaba high-voltage transmission line. Energy expenditures were alsosignificantly by larger than foreseen in the Mobutu Plan.1/

25. The budgretary deficit in 1981 was five times larger than iin 1980 andaccounted for 8 percent of commercialized GDP. Most of it was financed throughgovernment borrowing from the domestic banking system which, on a net basis,totaled Z 1.45 billion compared to Z 267 million in 1980.

1/ The energy sector absorbed 53 percent of budgetary capital expenditures in1981 compared to its share of 19 percent in the three-year public investmentprogram.

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4. Credit, Prices and Real Wages

26. In 1980, the annual rate of domestic credit expansion had deceleratedfrom an average of 34 percent in 1976-79 to about 14 percent thanks to a sharpreduction in the growth of both net government borrowing and credit toenterprises and households. (Statistical Appendix Table 6.1) In 1981, creditexpansion picked up again: total domestic credit increased by 54 percent, netcredit to the government by 62 percent and credit to enterprises and householdsby 32 percent. The money supply (the sum of currency in circulation, demanddeposits and time deposits) increased by 38 percent, owing largely to themonetary financing of the budgetary deficit.

27. The Government absorbed four-fifths of the total credit expansion inorder to finance its deficit and this, together with other factors, produced asevere credit squeeze in the economy, with the private sector bearing thebrunt. The shortage was aggravated by both government policies and marketconditions. Among the government measures responsible are the unscheduledfinancing of Petro-Zaire noted above1 / and the tying-up of import deposits atthe Central Bank (discussed in para. 32 below). The main market conditionswhich contributed to the liquidity shortage were the build-up of' stocks due to adecline in effective demand (partly because of the further erosion of real wagesand salaries) as well as other factors. The tying up of credit in coffeestocks, at least at the beginning of the year, was due to the mishandling of thestamps issued by the International Coffee Organization under the quota system.(This problem seems to have been largely solved; see Volume II, Chapter IX.)Thebuild-up of textile stocks was due to the authorization of imports of vastquantities of used clothes, or rummage. (See Volume II, Chapter VII.)Moreover, the large devaluation of June 19, which increased the need forliquidity, came on the eve of the major jump in the Government's borrowingrequirements.

28. There was little change in the sectoral allocation of credit toenterprises. A large part continued to finance the marketing of agriculturalproducts: 35 percent in 1981 compared to 39 percent in 1980. Commerce received23 percent, while the manufacturing sector accounted for 19 percent (StatisticalAppendix Table 6.3). The year 1981 saw, however, major modifications ofinterest rates on deposits as well as loans. On April 1, 1981, the rates paidby commercial banks on time deposits of 3-24 months were increased by 3-5percentage points to 8-30 percent per annum; the rates on deposits of over 24months were left freely negotiable. Concurrently, the rates that commercialbanks are allowed to charge for a number of their loan categories were permittedto be set freely. The basic rediscount rate of the Bank of Zaire was alsoraised on the same date by 3 percentage points to 15 percent per annum, a-adsimilar increases were made in the Bank's other lending rates (StatisticalAppendix Table 6.4). Interest rates remain negative but are expected to 'bereviewed periodically.

1/ The financing was justified but the justification for granting Petro-Zairethe oil import monopoly, which created this financing need, has not beentransparent.

- 17 -

29. The inflation rate, as measured by the consumer price index forKinshasa, slowed down from 44 percent in 1980 to 38 percent in 1981,1/ However,the rate accelerated during the year -- from 27 percent in the second quarter to50 percent in the fourth -- and, for that reason, the increase in prices betweenDecember 1980 and December 1981, a common measure, was 53 percent. Theacceleration of inflation in 1981 cannot be linked directly or exclusively toeither the price 'Liberalization measures of June 1, 19812/ or to the devaluationof' June 19, 1981. Surveys undertaken by the Ministry of National Economy and]ndustry 2-3 months after the price liberalization measures showed thatincreases in ex-factory prices had been moderate and that the difference betweenretail prices and ex-factory prices had, in fact, narrowed. The accelerationwas due, rather, to increases in food prices (which account for 60 percent ofthe consumer basket) and to the underlying inflationary tendency of the economy.

30o. Despite the increases in wages and salaries granted to governmentemployees (para. 23), which normally set the trend for the private sector aswell, real wages and salaries declined for the seventh consecutive year (Chart2). Although the decline (10 percent) was moderate compared to previous years,it brought salaries in the public sector, for exam.ple, to one-fourtlh of the 1975level. However, fEigures on real wages in Zaire should be interpreted withcaution for at least two reasons: (i) During the crisis, non-salary benefits,especially in the private sector, have increased significantly. According to asurvey of 43 firms, the base (monetary) salary of unskilled workers accounts foronily 40 percent of total compensation (salary plus transport and housingsubisidies). (Statistical Appendix Table 1.5.) If health care is counted, theshare of the base salary becomes even smaller. (ii) The crisis has seen theemergence of a large underground economy that has its own dynamic and-income-distribution impact. However, while for these reasons the data on realwages and salaries may overstate the decline in re!al purchasing power andstandard of living, the magnitude of the contraction of the economy, coupledwith the population growth (estimated at 2.7 percent per annum), leave no doubtl:hat the decline has been severe and that the cumtLlative effect of the drop in'1981 was painfully felt.

LI/ Change between the average price index for 1981 and the index for 1980. Themonth-to-month average (i.e., January to January, February to February,etc., averaged) and the quarter-to-quarter average (computed similarly) wereboth about 37 percent.

2/ Until June 1, 1981 price controls were applied in principle at all levelsfrom producer to retailer, with manufacturers subject to a cost-plus 20percent pricing formula. As noted in the last: economic memorandum,effective June 1, 1981, the system was signifi.cantly liberalized. Pricecontrols were retained only for selected goods and services considered ofstrategic importance, namely palm oil, wheat i'lour, sugar, petroleum,pharmaceutical products, construction materials other than wood, water,electricity, and public transport. In the case of manufactured goods, exante control (i.e., prior approval of price increases) was eliminated infavor of ex post control if the Authorities felt it necessary. Furtherliberalization of agricultural producer prices and the lifting of controlson pharmaceutical products were announced in June 1982.

- 18 -

CHART 2: ZAIRE: PRICE AND SALARY INDICES, 1-i975-81C 1975-1t8, UNLESS INDICATED)

1 CPI (INS)

---- -------- GNP p.c. (US $) >

1-8 - ~ P.C. (us PUBLIC ADMIN. SALARY

=MINIMUM LEGAL SALARY -

107 l l l l l76 78 77 78 78 s 8e1

1/ Salary indices deflated by the CPI.

Source: Statistical Appendix, Table 1.6.

- 19 -

C. Impact on the Private Sector

31. The private sector, which was severely weakened by the zairianization/nationalization meiasures of 1973-74, has suffered significantly throughout thecrisis, and its retcovery is essential to the sustained recovery of t:he Zairianeconomy. In 1981, the Government took a number of measures to ease the problemsof the private sector and to stimulate private sector confidence. Theseincluded the price liberalization measures noted above (para. 29); the change inthe foreign exchange allocation guidelines to the commercial banks in favor ofimports of raw materials and spare parts; the further liberalization of S.A.D.imports; the creation of a new legitimate source of foreign exchange in the formof the Mineral Recovery Funds;1 / and the decision to "privatize" 37 mostlyinefficient public enterprises. However, the potential benefits of thesemeasures were largely nullified by three sets of factors: (i) the intensifiedproblems of the economy, especially the decline in real income and t:he severeforeign exchange shortage; (ii) specific developments or measures aifecting theprivate sector; and (iii) the problems of the central government. The first setof factors -- the macroeconomic ones -- were addressed earlier; the second andthird are examined below with particular reference to the manufacturing sector,which is a barometer of the Zairian economy in general and the private sector inparticular.

32. Among the most important events or measures affecting the privatesector in 1981 were the following:

- The allocation of US$70 million (out of the purchases from the IMF) toselectedl enterprises for emergency imports. Eligible enterprises wererequired to deposit the full countervalue in zaires in order toqualify. This placed a severe strain on the liquidity position ofmost enterprises, which could not obtairL credit because the banksthemselves were operating under very tight ceilings. In addition,several companies had their funds blocked at the central bank forseveral months, as the latter did not provide the foreign exchangepromptly. 2/

- The large increases in the production costs of most enterprises. Theaverage increase in the unit costs of the cotton textiles industry,which is believed to be representative, has been estimated at 80percent (see Volume II, Chapter VII). W4hereas the labor costcomponent increased by just 16 percent, the energy component rose by100 percent, the raw materials component by 184 perccent, and "salesand administrative costs and taxes" by 233 percent.

- The increases in selected taxes without a commensurate im'provement intax adnLinistration. The failure to ensure uniform assessmentperpetuated the problem of unequal burdien-sharing.

1/ In November 1981, the Government authorized SJZACOM to sell its foreignexchange earnings from the sale of artisanal diamonds at a negotiated ratewhich tended to approach the parallel exchanges rate. These funds, which arelabeled Mineral Recovery Funds, can be purchased legally and without goingthrough intermediaries by anyone and used for S.A.D. imports. Since August1982, the funds are sold at a rate fixed by OFIDA.

2/ Through this operation, the Central Bank was also trying to achieve theobjective of reducing the excess liquidity.

- 20 -

- The importation of massive quantities of cheap goods, especiallytextiles and shoes. This occurred at a time when the ability of thedomestic industry to compete was severely eroded as a result of theprotracted crisis and government policies (see Volume II, ChapterVII).

33. The private sector was also hurt by the problems faced by the centralgovernment. This took the following form: first, the main burden of thecredit squeeze shifted to the private sector; second, as in previous years, theGovernment periodically accumulated arrears vis-a-vis private suppliers orcontractors; third, the underfunding (or irregular funding) of the parastatalsproviding key services, such as electricity and transportation, to the privatesector led to either a deterioration of service or large increases in costs, insome cases both; and fourth, the erosion in the pay and quality of the civilservice interfered with the efficient and equitable application of laws andregulations.1/

34. The impact of these developments was first of all to reduce the rateof capacity utilization of many manufacturing enterprises to as low as 15percent. More important, the sector saw its cash flow reduced to criticallevels. A number of enterprises did not seem to have the cash reserves tosurvive the trough. Finally, most enterprises lost any incentive to engage insignificant new investments and limited their activities in this area to minimummaintenance and rehabilitation (see Volume II, Chapter III).

D. The Situation in 1982

35. The difficulties of 1981 have persisted in 1982. In fact, the dataavailable suggest that the situation has deteriorated further. As in 1981, themain problems are associated with exports, external debt and public finance.

36. World copper and cobalt prices have continued to decline in 1982. Thecopper price on the London Metal Exchange (LME) has averaged US$0.67/lb inJanuary-November, compared to US$0.79/lb in 1981, and the average spot cobaltprice during the same period was US$8.5/lb, compared to US$15.54/lb last year.2/The world economic conditions underlying these trends have forced downward

1/ The severe difficulties faced by the private sector in 1981 led to an.extraordinary meeting on January 27, 1982 between the representatives of theprivate sector and the Government. In it, the private sector pleaded not somuch for deregulation as for improving the efficiency and efficacy of thepublic administration in order to achieve, inter alia, a more rationalutilization of domestic as well as external resources.

2/ In February 1982, SOZACOM reduced its "offer" price from US$17.50/lb toUS$12.50/lb, with discounts of up to 20 percent reportedly being negotiable.The average spot price in November was US$4.34/lb.

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aLdjustments in the estimates for 1982 (compared, for example, to those presentedin the last economic memorandum), with particularly adverse implications forZaire. The adjustments result in a reduction of the estimates for Zaire'scopper and cobalt: earnings in 1982 from US$1.5 billion to about US$750 million_ US$225 millioni below the level of 1981 (Table 5)..Total exports are now

estimated at just US$1.28 billion. This figure, which may be on the high side,is approximately US$550 million less than the 1979 level in nominal terms.

Table 5: Copper and Cobalt Export Estimates for 1982(value in US$ million, volume in '000 MT,

unit value in US$/lb)

1982 Estiimate1981 Mid-1981 Mid-1982

Actual Estimatea/ Estimate

A. Copper b/Value c/ 806 1,120 676Volume 473 463 451Unit Value 0.77 1.10 0.68

B. CobaltValue c/ 169 380 75Volume 4.5 11.5 4.0Unit Value 17.0 15.0 8.5

C. Copper and Cobalt Valuec/ 975 1,500 751

D. Total Merchandise Exports 1,494 2,106 1,279

a/ Report No. 3287-ZR, p. 37.b/ Gecamines and Sodimiza combined.c/ Gross of marlceting and refining costs normally deducted before SOZACOM

returns the sales receipts.

37. Prompted by these drastic changes in the short-term outlook, as earlyas January 1982, Zaire requested a new debt rescheduling meeting. While theneed for a new agreement is obvious and pressing, the cancellation of theextended arrangernent with the IMF and the uncertainty attaching to the timingand nature of a new IMF program have delayed the next round of debitconsolidation. UJnder these circumstances, the official debt service obligationsof Zaire in 1982 have exceeded its debt service capacity by a wide margin.These obligations total about US$930 m4 1 lion (or 70 percent of estimated exportsof goods and NFS) and consist of: US$175 million of arrears as of end-1981;

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US$650 million in contractual debt service due in 1982; and US$105 million ofdebt service on the 1981 maturities, assuming that the rescheduling agreementcovering these is implemented shortly.l/ Although the Central Bank has beenmaking very serious efforts to service as much debt as possible, payment:s arelikely to fall significantly below the level of last year (i.e., about US$225million in the case of external,public debt alone). In this case, arrears mayapproach US$800 billion by the end of the year.

38. Up-to-date information on capital inflows is lacking. On the basis oftrends in the first half of the year, commitments may have increased somewhat in1982 due largely to an increase in IDA commitments, which carry with themconsiderable cofinancing. The disbursement picture, however, is less certain.Under existing national laws or institutional policies, some donors may feelcompelled to reduce disbursements because of the accumulation of arrears. Thereaction of some donors to recent changes in Zaire's external relationsinvolving the Middle East may also have had a negative impact on disbursements.Total disbursements are, therefore, likely to remain at best unchanged from lastyear's level.

39. The public finance picture has already deteriorated further than lastyear. The budgetary deficit matched the total for last year in January-Junealone, it reached Z2.6 billion by Septmber; and it may reach Z3.0 billion by theend of this year. The major problem is again on the expenditure side. Whilethe increase in wages and salaries appears to have slowed down this year,by October, transfers and subsidies, "dotations" and operating expenditures hadalready exceeded twice the levels budgeted for the entire year. Although theauthorities made efforts to curtail the growth of expenditures, the success wasmixed and the impact nullified by the sharp drop in revenues during the year.In particular, Gecamines paid practically no taxes after August. Under thesepressures, the money supply expanded at an annual rate of 65 percent in thefirst three quarters, compared to 38 percent in 1981.

40. The medium-term program had foreseen a real GDP growth rate of 4percent in 1982. A stagnation appears more likely now. Given the export andcapital flow picture described above, imports will probably decline from lastyear's level in nominal term. The supply constraints, together with the largebudgetary deficit, could act to accelerate the inflation rate and put furtherpressure on the exchange rate. These pressures are already in evidence. Theratio of the parallel market rate to the official rate, which had fallen to 2:1after the June 1981 devaluation, has already crept above its pre-devaluationlevel of 3:1. The accentuation of the foreign exchange shortage has led to therationing of gasoline for the first time and has begun to hinder industrialproduction and the transportation of agricultural commodities. The annualinflation rate for the first ten months (29 percent) was lower than in 1981 (38percent), but in light of the large budget deficit and the continued shortage ofpetroleum products, this level will prove difficult to maintain.

1/ These figures refer to public debt alone and exclude, for example, 114Frepurchases and changes due which amount to SDR 53 million in 1982.

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E. Conclusions

41. Although, aggregate output may have registered some growth in 1981, theeconomic difficulties of Zaire have intensified in the last 18 montb,s. This isattributable to both external and internal factors. The shortfall in exportshas been of such a vast magnitude as to constrain very seriously theGovernment's freedom of action; on the other hand, the room to maneuver was alsohindered by the unbudgeted increases in certain categories of budgetaryexpenditures whose control has been traditionally weak but was expected toimprove under the medium-term program supported by the IMF. The result has beenthe failure of both the medium-term program and the latest debt reschedulingagreement to be imlplemented almost as soon as they were approved. Iheshort-term outlook remains as difficult. Furthermore, some of the problemswhich became intensified in 1981 (e.g., the loss in cobalt revenue, the declinein Gecamines' tax contribution, and the reduction of new commitments oflong-term aid) have ramifications beyond this year. Some of the implications ofthe recent economic developments are as follows:

(i) The experience since 1980 suggests that economic difficulties wereaggravated by the long lag between economic events and theirappreciation, between appreciation and reaction, and between decisionsand implementation. While the Authoritias recognize the nature andextent of the serious difficulties which currently confront theeconomy, they need to take strong and prDmpt action to alleviatethem. In particular, Zaire needs to do everything possible to tightenfiscal d:iscipline and to improve the allocation of resourc:es in thenext few months in order not to compromise 1983 as well.

(ii) Several key parameters -- exports, imports, capital inflows, and debtservice -- have gotten too far away from the levels assumed and deemedmanageable under either the medium-term program or the last debtrescheduling agreement. There is, therefore, a need for a completereevaluation of what is feasible and over what time,

(iii) The causes of recent developments cannot be found in the events ofthis period alone and lie in part in the institutional and. managementconstraints of Zaire, which are discussed in the next chapter.

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II. ECONOMIC MANAGEMENT AND INSTITUTIONAL CHANGE

1. The role of economic management in the genesis and accentuation of thecrisis was examined in the economic memorandum issued in 1979. The period sincethen has witnessed an intensified dialogue on economic management issues bothwithin Zaire and between Zaire and the major donors, as well as a number ofconcrete actions in this sphere. Some of these actions were reviewed in thelast economic memorandum (May 1981). The purpose of this chapter is to inquirefurther into the role of economic management in shaping recent economicdevelopments, to highlight recent institutional and policy changes, and toexamine the state of management and institutional reforms with emphasis on (i)the preparation and execution of the budget, (ii) the investment programming andmonitoring process, and (iii) the environment surrounding the private sector.

A. Background

2. Some historical clarification is necessary in order to set the issueof economic management in perspective. In mid-1977, Zaire began to prepare aneconomic recovery program with the assistance of a group of Belgian experts.The attempt was formalized and labeled the Mobutu Plan later that year.However, the work was shifted from the Bureau of the Presidency to the Ministryof Planning; its macroeconommic orientation was deemphasized; and the focusbecame the preparation of a three-year public investment program. The reasonsfor the change in orientation were two-fold. First, it proved difficult for theZairian team to make projections of economic growth and capital requirements,because discussions on a stabilization program, debt rescheduling and balance ofpayments assistance were taking place in different fora and, to some extent,independently of each other. Second, Zaire and the major donors felt that theinstitutional reforms that Zaire intended to undertake (which are discussed inthe next section), together with the anticipated debt rescheduling, thestabilization program and the public investment program, constituted a "recoveryprogram", albeit in parts.1/ This has not proven to be correct, i.e., Zaire hasnot had a true economic recovery program during the crisis, for three reasons:

(i) The components referred to above omitted three important elements:(a) a program to arre6t the deterioration of the social situationthrough an appropriate wages and salaries policy and other measures;(b) a program to assure the adequate functioning of the publicadministration by estimating and financing the minimum operatingrequirements; and (c) an action plan to reconcile the tax obligations

1/ The Mobutu Plan, which was subtitled "Economic Recovery Program", took thesame general view by setting three broad goals -- improving the management ofthe economy, stabilizing the financial and economic situation, and restoringproduction -- although it did not deal with all three systematically.

- 25 -

and investment requirements of Gecamines as well as to assure theproper management of both Gecamines and Sozacom. 1,

(ii) Although projections of capital requirements were prepared for avariety of fora (the Brussels Conferences, the Paris Club, theConsultative Group) and the donors/creditors responded as favorably asthey could, the gap was never closed on any occasion or for any year-- even on paper -- i.e., commitments of short-term assistance or debtrelief never added up to the estimates oi minimum requirements. Thesame was true of both the 1979-81 and the 1981-83 public investmentprograms whose financing gaps have not been closed to this day.

(iii) The failure to close the estimated financing gaps was due also toinsufficient allowance for the lag between commitment anddisbursement, or action and result;2 / that is, while actions were tosome extent synchronized, the results were not, and no attempt wasmade to tie the anticipated results together in a realistictime-specific scenario. This led to a misleading view of what wasbeing achieved toward recovery. For examnple, the preparation of the,public investment program for 1979-81 led to some optimism aboutrecovery even though the program was not completed until September1979 (nine months after the program's start), it was not presented tothe international community until May 1980, and the external gapremained largely non-financed.

3. In short:, the Zairian economy has operated in an atmosphere oflingering uncertainty in the last five years, despite the convening of ninemultilateral conferences on Zaire during this period.3 / The proper yardstickfor evaluating the effectiveness of economic management in Zaire is not thesuccess of a recovery program, for the actions taken were not sufficient toconstitute such a program; it is, rather, the degree to which management actedon the right priorities and succeeded in preparing a climate conducive torecovery.

2/ In 1979, the investment problem of Gecamines was considered manageable; theinstitutional problems affecting it were viewed as minor; and Gecaminescontinued to b,e treated as if it were "outside the economy", with itscontribution to the Government in foreign exchange or taxes calculated as aresidual (after the company's requirements) and, therefore, taken as given.In 1980 and 1981 this gave way to a process of ad hoc negotiations betweenthe company and the Government, whose outcome was again indeterminate.

2/ This applied to technical assistance, too. More than two years elapsedbetween the conceptualization of OFIDA, the new customs organization managedby Belgian experts, and its becoming operational.

3/ Three Brussels Conferences, three meetings of the Paris Club and. threemeetings of the Consultative Group.

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B. Institutional Developments

4. In 1979-80, Zaire undertook a number of institutional changes as partof the Mobutu Plan. These changes, which were described in the last twoeconomic memoranda, were essentially of three kinds: (i) Those designed toimprove economic decision-making and monitoring at a high level. The mostimportant innovations in this category were the establishment of the Short-TermEconomic Management Committee (Comite de Conjoncture) and the External ResourcesCoordination Committee. The preparation of a public investment program can alsobe cited in this group, as it was expected to assist in annual decisions on thefinancing and execution of investments. (ii) Those aimed at improving thefunctioning of, and administrative controls within, key institutions. Amongthese were the installation of high-level technical assistance teams at theCentral Bank and the Ministry of Finance, and the creation of a Central PayDirectorate and a semi-autonomous Customs office called OFIDA. (iii) Thoseintended to establish gradually an investment approval, programming andmonitoring process. The centralization of these tasks in the Ministry ofPlanning, the adoption of a new Investment Code and the revamping of theInvestment Commission fell in this category.

5. The record of these changes in the last 18 months is mixed. TheComit6 de Conjoncture has continued to gain in importance as a policy-discussionand decision-making body. However, it often has had to spend too much time onminor issues. Nevertheless, the creation of the Committee has been asignificant step, as it has filled a vacuum; its heavy workload testifies tothat. After a promising start in December 1980, the External ResourcesCoordination Committee has become inactive; it has not met for more than a yearbecause of a lack of initiative on the Zairian side. As for the high-leveltechnical assistance teams, more perspective is needed to assess theexperience. The Central Pay Directorate has continued to make progress incurbing the growth of the government payroll and, in fact, in eliminatingthousands of fictitious names or illegitimate payees from it; but its efforts todo the same for payments to primary and secondary school teachers, where themost serious problems lie, are proceeding more slowly.

6. The role of OFIDA is still evolving and, therefore, more difficult toevaluate. There is no doubt that customs revenues have been significantlylarger than they would have been in OFIDA's absence, although the liberalizationof S.A.D. imports, which OFIDA strongly promoted, contributed to this. H1owever,especially in 1981, fiscal objectives overshadowed all others, except for theovert desire to assure an adequate supply of goods considered necessities by themiddle and high-income groups (including the large expatriate community). Theoperations of OFIDA have been hampered by (i) the strong incentive to engage inillicit trade due to exchange rate and other policies; (ii) the large tariff andduty exemptions granted by other branches of the Government;'/ (iii) the largedisparity between the size of the frontiers and OFIDA's limited human and

1/ In 1981, tax-exempted imports (in value) amounted to 21 percent of allimports cleared through customs. (Vehicles accounted for one-fifth of totaltax-exempted goods.) The revenue foregone was estimated at about Z 300million, or 24 percent of the total revenue from import duties.

- 27 -

financial resources; (iv) recruitment and training problems; and (v) theweakness of the infrastructure for economic analysis in Zaire. The review and

adjustment of tariffs have progressed slowly, because OFIDA has had t:o undertakethe! requisite economic analyses and market studies itself (starting with basicdata collection) at great cost and at the risk of being subjected to criticismfrom various interest groups.

7. The priorities of the public investment program have not beenadequately respected, as discussed later in this chiapter.

B. While the above record is mixed, in the 'Last 12 months Zaire has madea number of fresh efforts to improve economic management and institutionalperformance. The most noteworthy is the preservation of continuity in theleadership of the main economic ministries and in some of the relatively-wellmanaged parastatal enterprises. To the same end, a new Secretary General post,filled by career civil servants, was created in each ministry. The AgricultureMinistry was significantly reorganized as part of a broad program ofinstitutional reform for the sector. (See Volume II, Chapter I.) TheGovernment has also introduced a number of changes touching the parastatalssector such as the appointment of new, more broadly-based Executive Boards forGecamines and Sozacom. Furthermore, it has announced its decision to"privatize" the ownership and/or management of 37 public enterprises.l!According to recernt official statements, the new owners are to be selected on

the basis of the applicants' experience in the sector, management capability andfinancial means. The Government has indicated its intention to proceed withutmost care in this regard.

9. At the same time, the Government has been proceeding with a policy of"decentralization" whose apparent objective is to give the regions mnoreaLutonomy. Organizationally, this is to be achieved by establishing regionalinstitutions modeled on those of the central government, i.e., regionalessemblies (created in 1982), Comit6s de Conjonctures (already in existence),and Regional Planning Divisions, or RPD's (in the process of being set up). Theidea is to strengthen the Regional Governors by supplying them with advisorybodies (the Regional Assemblies) and technical secretariats (the RPD's). FourRP'D's have already been established (in Bandundu, Equateur, Kivu and Shaba) andtwo more are planned for later this year (Haut Zaire and Kasai Oriental). TheIRPD's have multiple roles: they are to serve as secretariat of the regionalComite de Conjoncture and also act as a technical advisory body of theGovernor. In this capacity, in addition to collecting and analyzing regionaleconomic and social statistics, they will undertake feasibility studies ofregional projects, draw up regional investment programs, and supervise regionalprojects under the guidance of the Planning Minist:ry.2/

Li Roughly half of the firms (21) are in agriculture, five in industry, five intransport and the rest in miscellaneous services (Statistical Appendix Table5.10). Information on the assets, turnover, orc employment of the enterprises

is not currently available. Most of them, however, are reported to beunprofitable operations.

2/ This is the RPD's most important role, as the mnove toward decentralization

was prompted in part by criticism of the concentration of investments in oneor two regions.

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10. Although the organizational implications of decentralization arerelatively clear, what the Government is seeking to achieve has not beenadequately articulated. It is not sufficiently apparent how decentralizationwill work in practice and how it will fit into the current political/administrative system. Yet, on the face of it, the move toward decentralizationcan be considered a positive step if it leads to improved policy-making andefficiency. Nevertheless, it seems appropriate to proceed with caution in orderto ensure that decentralization does not simply result in the creation ofadditional bureaucracies which strains both financial and manpower resources orweakens existing institutions; a redefinition of the responsibilities ofexisting regional institutions may be sufficient in some cases. (In thisconnection, the suggestion made in the last economic memorandum regarding theundertaking of a review of the public administration remains relevant.) Thereis also a need to recognize the diverse nature of Zaire's sectoral problems andadministrative constraints: while decentralization may be appropriate in somecases (e.g., extension services), it may be counter-productive in others (e.g.,control of education expenditures and, in particular, teacher hiring and schoolaccreditation). A selective approach to decentralization may, therefore, havemerit.

C. Management of Domestic Resources

11. The problems associated with the allocation of foreign exchange havereceived attention at nearly all the international meetings on Zaire held sincethe beginning of the crisis; they were discussed in the last two economicmemoranda; and they are demonstrated in Chapters III and Volume II of thisreport. The allocation problem is interlinked with the acute shortage offoreign exchange which is, to a large extent, caused by world market conditionsbeyond Zaire's control. The institutional and management deficiencies of Zairehave aggravated the allocation problem, and reforms in this area will bencessary, given the need to channel scarce foreign exchange resources intopriority uses in an environment characterized by market imperfections and strongspeculative tendencies. However, the end-objective should be to let marketforces play a bigger role in the allocation of foreign exchange thaninstitutional controls. This section, therefore, focuses on the management ofdomestic resources. The question can be examined in three parts: (i) thebudgetary process, (ii) revenues, and (iii) expenditures.

1. The Budgetary Process

12. Budget execution in Zaire has been traditionally poor. Since 1975,revenues have deviated from budgeted amounts on average by 17 percent, currentexpenditures by 18 percent and capital expenditures by 38 percent. Revenueshave been overestimated in six out of seven years and current and capitalexpenditures have been underestimated in six years and five years, respectively(Chart 3). The existence of a "management" problem is suggested by: (i) theconsistency of the deviations from year to year and in terms of direction, i.e.,the failure to adjust to experience; (ii) the consistency of the causes of thedeviations, particularly on the expenditures side; and (iii) the oppositedeviations in revenues and expenditures: in five out of seven years, shortfallsin revenues were accompanied by overexpenditures (above budgeted levels) ratherthan any alignment with the flow of revenues. The deviations from the budgethave been moderated somewhat (especially on the revenue side) in the last few

- 29 -p. t

CHART 3:ZAIRE - BUDGETED AND ACTUAL CENTRAL GOVERNMENT OPERATIONS

(MILLION ZAIRES)

REVENUEa,m

,-w .. ACTUALS. 886

2_ , ,

1974 1Q75 t070 1077 1976 1Q0 IM 1961

CURRENT EXPENDITURE CAPITAL EX(PENDITURE,1~~swE _sD

-BUDGET E

. -- - ACTUAL ' --- ACTUAL2;,,- '1 -J/

1974 WE7 1Q78 {077 MG7 1070 1M fct t0l74 1I7E fQ78 1147 1878 197Q SO 1tO

- 30 -P.2

CHART 3:ZAIRE - BUDGETED AND ACTUAL CENTRAL GOVERNMENT OPERATIONS

(MILLION ZAIRES)

WAGES AND SALARIES DOTATIONS3. See 5eo-

FjJ ACTUAL. EACTUAL.

1imJ WDGET Mm1 DGET_

4083

298-

1976 1079 96 18s1 1e78 1979 to" fel

PUBLIC DEBT SERVICE CENTRALIZED EXPENDITURES!/2.-8 6n-

[I] ACTUAL []ACMAL

ME OGET Mm DSET

408

1.111w 3w8

288

9-~ ~ ~ ~ ~~~~~~~~~~9

1978 1979 1088 test 1978 1979 1968 lost1/ Includes expenditures for: public utilities (eletricity, telephone, etc.),

gasoline, office equipment and supplies.

- 31 -

y,sars thanks to the efforts of the Ministry of Finance, including OFIDA, thedialogue with the IMF and the debt rescheduling agreements which have permittedmore realistic provisions for public debt service. However, the problem remainssignificant. The 1982 budget was grossly unrealisl:ic from the start: even ifone discounts the deterioration of the export outlook during the year, areasonable estimate of the deficit would have been Z 2.2 billion rather than theZ 1 billion in the official budget.l/ The actual deficit may be three timesthat figure (Ch. I, para. 39).

13. The shortcomings of the budgetary process were referred toa in the lasteconomic memorandum and have been examined in detail in a recent studyundertaken at the request of the Ministry of Finanze by the IMF's Fiscal AffairsDepartment.2 / The general shortcomings include the following: (i) The failureto take sufficiently into account the execution of the budget in the recentpast. This has been a real problem: in some years, the budgetary provisionsfor certain inelastic categories of expenditures have been lower than actualoutlays in the preceding year; conversely, revenue estimates have been based onassumptions on tam collection rates not borne out by recent experience. (ii)The failure to encompass all financial operations of the Government. The budgetexcludes all outltys financed by foreign loans and, therefore, fails to providea complete picture of and a tool for controlling all government actiLvities.(iii) The focus of the budget is almost exlusively on the nature of expendituresrather than on their purpose. Policy objectives (based on a realislicmacroeconomic forecast) are not formulated or stated.

14. The IMF/Bank study contains detailed recommendations to deal withthese and other shortcomings, taking into account the legal underpiinings of thebudget and the institutional set-up. The objectives of the reforms should be tostrengthen the credibility of the budget through improved preparation andexecution. Unless execution improves, preparation cannot follow suiLt, asagencies and project entities will continue to inflate their requirements. Anurgent priority is the establishment of a strong economic analysis capability inthe Ministry of Finance.

2. Revenues

15. A number of structural problems have traditionally plagued governmentrevenue in Zaire: heavy dependence on mineral taxation, which has a fluctuatingbase; the inelastiLcity of major tax categories with respect to changes in GDP

1 The reasons for the difference include the overestimation and double-countingof Gecamines' contribution, the serious overestimation of non-tax revenue,and the omission of debt service on a short-term loan from Belgolaisecontracted in I)ecember 1981.

2/ Willem Bier, Zaire: A Study of the Budget and Control over Expenditures,IMF, May 10, 1982 (restricted). The study is part of a trio comipleted inApril/May 1982.; the other two are: L. Muten, G.A. Mackenzie and T. Toure,Tax Reform in Zaire, IMF, April 21, 1982 (restricted) and L. Mutxn and M.Garrity, The Tax Regime of Gecamines, IMF, May 10, 1982 (restricited). Arepresentative of the World Bank participated in the last study. The threereports were transmitted to the Zairian authorities in late May and arecurrently under study.

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and the rate of inflation; the relative insignificance of non-tax revenue; andthe serious weakness of tax administration. Furthermore, declining taxperformance has coincided with a high rate of inflation and the overvaluation ofthe zaire, leading to an expansion of the underground economy which largelyescapes taxation.

16. A useful measure of the effectiveness of the tax effort is theInternational Tax Comparison (ITC) index which measures the degree to which acountry's tax/GDP ratio varies from what would be "expected" after determiningthose characteristics in the country's structure which influence its tax paymentability.1 / A comparison with nine sub-Saharan countries2 / suggests that thereis considerable scope for increasing the tax effort in Zaire. Zaire's currentITC index of 0.74, based on recent revenue statistics, is the lowest among thecountries surveyed -- and much lower than that of Zambia (1.33) whose economyalso depends heavily on copper -- suggesting that there are some significantlyunderexploited tax bases.3/ This is demonstrated best by the proceeds from thereal estate tax which, in 1981, amounted to only Z 4.4 million, or US$1 million.

17. Furthermore, the tax/GDP ratio and the ITC index have declined since1974 because of the decline in Gecamines' contribution as a percentage of GDPand the low "buoyancy" of several categories of non-mineral sources such as thecompany income tax, the personal income tax, the progressive tax on wages andsalaries, and the taxes on property.4/ These suggest serious administrativeweaknesses. The recent IMF/Bank study on tax reform found deficiencies .iLn allthe major areas: taxpayer identification, assessment, audit, and taxcollection. The deficiencies are due to both the weaknesses of the generalpublic administration and the difficulties within the Tax Department itself.Examples of the first type are the lack of a single, well-functioning aut:omatictaxpayer identification system, and the completely inadequate exchange ofinformation among governmental departments and agencies.5/ Regardingassessment, the bulk of income from wholesale and retail trade, personal and

1/ E.g., per capita income, size of the mining sector and "openness" of theeconomy (because taxes on international trade are relatively easy toadminister and collect). An ITC index greater than unity means that a.country's tax ratio is greater than would be expected on the basis of itseconomic structure, and conversely for an index of less than unity.

2! Cameroon, Congo Republic, Ivory Coast, Kenya, Nigeria, Senegal, Tanzania,Togo, and Zambia.

3/ See, Vito Tanzi, "A Statistical Evaluation of Taxation in Sub-SaharanAfrica", in IMF, Taxation in Sub-Saharan Africa, Occasional Paper No. a,October 1981, and IMF, Tax Reform in Zaire, op.cit., p. 12.

4/ Buoyancy refers to the ratio of the average annual compound rate of growth ofthe tax to that of the appropriate tax base.

5/ For example, OFIDA maintains a computerized listing of all imported motorvehicles. Yet, although no national vehicle registry exists (which the TaxDepartment could exploit for assessing the motor vehicle property tax Dr forpurposes of general taxpayer identification), the information compiled byOFIDA is not used by the Tax Department. There has been no regular exchangeof information between the Real Estate Service and the Tax Department,either.

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business services, and rent income goes untaxed. For example, less than 1,500returns for the tax on rental income were filed in 1980, although thte propertytax listing has some 10,500 properties of "grade one" for Kinshasa alone. Inaddition, tax collection rates are low: in 1980, arrears totaled Z 326 million(US$116 million), reflecting largely uncollectible claims.

18. While the IMF/Bank study recommends the revision of some t:axes (e.g.,real estate taxes, excise taxes on beer and other alcoholic beverages, and theturnover tax on imiports), the incremental yield of these measures is estimatedat about Z 150 million, or only 3-4 percent of the total tax revenue in 1981.The study concludes, therefore, that the main scope for increasing the yield ofthe tax system lies in improving the system of administration. This wouldminimize the need to continually revise upwards the rates of taxation, whichwould only aggravate the burden on the limited number of honest taxpayers in themodern sector. Of the more than 50 recommendations included in the study, thecverwhelming majority deal with tax administration.

19. The issues concerning Gecamines' taxation are dealt with iLn the nextchapter and in Volume II, Chapter II.

3. Expenditures

20. Expenditure control is the weakest area of the budgetary process.T'here is a serious lack of financial discipline which frequently leads toEspending far in excess of appropriations. The Ministry of Finance, through theDivision des Depenses Engag6es and the Direction de la Comptabilit6., controlsabout 30 percent of all commitments, essentially those for the operatingExpenditures of the departments and capital expenditures financed by theboudget. The Min.Lstry has limited control over debt service payments, wages andsalaries, the Presidency, the political insitutions, the military, and subsidiest.o autonomous agencies. One consequence of this is that control is shifted fromthe commitment stage, where it should be concentrated, to the payment stagewhere, in Zaire, it is more difficult to administer. In the last two yearsthis, together with the quarterly credit ceilings adopted to comply with the IMFprograms, has produced a pattern of gyrations in mionthly expenditures: a dipevery third month,, followed by a jump the next month to clear arrears (Chart4). Technically, the surpassing of appropriations is made possible by, interalia, payments ca:Lled debits d'office which bypass the normal administrativeprocedures; although they are intended to be issued in emergency situations,t:hey have been used in the past when appropriation.s were insufficient or absent.

21. As illustrated before (Chart 3), overexpenditures have, year afteryear, been concentrated in the same categories -- dotations, wages and salaries,centralized expenditures -- while the investment budget has been underexecutedmost of the time even though, during the 1975-81 period, it accounted for only 6percent of total budgetary expenditures. The authorities claim that: this wasnot necessarily indicative of the lower priority a.ccorded to investmentexpenditures; it reflected -- especially in recent years -- the faiLure of theproject entities to request disbursement for lack of knowledge of the necessaryprocedures. There is considerable evidence to support this, and the Ministriescf Finance and Planning have taken measures to correct it; budgetary investmentE'xpenditures exceeded budgetary provisions in 1981 and are forecast to match

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CHART 4:CENTRAL GOVERNMENT MONTHLY EXPENDITURES, t880-81

(MILLION ZAIRES)

9000X 8Q,' 198t

300- 1

J F M A M J J A S O N D

M ONT H

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them in 1982. However, the allocation problem remains: in 1981, expendituresunder the charge of the Ministry of Energy exceeded the legal appropriations bymore than 300 percent and accounted for more than half of total investmentexpenditures (Table 6).

Table 6: Execution of the Investment Budget for 1981, by Ministry(million zaires)

Appropriatioas Expendituresa/Amount ('%) Amount (%)

Presidency 48.3 (14.1) 52.91 (8.9)Agriculture 11.4 (3.3) 19.6 (3.3)Transport 31.0 (9.1) 31.2 (5.2)Energy 87.3 (25.5) 309.9 (52.0)Primary & SecondaIy Education 27.8 (B.1 35.1. (5.9)Information, Culture & Arts 22.5 (6.6) 8.3 (1.4)Finance & Budget 23.0 (6.7) 33.]. (5.5)Portfolio 15.3 (4.5) 25.1 (4.2)Planning 17.7 (5.2) 18.5 (3.1)Defense 8.8 (2.6) 4.6 (0.8)Public Works 20.1 (5.9) 35.5 (6.0)Flealth 9.8 (2.9) 2.0 (0.3)Others 19.4 (5.7) 20.0 (3.4)

Total 342.4 100.0 595.13 100.0

a/ Preliminary. Total differs slightly from that based on Treasury data shownbefore.

';ource: Ministry of Finance.

22. Among current expenditures, the most difficult to control havetraditionally been wages and salaries (which represent 45 percent of totalcu1rrent expenditures), especially payments to primaary and secondary schoolteachers (which account for 44 percent of the total wages and salaries bill).C.urbing the growth of the latter has defied a serJies of institutional and othermeasures, including the announcement of a "freeze" by the President. Accordingto a new pay system adopted in April 1981, salaries were to be paid in pre-fixedamounts per school at a monthly rate no higher than that of December 1980,adjusted for the intervening salary increases. A census of schools was to beundertaken in order to eliminate fictitious schools and personnel and to ensurethat current payments are in accordance with the Legally establishedstudent/teacher ratios. The Government was unable to enforce the c:eiling underthe new pay system which gave rise to a great number of irregularities andlitigation. The problem comes partly from the fazt that, for all practicalpurposes, there is no control over hiring. Most schools are established andmanaged by religious congregations, and the Government pays the sal-aries andpart of the operating expenditures of any school that is accredited by theMinistry of Primary and Secondary Education. To be accredited, the school hasto meet certain basic standards regarding, for example, the number of students,the credentials of teachers and the appropriateness of the school buildings.

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Anyone can establish a school which, upon meeting the established criteria, isautomatically accredited. Once this stage is passed, the request for funding isgranted in accordance with the policy that the Government should pay for alleducation. (See Volume II, Chapter V.)

23. Partial and preliminary information for 1982 indicates significantoverruns in dotations and subsidies which were running at twice and three timesthe rates budgeted, respectively.

24. The recent IMF study on expenditures contains a number ofrecommendations for improving the control over them, although therecommendations are fewer and more general than those of the study on taxreform. The reason is that expenditure control depends, in the last analysis,on political will. Aside from the very technical and administrative issues,there are three questions which deserve attention: (i) The reconciliation ofpriorities should take place at the earliest stage possible and, once decisionsare reached, they should be respected. (ii) Subsidies required to operategovernment enterprises accounted for 9 percent of current expenditures in 1981;a study of the financial and economic viability of public enterprises should,therefore, be started. (iii) The Government should ensure that decentralizationdoes not lead to an increase in the administrative budget and/or diversion ofscarce resources from other essential activities.

D. The Public Investment Program

25. In 1979, Zaire prepared a three-year public investment program (PIP)which was reviewed by the World Bank staff in a document prepared for themeeting of the Consultative Group in May 1980.1/ Although the PIP was notperfect, it was seen as the positive start of an investment programming andmonitoring process. A "process" was understood as: (i) the continuedimprovement of the estimates of costs, available and required financing,execution timetable, manpower requirements, and production and balance ofpayments impact; (ii) assuring increasing correspondence with the annualinvestment budget, (iii) periodic reexamination of priorities and intersectorallinkages; (iv) improved monitoring and measurement of execution; (v) improvedlinkage to a macroeconomic framework; (vi) strengthening of the institutionaland manpower base to achieve all of the above; and (vii) rolling over the PIPyearly, i.e., dropping a year and adding another.

26. In March 1981, Zaire prepared a new PIP covering this time the years1981-83. (Statistical Appendix Table 5.11.) That program, which was evaluatedin the last economic memorandum,2/ demonstrated the successful continuation ofthatn"process", as it was more realistic and better estimated and articu:Latedthan the first and drew on the experience with its execution.3/ Since then, theprocess has encountered difficulties as demonstrated by the following: (i)while information on the financial execution of the PIP through the budget in1981 is available, estimates of execution through foreign aid and self-f:inancing

1/ "From Economic Stabilization to Recovery: An Appraisal of the Mobutu Plan",May 15, 1980.

2/ Report No. 3287-ZR, op.cit., Annex III.3/ The 1981-83 PIP was an important building block of the medium-term program

supported by the IMF.

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by the major parastatal enterprises are still lack:ing; (ii) the 1982 investmentbudget did not adequately conform to the PIP; and (iii) the PIP could not berD.led over to 1982-84 as had been anticipated. The difficulties are of amanagement nature because they involve will, priorities, coordination, resourceallocation, and organization.

27. Although the lack of complete estimates of execution in 1981 adverselyaffected the preparation of the 1982 investment budget, a greater problem wasthe strong pressure to include projects which did not appear in the PIP, despitethe objections of the Planning Ministry. AllocatiDns for such projects amountedto 18 percent of the investment budget. This problem had also appeared in 1981:the investment budget for that year had also contained projects which were notincluded in the PIP for 1979-81. The problem was resolved by adding theprojects then in question onto the 1981-83 PIP with the understanding that allexisting projects had been accounted for in the PIP. The repeated i nclusion ofnon-PIP projects in the 1982 investment budget suggests either that this was notthe case or that the projects added were "new , i.e., they did not exist in1981, in which case they could not be based on adequate feasibility studies.Apparently, the majority of the projects added fell in the second category,i.e., they were new.l/ If the problem were to be solved for the second time byadding the new projects to the PIP,2/ this would mean that rather than the PIPdetermining the arnual investment budget, the latter is influencing the PIP.W'hat is at issue is not whether the new projects are justified or not -- some ofthe health projects which have been added probably are -- but, rather, thefailure of the projects to be subjected to an adequate evaluation process andthe implications f-or the execution of the PIP as conceived.

28. Another problem which emerged in 1982 is the growing disparity betweenthe original project financing requirements as estimated in the PIP and thef inancing requests and budgetary provisions. Apparently, the disparity farexceeded the impact of inflation. According to the Planning Ministry staff, therequests -- which were extremely poorly documented -- as well as the budgetaryprovisions bordered on "fantasy". A related problem was the persistent huge and

Table 7: Composition of Public Investment Program, 1981-83,and Investment Budget, 1982

(percent)

PIP, 1981-83 1982Total State InvestmentCost Financing Budget

Agriculture 3.7 15.1 11.8Mining 34.4 3.7 0.3'Transportation 30.1 11.9 16.6Energy & Water 16.0 18.8 27.2Education 3.2 14.1 5.7llealth 1.5 3.9 10.8Others 10.1 27.4 27.6lJnforeseen 1.0 5.1

100.0 100.0 100.-0

1/ The breakdown available at the time of the mission did not permit asystematic identification and analysis of these projects, although most ofthem appeared to be in the health, telecommunications and constructionsectors.

2/ There is no alternative, because the projects de facto exist.

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undocumented cost overruns of, and the high priority attached to, energyprojects, especially the Inga-Shaba transmission line. Because of all of theabove factors, the sectoral composition of the 1982 investment budget deviatedsignificantly from that of the PIP (Table 7).

29. The Planning Ministry staff believe, rightly, that the major problemwith the "process" -- aside from insufficient adherence to priorities -- lies inthe inadequacy of on-the-field project monitoring. This problem was recognizedin the Mobutu Plan of March 1981 and the Authorities promised to correct it.However, although the Planning Ministry carefully drew up a project supervisionscheme in 1981, the requisite financing has been erratic and grossly inadequate-- for long stretches non-existent. This partly explains the failure of the PIPto be rolled over as initially planned. The Planning Ministry has stronglydefended the view that a rolling-over would not make sense without updating anda meaningful updating is not possible without on-the-field monitoring ofphysical execution. However, while this view has considerable justification,the delay in updating and rolling over has made both tasks more difficult: tocite two examples, original project costs have become so out-of-date that theyneed reestimation, and the drastically changed outlook for mineral pricesnecessitates a complete reestimation of the self-financing capability of themain mining firms.

30. Although the investment programming and monitoring "process" hasencountered difficulties, its importance is undiminished and much of theinfrastructure painfully established since 1979 remains intact. However,greater efforts are needed -- by both the Administration at large and thePlanning Ministry -- to use it more effectively. In the second half of 1982,the Planning Ministry was finally able to undertake the supervision of 150projects. The substantive and administrative findings, which are currentlybeing synthesized, can provide an excellent basis both for updating the PIP andfor improving the programming process.

E. Climate Surrounding the Private Sector

31. The impact of the physical environment (shaped by the availabiLity ofinputs, spare parts, credit, transportation, etc.) on the private sector wasbriefly examined in Chapter I and is highlighted again in the next chapter.This section focuses on the policy and institutional environment.

32. In the last few years, the Government has made a considerable attemptto expand its dialogue with the private sector and the results have beenhelpful. The most valuable step was the addition of a representative of ANEZA(the enterprise association) to the membership of the Comite de Conjoncture; agood illustration of cooperation is the relatively smooth manner in which theproblem concerning the distribution of ICO coffee stamps was resolved (VolumeII, Chapter IX). The Government has also taken a number of measures to improveboth the physical and the policy environment. The potentially most important ofthese was the liberalization of most prices. However, the impact of many of themeasures has been diluted by poor articulation, weak or uneven implementationand inconsistency either over time or between measures, as illustrated below:

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The price liberalization measures of April 1, 1981 have been quitepositive and were followed up in May 1982. with the decontrol of mostfoodcrop prices. However, they have not gone far enough or removeddoubts about the objectives. There remains considerable confusion onthe part of the private sector about what "liberalization" reallymeans and how firmly the Government stands behind it. The reasons arevaried: (i) price controls have beeu remioved from commodities wherethey were not or could not be applied to begin with but maintained incases where they could (cotton, sugar, palm oil); (ii) the retentionof the "cost plus 20 percent" pricing foi-mula for manufactured goods-- despite the shifting of the control from the ex ante stage to theex post stage, which effectively means the retention of theGovernment's "right" to intervene -- has weakened the impaLct of theliberalization measures; (iii) frequent references by Governmentofficials to a policy of "libgralisation controlee" or "liberalisations6l6ctive", to "social responsibility" and to "reasonable prices" hashad the same effect. This has not been helped by confusion regardingthe responsibility for price administration within the Government(e.g., between the Ministries of National Economy and Agriculture) norby clear examples of price setting and physical control (which wererare before the liberalization). 1/ Finally, no supplemenitary stepshave been taken to foster greater competition, i.e., letting themarket mechanism work, such as curtailing preferential access totrucks or petroleum, which produce monopolies or monopson:ies, raisingthe retail price of goods while depressing the producer prices. Thissituation has not necessarily had a significant impact on productionbecause of the depressed level of demand and the success of producersin just:Lfying price increases. However, while it might not haveaffected current production, it poses a disincentive to investment orcapital repatriation. The problem does not stem from theliberalization policy per se; it is complicated by the privatesector's suspicion of Government policies, even when these arebenevolent, and by the difficulty of the Central Government to controlthe application of policies in the interior.

The decision to "privatize" the capital and/or management of 37 publicenterprises coincided broadly with (i) t:he granting to PetroZaire ofthe monopoly for petroleum imports, and (ii) an attempt to restrictseverely and unrealistically the functional and occcupationalcategories of expatriate employment. A:Lthough the attempt under (ii)appears to have been abandoned for now, the message concerningreliance on the private sector has been unnecessarily clcuded.

1/ Meat prices were still being fixed in Ituri in July, and "a major,on-the-spot price inspection operation of various goods" was undertaken inHaut-Zaire in early August. (AZAP, July 30 and August 12, 1982).

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- In late 1981 and early 1982, two events dealt a severe blow to privatesector confidence: the initial mishandling of the distribution of theICO coffee-quota stamps and the sudden opening up of the textilesmarket to competition from imports of used-clothes through exemptionsfrom existing restrictions. Although corrective measures have beentaken in both areas, (see Volume II, Chapters VII and IX), thenegative impact could have been minimized by enunciating a clearpolicy on each subject and by taking the corrective measures -norepromptly, rather than after large profits were made by relatively fewtraders.

33. The climate surrounding the private sector has been sensitive not onlyto the nature and consistency of the actions directed toward it, but also to theState's management of its own affairs. For example, the problems associatedwith the management of domestic resources, discussed above, frequently havecaused the accumulation of arrears to firms providing goods and services to thegovernment as well as the underexecution of programs designed to rehabi:Litatethe infrastructure essential to the recovery of the private sector. Thedifficulty of adopting and implementing a social policy has forced the privatesector to assume a heavier burden in this area. The problems which have! arisenfrom time to time with the effective utilization of external assistance haveweakened the prospects for an increased inflow of foreign private capital. Theweak financial situation of some of the public enterprises (in some casesbecause of poor management) has led to sharp increases in tariffs.

F. Conclusions

34. The Mobutu Plan recognized the important role that economic managementwould need to play in the recovery of the Zairian economy and assigned a highpriority to its improvement. Several institutional reforms were undertaken in1979-80 and some new ones were announced in 1981-82. The reforms were notexpected to achieve dramatic and immediate results, given the deep-rooted natureof some of the problems and the interdependence of internal and externaldevelopments. Moreover, the financial stress under which the economy operatedin 1981 made the task of economic management more difficult, indeed.

35. Yet, on the basis of the two criteria suggested at the beginning ofthis chapter -- responding to priorities and shaping an environment conducive torecovery -- economic management and institutional change have not beensufficiently vigorous, systematic or determined. The concentration ofexpenditure overruns in the traditional problem categories and the weakening ofthe investment programming and allocation process point to continued res:istanceto change in crucial areas. The climate for recovery continues to be adverselyaffected by the ad hoc nature and inconsistency of some decisions and by thelack of transparency of the decision-making process. The end-objective ofpolicy reform in Zaire ought to be the restoration of internal and externalconfidence. The developments of the last 18 months suggest that, given pastexperience and institutional weaknesses, a marginalistic or selective approachwill not have the desired impact on confidence.

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III. SECTORAL ISSUES

1. The main sectors of the Zairian economy, like the economy as a whole,have been adversely affected by external and internal factors and suffer fromfinancial as well as institutional constraints. Some of the problems they face,however, are sector-specific or have varying orders of priority. If these arenot acted upon systematically, economic recovery may be imbalanced or altogetherthwarted. After a review of the main sectoral characteristics and commonproblems and issues, this chapter focuses on the most important sectoralissues, drawing largely on the fuller analysis provided in Volume It.

A. Background

z.. The secitoral structure of the Zairian economy has changed relativelylittle during the crisis, except for the sharp increase in the share ofgovernment services. Agriculture constitutes the major economic activity of thepopulation providing a source of living for about 75 percent of the populationand contributing 30 percent of GDP in 1979-81. The sector's share of totalexports is about 15 percent. Less than one-tenth of the land suitable foragriculture is being exploited. Modern farming (palm oil, sugar, rubber,tobacco, coffee, cocoa, and cattle) contributes about 40 percent of totalagricultural output, and traditional activities (cassava, maize, rice, cotton,groundnuts, vegetables, and tropical fruits) abou1: 60 percent. Over the 1972-80period, agricultural output declined by about 10 percent. Commercializedagriculture was particularly affected by the economic crisis.

3. Mining is almost entirely in the public sector. The Government is the5ole owner of Gecamines, Sozacom, and Kilo-Moto (gold); it has a majorityparticipation in Miba (diamonds) and a minority participation in Sodimiza(copper). The sector continues to be the dominant: force in the eccnomy. Itcontributes about 16 percent of GDP, more than 85 percent of the country'sforeign exchange earnings and more than 25 percent of government revenue. Zaireis the leading producer of industrial diamonds andl cobalt and the world's sixthlargest producer of copper. (See World Tables annexed to this volume.) Otherminerals exported include gold, silver, cadmium, zinc, tin, and manganese ore.Since the mid-Seventies, shortages of foreign exchange, skilled labor and fuel,transport bottlenecks and unstable economic conditions have led to a decline inoutput and productivity as well as a growing decapitalization of the main miningfirms.

4. The manufacturing sector is relatively small, contributing some 3.5percent of GDP and employing about 160,000 persons, or 22 percent of totalemployment in the modern sector. Medium and large enterprises (over 100workers) dominate most branches and account for nearly 90 percent of total valuevalue added in the sector. As in many countries at the same stage ofdevelopment, manufacturing activity consists essentially of the production ofconsumer goods for the domestic market. The sector is dominated byagro-industrial enterprises many of which are vertically integrated. Over thelast 10-12 years, there has been no significant change in the location patternof enterprises; K(inshasa, the capital, remains the main center, with Lubumbashi

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a secondary center. These two urban areas contribute more than two-thirds ofmanufacturing value added and employment. The manufacturing sector has been themost severely affected by the economic crisis; in 1979-81 manufacturing outputwas about 25 percent below the level of the early 1970s. The last decade hasalso seen a shift away from domestic resource-based industries toward industriesbased on imported inputs.

5. Zaire's transport system is an interconnected network of rivers,railways and roads linked at strategic points. The main traffic corridor is theVoie Nationale (VN), a 2,700 km long intermodal chain comprised of the railwayline from the Shaba mining area to the Ilebo port on the Kasai River, bargetransport from Ilebo to Kinshasa on the Zaire River, rail transport fronKinshasa to Matadi, and maritime transport from the Matadi port through theZaire estuary to the ocean. Concurrently with the VN, Zaire has been usingother routes through other countries: the southern route via theZambia/Zimbabwe railway to Indian Ocean ports; the Kalemi-Kigoma route toDar-es-Salaam; and, until its closure in 1975, the Benguela railway throughAngola to the port of Lobito (the shortest link between the Shaba region. and theocean). The transport sector is dominated by three large parastatal agencies:(a) the Office National des Transport (ONATRA), operating river and railtransport as well as the ports of Matadi and Kinshasa; (b) the Societ6 Nationaledes Chemins de Fer Zairois (SNCZ), the national railway company, which alsooperates the port of Ilebo; and (c) the Office des Routes (OR), which isresponsible for road construction and maintenance. In addition, five transportagencies or public companies -- all under the general control of the Ministry ofTransport and Communication -- have important functions. The performance of thetransport agencies, as measured by the volume of traffic carried, has shown asignificant decline over the 1974-77 period and a relative stagnation sincethen.

6. Zaire's per capita consumption of energy is one of the lowest in theworld, although the country has enormous, diversified though still largelyunexploited energy resources. Only about a quarter of Zaire's energy supplycomes from commercial sources, nearly 60 percent of it being provided bypetroleum, about 30 percent by hydroelectricity and the remainder by locally-produced and imported coal. Responsibility for the various energy sub-sectorsis divided among several ministries. The Ministry of Energy has overallresponsibility for energy policy formulation and implementation; it controls thesupply, storage and distribution of petroleum products; and it supervises theSociete Nationale d'Electricite (SNEL) and Petro-Zaire (PZ). The Ministry ofEconomy and Industry has authority over pricing. The Ministry of Portfolioexercises financial supervision over energy companies (petroleum, electricity)which are totally or partly government-owned.

7. SNEL is responsible for the generation, transmission and distributionof electricity throughout Zaire. The SNEL system is almost entirely based onhydroelectric production. Private systems, often serving a single population orentity, account for about 6 percent of total production. About two-thirds ofthe national electricity output is consumed by large industry/mining and 25percent by small industry, commerce and local governments; the remaining 10percent goes to households. Because of income, supply and distributionconstraints, access to electricity is limited to about 2 percent of thepopulation. Only two regions have well-developed, regionally interconnected

- 43 -

systems with major operating plants: the Western system, covering the regionsof Kinshasa and Bas-Zaire and supplying the main agro-industrial andmanufacturing area of the country; and the Shaba system, covering the southernportion of Shaba province, supplying the mining industry and major railroadfacilities. Together, these two regions account for about 90 percent of SNEL'stotal installed capacity. The Government has given high priority to investmentwithin the power subsector. Over the past seven years, the Inga power station,the Inga-Shaba transmission line and additional transmission facilities inShaba have absorbed some US$3.2 billion (1980 prices). Development of the Ingasite, near the mouth of the Zaire River, began with the construction. of theInga I hydroelectric station (350 MW) from 1972 to 1974. The construction of asecond Inga station has been completed, and its eight 175-MW units are scheduledto be ready for operation in 1982. This will be followed by the coummissioningof the Inga-Shaba high-voltage transmission line in 1983. The power needs ofthe Shaba region, which are to be met from the Inga II/Inga-Shaba line, are notprojected to exceed 20 percent of that system's capacity in the medium term.

8. Crude oil production in Zaire is carried out by two firms: ZaireGulf, which started exploration in 1969 and has been producing oil off-shore ona commercial basis since late 1975; and Zaire-Rep, which began production in1980 but is still operating on a pilot basis. Petroleum production was about 7million barrels in 1981, down from about 9 million in 1976. Petroleum exportsrepresented 18 percent of Zaire's total export earnings in 1981. A:lthough interms of volume Zaire is a net exporter of petroleum, the overall trade balanceof the sector is negative because about 40 percent. of revenue from exportsaccrues to the operating companies. Zaire's only petroleum refinery, SocieteZairo-Italienne de Raffinage (SOZIR), which is jointly owned by the Government(50 percent) and AGIP (50 percent), supplied all of the fuel oil and about a(lIiarter of the light products consumed in Zaire in 1981. SOZIR has a capacityof 750,000 tons/year but, over the 1976-81 period, its utilization rate has.E:Luctuated between 22 percent and 56 percent of capacity because it is notadapted to process Zairian crude nor to produce the range of products requiredin Zaire. Since May 1981, responsibility for imports of petroleum products has*been solely in the hands of the state-owned Petro--Zaire. Distribution ofpetroleum products is handled by Zaire-FINA, Zaire-Mobil, Zaire-Shell,Zaire-Texaco, and Petro-Zaire which are allocated market shares by type ofproduct. As a result of the economic crisis, total consumption of petroleumproducts in 1981 was some 8 percent lower than in 1975.

9. Turning. to the education sector, currently, religious schools accountfor more than 80 percent of primary schools and nearly 65 percent of secondaryschools, most of which are staffed by Zairian-trained teachers. The Governmentpays the salaries of all teachers employed by the religious schools and part ofthe operating expenditures of any school that is accredited by the Ministry ofPrimary and Secondary Education. The formal education system of Zairecomprises: (a) 6 years of primary school, officially beginning at age six; (b)2-7 years of secondary level education, including vocational and trainingprograms; and (c) 4-6 years of university trainin.g. In 1979/80 there were 4.2million children attending primary schools (compared to 3.5 million in 1975),representing 76 percent of eligible school-age youths. Between the 1975/76 and1979/80 school years, the number of primary school teachers increased at anannual rate of 9 percent, compared to a growth in student enrollment of 6.2percent. Secondary school enrollment representec 18 percent of the eligible agegroup. Enrollment at the national university anc the various technical

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institutes reached 28,500 in 1980/81 compared to 15,000 a decade ago. Over thelast six years, expenditures on education have accounted, on average, for about20 percent of total government expenditures and 5 percent of GDP.

10. Health services in Zaire are provided by four different groups: (a)the State, including public enterprises; (b) private enterprises; (c) thenon-governmental organizations, dominated by the various Christian missionaryprograms; and (d) traditional folk medicine. In addition, there are a viarietyof specialized agencies which, though forming part of the Ministry of PublicHealth, are virtually autonomous, receive their own budgetary allocations, andcollaborate directly with external donors. Several public and privateenterprises provide occupational health services to their workers. The privatesector, including the religious and other non-profit organizations, operatesabout 30 percent of total medical facilities (over 50 percent of all facilities,excluding dispensaries) and accounts for over 50 percent of hospital beds.Available data indicate an average of 484 persons per hospital bed. The ratioof physicians per population has improved from one per 29,000 persons in 1973 toone per 15,000 in 1981. Kinshasa is the best staffed region, while Bandundu andthe Kasais are well above the average ratio of population per physician. TheFaculty of Medicine and Pharmacy of the University of Zaire provides training inmedicine, dentistry and pharmacy. Training has traditionally been orientedtoward curative care to the detriment of preventive health care. The DepotCentral Medico-Pharmaceutique (DCMP) is the central buying and distributionagency for drugs. Since 1976, the Government has allocated an average of 5percent of its total expenditures to the health sector, which represents aboutZ 3 per capita.

11. The level of water supply services in Zaire is among the lowest in theworld. Water supply in urban areas is the responsibility of the statecorporation Regie de Distribution d'Eau (Regideso). Regideso is responsible tothe Ministry of Energy for technical supervision, and to the Ministry ofPortfolio for financial supervision and control. The two Ministries approvemajor decisions concerning Regideso's new investments, borrowings andorganization. Regideso has also been successful in securing substantialexternal assistance in a very short period from the World Bank, AfDB, BADEA,EDF, OPEC and Kreditanstalt fur Wiederaufbau. About 1.7 million urban dwellersare supplied water by Regideso. This represents only 21 percent of the totalurban population, or 32 percent of the population in the 56 urban centers servedby Regideso. A high proportion (85 percent) of those served is supplied through150,000 private connections and the rest (15 percent) through 550 publicstandpipes. It is estimated that only 5 percent of the rural population hasreasonable access to permanent sources of safe water. Rural water supply is theresponsibility of the "Hydrological Brigade", which comes under the Secretary ofState for Rural Development attached to the Ministry of Agriculture. Thesewerage and drainage sub-sector has no formal organization.

B. Common Problems and Issues

12. Although, with the cooperation of the international community,progress has been made in defining the broad policy actions necessary forrecovery, and some appropriate decisions have been taken, an important obstacleappears to be the lack of consistent sector strategies. This is due, in turn,to: (i) the deterioration of the information systems on which appropriate

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analyses could be based; (ii) the shortage or underutilization of trainedpersonnel; and (iii) the weak coordination among the numerous governrmentagencies involved in the various sector. Policy-making has been unsystematic,and insufficient attention has been paid to devising mechanisms for translatingpriorities into effective actions within the constraints imposed by Zaire'sspecial political, social and economic characteristics. In most sectors,policy-making is weak and fragmented, leading to ad hoc, often confl:ictingdecisions.

(i) Deterioration of Information Systems

113. The lack of reliable data complicates the analysis of problems and theassessments of the impact of policies. For example, in the case of agriculturethere is no single source of verifiable information, and conflicting data arefrequently reported by the various ministries and agencies involved in thesector. A recent review of 61 ongoing agricultural, projects illustrated thedearth of basic information: it was not possible 1:o obtain accurate productiondata for most of t'he projects; nor was any information available onbeneficiaries, impact on farmer incomes, etc. In the transport sector, suchbasic statistics as the tonnage carried by private river operators or aircarriers do not exist. The inadequacy and unreliability of data on manpower andeaployment make it extremely difficult to relate education to manpowerrequirements. Any comprehensive study in health or rural water supply wouldneed to be based on an analysis of the income distribution of the populationsserved, which could not be carried out for lack of data.

(ii) Shortage or Underutilization of Trained Personnel

14. There is; a shortage of trained personnel to plan, prepare, implementand monitor sector strategies. An equally important problem is that: existingskills are often not utilized effectively. The reasons for this include:conflicting directives; frequent transfers of key staff, which leads to anErosion of experience and specialization; assignment of technical staff tofront-office admiiiistrative positions; and insufficient motivation due to lowpay, inadequate working equipment, difficulty of making an impact, and recourset.o technical assistance for tasks which, in some cases, can be performed byrLationals.

(iii) Lack of Coordination

1.5. The inability to devise and/or follow ef'fective sector strategiesstems especially from poor interagency coordination. Coordination is especiallycritical in the transport, agriculture and education sectors because of theILarge volume of resources they absorb and/or the complex problems ofcomplementarity which have to be addressed. For example, traditionally therehas been no clear allocation of responsibility among the many agencies involvedin the agricultural sector, and their respective tasks have often changed; inthe transport sector, there is a need for close coordination of operations andinvestments between the various carriers, in partLcular, along the VoieNationale. The education sector is administered by three Ministries, withlittle coordination among them.

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16. The above problems are not insurmountable, as shown by the successfulpreparation of a public investment program in 1979 and its updating in early

1981. However, experience since then shows the vulnerability of the "process"and the perseverance required to sustain it. Although various ministries have

been establishing planning units with the support of the Planning Ministry,continued efforts must be made to strengthen the Planning Ministry itself, whichshould carry out the sectoral integration.

17. The most important common specific problems affecting the sectors arethe Government's budgetary policies, the exchange rate and foreign exchangeallocation, and the tax regime. These were highlighted earlier; the followingparagraphs illustrate how they affect the sectors.

18. Budgetary Policies. The stagnation of the economy has resulted in an

erosion of the tax base and sharply reduced government revenues in real terms.Budgetary allocations for such high-priority sectors as agriculture andtransport have been insufficient. The scarcity of funds (local and foreign) hasaffected both current operations and investments, but the impact has beenparticularly damaging in the case of current operations because of the resultingneglect of existing facilities. Proper maintenance and rehabilitation of the

transport network has been hampered, leading to high transport costs and causingdisruptions in the level and pattern of economic activity. Transport problemshave directly affected the export of minerals and cash crops. The profitabilityof agricultural exports such as coffee, logs and oil palm has declinedappreciably partly because of the high cost of transport. Lack of budgetaryallocations for materials and supplies has increasingly hampered thesatisfactory functioning of important services such as health and education.Practically all rural water supply systems have fallen into disrepair because ofthe lack of funds for spare parts and maintenance.

19. Exchange Rate and Foreign Exchange Allocation. The large gap betweenthe parallel market and the official exchange rates, the stagnation or decline

of traditional exports such as coffee, rubber, logs, palm oil, and thelarge-scale smuggling indicate that the zaire is substantially overvalued.While certain firms and sectors have inevitably benefitted from theundervaluation of foreign exchange, the overall impact on the economy has beennegative. Given the permeability of Zaire's frontiers, the overvaluation of theexchange rate has led to the smuggling of coffee, diamonds and gold, thusreducing the amount of foreign exchange going through official channels as wellas government revenue. At the official exchange rate and the prevailing worldmarket price, coffee export was not profitable at the end of 1981. A kilogramof robusta coffee cost the exporter about Z 11, while the export value was onlyabout Z 10. Only by retaining 20 percent of the export proceeds and exchangingthem at double the official exchange rate, could the exporter realize a profitequivalent to 7.5 percent of the export value (Volume II, Chapter IX).

20. The shortage of foreign exchange has been one of the most bindingconstraints on the recovery of the Zairian economy. Production of copper,diamonds, gold, have all been adversely affected by the inadequate allocation of

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foreign exchange. In agriculture the unavailability of fertilizers and otheron-farm supplies and equipment -- because of both 1:he lack of foreign exchangeanld the deterioration of the transport sector -- has directly affected theproduction and export of crops and the distribution of food supplies. Forexample, asL a result of the shortage of pesticides, fertilizers and spare partsfor the processing machinery, the quality of Zairian coffee has graduallydeteriorated. Between 1972/73 and 1979/80 exports of higher-quality robustadropped from 33 percent to 5 percent of total robusta exported. The failure toreplace worn, critical machine parts (such as bearLngs, shafts and gears) hasaffected the quality of textile production, too. 1Yurthermore, operation ofmachinery with worn parts causes undue stress, accLerating wear and thusreducing the normal life span of basic machinery. As the machinery of thetextile industry deteriorated, yarn counts were reduced intentionally in aneffort to maintain. production even at the expense Df quality, output cost andaesthetics. Enterprises also resorted to cannibalization of some machinery inorder to keep the rest operational. Most of the cannibalized equipment isbeyond salvage (Volume II, Chapter VII).

21. The management of scarce foreign exchange by the Government takes theform ofopriority allocation to imports perceived as essential. However,available evidence seems to indicate that actual allocation is far iEromoptimal. Also, the SAD system, which was introduced to facilitate the import ofessential consumer and industrial goods, is now used to import a widle variety ofnon-essential consumer goods as well.

2.2. Tax RegiLme. Particularly for mining and manufacturing fi:rms, thetreatment of asset revaluation for tax purposes has been a deterrent toinvestment. In lLght of the many devaluations of the zaire since 1978 and thesharp increase in the price of imported equipment, depreciation for tax purposeson the basis of historical cost does not provide adequate funds for assetreplacement and overstates the profit subject to tax. Businesses which are notinvolved in the productive sectors and which tend to have little fixed assetsare favored under the present system. Taxes applying to agricultural exportsare a disincentive to production and encourage smuLggling. For example, in thecase of coffee, although by world standards the fiscal burden is not unusuallyheavy, the imposition of a plethora of taxes calculated on different bases iscumbersome and time-consuming. There are at least: six different taxes whichlhave to be paid by coffee buyers and exporters. Last but not least, there is aneed for a thorough evaluation of the tariff structure, taking into account bothimported inputs and outputs, to ensure that industries with actual or potential,omparative advantage are encouraged.

l>. Sectoral Issues

1. Agriculture

23. In the past decade, the Zairian Government, with substantialassistance and encouragement from external agencies, has embarked cn a series ofexercises aimed aLt promoting the rehabilitation and development of theagricultural sector. Although these efforts were based on the clear assumptionthat revitalization of the agricultural sector was probably the highest priorityfor Zaire's long-term development, this has not always been reflect:ed in theallocation of resources to the sector or in policy formulation andimplementation. The latest Government program of action for agricultural

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development entitled "New Agricultural Strategy" was presented at the June 1981Consultative Group meeting in Paris and an updated version, the AgriculturalRecovery Plan, was discussed at the special meeting of the Consultative Group onagriculture held in June 1982. This Action Plan is designed to stimulateshort-term recovery, first by removing critical bottlenecks impeding production,second, by making ongoing projects and programs work better, and third, byspecific efforts to encourage small farmers and private entrepreneurs. The Planis also designed to address the critical issues for longer term development,notably institutional development, definition of clear and effectiveagricultural policies, and improved planning and project preparation. TheDocument includes a sectoral investment program for 1982-84 focusing on ongoingprojects for which the external financing has already been secured.

24. The Government realizes that growth-oriented policies for agricultureare crucial to improving overall economic performance and reducing poverty andmalnutrition in Zaire. The constraints impeding agricultural development arewell identified in the new Agricultural Recovery Plan: weak institutionalsupport, insufficient budgetary allocations; acute shortage of foreign exchange;inappropriate pricing policies; inadequate marketing systems; unavailability ofoff-farm inputs and consumer goods; lack of credit; deterioration of thetransport network and shortage of equipment, notably of vehicles and spareparts; weaknesses in research, extension and training; and the uncertain role ofthe private sector. The steps taken so far as part of the Agricultural RecoveryPlan include the reorganization of the Ministry of Agriculture and RuralDevelopment, increased budgetary allocations for 1982, and the furtherliberalization of agricultural prices. Although these measures represent stepsin the right direction, the performance of the sector will depend on the successof implementation in the following areas:

(i) Institutional Measures. The reorganization of the Ministry ofAgriculture aims at increasing effectiveness in the criticalareas of planning, project preparation and financial management. Thegoal is to have a structure in place which allows the Government toplan effectively and to implement the agriculture sector investmentprogram, to carry out effective project supervision andimplementation and to address key policy issues. However,administrative and institutional reforms by themselves are notenough; they need to be accompanied by a deep-rooted commitmenit todesign and actually implement a clear, coherent and realistic sectorstrategy. Further, since agricultural growth must be regionallyspread, there is a need to redefine the role of regional and localinstitutions in the planning and execution of development programs.

(ii) Stimulation of the Private Sector. It is essential that theapplication of the new policy of price liberalization be consistentbecause unless producers are assured that this change is permanent,they will be reluctant to undertake new investments. Sufficient timemust be allowed for the sector to adapt, since policy changes torestructure incentives do not necessarily have immediate and visibleeffects. Prices represent only one of the many aspects of thefarmer's environment which affects his willingness to produce andsell. There must be concomitant progress in marketing, availabilityof off-farm inputs and consumer goods and involvement of producers in

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the decisions that affect them. The present overevaluation of the

zaire is having a negative impact on agricultural production, asfarmers obtain less in zaires for their export crops and food importsare underpriced. Improvements in producers prices through foreignexchange adjustments would increase production and redirect supplies

into official channels. Greater fiscal discipline, leading toreduction of the Government deficit, is required to increase theavailability of credit to the private sector. Finally, the

Government would have to address the issue 1:o the appropriate tax,

investment and tariff policies.

(i:ii) Transport. Although the Government has taken some measures toimprove the transport network, there is a need for greatercooperation between the Ministry of Agriculture and the transport

agencies to identify critical transportation bottlenecks directlyimpeding the marketing of agricultural products and to delineateresponsibilities. Greater involvement in road works should also be

sought from road users such as major agricuLtural companies and local

communities, which have a direct interest ia parts of the network.Another critical issue which needs to be addressed is the

subsidization of copper transported at rates which do not covervariable costs while agricultural produce carry a disproportionateburden of total costs.

(iv) Education, Research and Extension. To the extent that successful ,project design and implementation require crop and location-specific

technological packages, a production-oriented strategy requiresappropriate! applied research and links between research resuLts and

extension. Priority should be given to reorienting research efforts

and providing adequate staff. Although the country has developedover the years a substantial network of agricultural educationinstitutions, these are not operating effectively and most programsare not well adapted to the practical needs of the sector. A review

of the entire agricultural education and training system andfacilities seems warranted.

(v) Project Implementation. The Government is currently implementingabout 60 separate development projects whose total cost is estimatedat approximately US$380 million, of which 76 percent are financed byexternal sources. However, to date, the results of these projectshave been mixed. While there have been some notable successes, thegreat majority of the projects have serious implementation problemswhich have prevented them from meeting their objectives. A recentreview of ongoing projects indicates that some of the most criticalexecution problems were related to project management at the CentralGovernment, sector or project levels and were the cause of inadequate

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budget preparation and management, delayed disbursements of funds,and cofinancial control and auditing. In order to derive the maximumbenefit from this large commitment of domestic and external funds,and given the direct link between improved project implementation,disbursements as well as fresh commitments, it is important that theMinistries of Agriculture, Finance and Planning act systematically onseveral related management issues: (a) development of a projectplanning capability; (b) improvement of budgetary procedures; (c)measures to improve and support project management; and (d)establishment of more rigourous financial controls. This effortshould be accorded a high priority and should focus, at leastinitially, on a realistic time horizon - that is, on improvingplanning and forecasting for a two-year period. Further, the reviewof projects should be continued and expanded in order to ensure thataccurate and up-to-date information is obtained, in particular on thefinancial and production aspects of all on-going projects. Effortsto improve coordination on all aspects of project implementation --both among Government departments and with external agencies -- seemalso indicated.

2. Mining

25. The disappointing performance of the mining sector is due not only tounpredictable events beyond the control of Zaire -- such as depressed worldprices for copper and cobalt and transport route closings due to politicaldevelopments in neighboring countries -- but also to inappropriate sectorpolicies regarding taxation, allocation of foreign exchange and marketing. TheGovernment's long-term objective is to reduce the country's overdependence onmining and particularly copper; but, in the short and medium term, it expectsthe impetus to recovery to come from the mining sector. Consequently, theMobutu Plan considers the maintenance and rehabilitation of the existing miningand processing facilities a top priority. The most important issue facirg theGovernment is, therefore, to put in place a framework for an orderlyrehabilitation of the mining sector. Such a framework needs to include thefollowing:

(i) Greater managerial autonomy for the mining firms. As noted earlier,the Government is the sole owner of the three largest mining firms --Gecamines, Sozacom and Kilo-Moto -- and has a majority participationin Miba. For these companies to be run efficiently and within thelimits of the guidelines agreed between the companies and theGovernment, management should have autonomy of action and be free ofinterference, in particular with regard to financial and personnelmatters, which is not presently the case. Lack of autonomy inmanagement and the assignment of non-commercial goals to the companieshave resulted in higher operating costs, thus reducing the fundsavailable for maintenance, expansion and taxes. For example,Gecamines' indirect costs have increased from 33 percent of totalcosts in 1974 to 48 percent in 1980, with the largest jump occurringin administrative costs.1 / In the case of Miba, whereas mining costsrose from US$0.80 a carat to US$2.00 between 1974 and 1980, the costs

1/ Although Gecamines' mine output was lower in 1980 than in 1974, the numberof staff increased by 18 percent over this period and the number of workerswent up from 32,000 to about 35,000.

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of municipal services provided to the population of the surroundingareas and administrative costs quadrupled: from the equivalent ofUS$0.80 a carat to US$3.20 a carat.

(ii) Appropriate fiscal regime. The tax system applicable to Gecamineshas been, too inflexible and has resulted in too high a burden,especially in years of depressed prices for copper, to preserve thecompany's financial viability. The Government has realized theimportance of this issue, has suspended all export taxes tntilDecember 1983, and requested the IMF and the Bank to undertake astudy of the problem. The joint IMF/Bank study, which was completedrecently, recommends a reform involving the introduction of twolevies: a basic royalty at a proportionate ad valorem ratte on thetotal of. Gecamines' exported production, and a progressive exportduty on sales of copper above an indexed threshold price.The proposed system promises to be more flexible and conducive to thelong-term growth of the industry. A related, equally important issuenot only for Gecamines but for all firms in the industry concerns thevaluation of fixed assets for income tax purposes. Under the presentsystem, depreciation for tax purposes on the basis of historical costdoes nol provide adequate funds for asset replacement and generateslarge, taxable "'paper profits"'. To the extent that firms have topay taxes on the basis of these fictiticus profits, the auathoritiesneed to consider the implications of putting in place a system of" asset revaluation".

(iii) Foreign exchange allocation. Although, in the case of G6camines andMiba, specific mechanisms exist for the priority allocation offoreign exchange, they have not always urorked satisfactorily inpractice. There appears to be a need for a systematic assessment ofthe import requirements not only of the mining sector but of all themajor sectors of the economy to ensure optimal allocation. Like allexport-oriented activities, the mining sector suffers from theovervaluation of the zaire, and a move ':oward a more realisticexchange rate would improve the profitability of the sector.

(iv) Participation of private foreign capital. Given the nature ofcapital-intensive mineral operations and the characteristics of theworld mLarkets for these products, it is relevant to ask whether thepresent ownership structure of the mining firms in Zaire is theoptimal. one: whether the firms involved can be operated on acommercial basis; and whether the Government can raise the large sumsof money necessary for the rehabilitation and expansion of Gecaminesand the other mining firms. This is undoubtedly a very complexissue, but one which needs to be addressed, because recourse toprivate foreign capital remains an option for the recovery andexpansion of the sector, provided that stable and equitableinvestment agreements can be worked out.

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(v) Marketing. Available evidence suggests that the marketing strategiesfollowed in the past by Sozacom for copper and cobalt 1/ might nothave been optimal from the standpoint of maximizing revenue either inthe short-run or in the long-run. The separation of production(controlled by Gecamines) and marketing (controlled by Sozacom) andthe lack of transparency of Sozacom's activities have posed seriousproblems which need to be resolved in order to improve the long-termprospects of the copper industry in Zaire. The recently negotiatedand approved marketing agreement between Gecamines and Sozacomrepresents a positive first step toward resolving the problems inquesion. The Agreement contains provisions concerning the ownershipof Gecamines' products until final sales, the exchange ofinformation, Gecamines' control of sales receipts, marketingoperations and inventories and the company rights to contractprefinancing agreements.

3. Manufacturing

26. The crisis in the manufacturing sector is reflected in the pervasiveunderutilization of capacity. The causes of the precipitous decline inmanufacturing production in recent years include: the fall of purchasing powerwhich is, in turn, partly related to the stagnation of the agricultural sector;transport bottlenecks; overvalued exchange rate; shortage of imported inputs andspare parts; inadequate government pricing and tariff policies; inappropriatefiscal regime; shortage of credit; and conflicting policies toward the role tobe played by the private sector. In order to stop and reverse the cumulativedeterioration of the sector the following measures may be helpful:

(i) A clear definition of responsibilities for developing strategy andpolicies towards the sector. The aim should be not to fragment theprocess further but, rather, to ensure that all the agencies which areconcerned with the sector -- the Ministries of National Econony andIndustry, Planning, Labor, the Bureau of the Presidency, and the Bankof Zaire -- work in the same direction and that the results of theirwork are integrated. It is also important that mechanisms forsystematic consultation of private entrepreneurs (e.g., through ANEZA)be strengthened.

(ii) The above should lead to the promulgation of a clear government policytowards the sector and a set of objectives and criteria for furtherinvestment. Priority should be given to existing investments thatmeet basic needs and that utilize domestic raw materials. Achieving acertain degree of stability and predictability in macro and sectoralpolicies is particularly crucial to establishing a proper climate formanufacturing sector development.

1/ Cobalt marketing has been particularly deficient. In view of (i) thelong-term prospects for cobalt (which suggest that it will be a long timebefore world demand and supply are in balance) and (ii) the fact that cobaltis a by-product of copper, with marginal costs well below the present marketprice, a strategy which promotes market growth and allows the country toretain a larger share of the market seems indicated. Appropriate measuresalso need to be taken by Sozacom-Gecamines and SGM (the Belgian firm thatrefines and markets on behalf of Sozacom most of Gecamines' output) toliquidate the large pre-financed stock of cobalt which threatens thefinancial viability of the company.

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(iii) Revision of the Investment Code and the way it is applied. Theprovisions of the Code should include clearer and greater advantagesfor existing enterprises in order to enable them to renew equipmentand to offer them export incentives. Greater leeway should be allowedfor the repatriation of profits, providect that these do not arise outof disinvestment.

(iv) Modification of the credit and foreign exchange allocation systems.The manufacturing sector should have the benefit of a known and fixedcredit amount and not just receive the residual after allowing forgovernment deficits. In the absence of a substantial revision of theofficial rate of exchange of the zaire, the system for allocatingforeign exchange proceeds from exports and the SAD imports systemcould be revised.

(v) Basing the tax system and other fiscal caarges on profits, not onturnover. The accountancy code could be revised to allow regularrevaluation of assets and the setting of adequate depreciationprovisions. New incentive formulas for rehabilitation and replacementinvestments should be explored.

(vi) More assistance to small-scale industry. Serious attention should begiven to the recently published findings of the working group whichwas established under the direction of the Ministry of NationalEconomy and Industry with UNIDO assistance. The Government might wishto consider the establishment of a well-funded Guarantee Fund and theprovision of technical assistance through a reorganized OEfice for thePromotion of Small and Medium Enterprises (OPEZ).

4. Transport

27. The rehabilitation and maintenance of the transportation network iscrucial to the recovery of Zaire's productive sectors. The current problemsof the transport sector are due to: (i) the poor condition of facilities; (ii)the weaknesses in the management and operating practices of some of the agenciesconcerned; and (iii) the general economic environrment, which is characterized byscarcities of foreign exchange, high inflation and insufficient budgetaryrevenues. The strategy for improving transport sector performance and ensuringthat transport deficiencies do not hamper economic recovery should, therefore,be formulated on the basis of measures aimed at e:Liminating the above three,onstraints. Although the Government has adopted a number of appropriate,?olicies and measures during the past several years in the context of such astrategy, it will need to pursue the implementation of these policies moreforcefully. Performance of the sector will dependI on the following:

(i) Availability of operating funds and foresign exchange. Therequirements of the agencies have to be evaluated more accurately andmechanisms have to be designed which will ensure that funds areavailable on a regular basis. In the case of the Office des Routes,the setting up of a Road Fund financed from a fuel tax would be onesuch mechanism while, in the case of revenue-earning agencies, tariffadjustments need to be more automatic tD compensate for inflation andto cover capital costs at replacement value. For the road transport

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industry, a better assessment is required of the annual foreignexchange needs for replacement of the fleet and for operating it, soas to help policymakers in the allocation of foreign exchange.

(ii) Investment Planning. In order to eliminate the constraints derivingfrom the deteriorated infrastructure and facilities, vastrehabilitation and replacement investments are required. Even th,oughmany investments can be shown to have an acceptable rate of return,there is a need to be highly selective and to cater to thedemonstrated needs of the productive sectors. In order to achieve themaximum results with available resources, an overall investmentapproach covering the entire transport network has to be adopted, withparticular attention to solving possible bottlenecks and special careto avoid costly imbalances in the capacity of any one link. Anexpansion of infrastructure and facilities is, in general, nottequired; maximum use can be achieved through modernization andrehabilitation of the existing capacity. The guiding principle shouldbe to increase the effective capacity of the system at the lowestpossible incremental cost.

(iii) Adequacy of the tariff structure. Over time, the tariff structure ofthe rail/river has evolved in a rather arbitrary fashion as asuccession of generalized and selective tariff increases were granted,aimed at covering increased costs through increased revenues. Theresult is that, at present, most tariffs bear little relation to costsand some products, such as copper, are transported at rates which donot cover marginal costs, while other products carry adisproportionate burden of total costs. There is a need to introducea tariff system based on systematic traffic costing analyses.

(iv) Improvement in management and operations. In recent years, expatriatetechnical assistance has played a relatively large management role inthe main parastatal transport agencies. Although significant resultshave been achieved, further improvements are still needed, and nosignificant reduction in managerial and technical assistance can beexpected in the near future. On the other hand, the smaller agencies,RVM and especially RVF, which are support agencies for maritime andriver transport, respectively, and therefore essential to overalltransport operations, did not benefit from such assistance. Theysuffer from weak management and their performance has beenunsatisfactory. For example, RVF's failure to maintain adequately thenavigation aids on the river has adversely affected river transportcapacity. It is of critical importance that the management problemsof the smaller transport agencies are also addressed.

5. Energy

28. A survey of the energy sector indicates that while the Government hasgiven high priority to it and made huge investments, particularly inhydroelectricity, the potential benefits from the investment effort have not:been fully realized because of inadequate planning. The Inga hydroplant and theInga-Shaba transmission line have design capacities which will exceedmedium-term demand and very likely show low or negative returns for many years.

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The Government objectives for the energy sector, as stated in the PublicInvestment Program, are to increase reliance on ineligenous sources of energy andto rehabilitate the present production, transportation and distributioninfrastructure. In both the electricity and petroleum sub-sectors progress willdepend on attention to the following: (a) strengthening of the institutionsresponsible for taking decisions affecting the energy sector and forimplementing them; (b) availability of financial resources; (c) use of technicalassistance to organize the energy planning authoril:y and to train the neccessaryadministrative and technical staff; and (d) establishment of an analytical unitat: the Ministry of Energy as soon as possible in order to provide a basis forshort, medium and long-term planning. In the case of the petroleum sub-sector,attention to the following appears crucial:

(i) The role of the private sector. Government decisions regarding therole of the foreign firms in the sector should be implemented in aconsistent manner which does not adversely affect the confidence ofthose firms, given Zaire's need for the financial resources andexpertise that the firms can offer. In this context, there is a needto clarify the exact role of Petro-Zaire, which is responsible forproviding technical advice in all areas affecting the petroleum sectoras well as for importing all petroleum products and which is, at thesame tinme, involved in distribution.

(ii) Pricing policy. Petroleum prices should be automatically adjustedusing a formula reflecting changes in the world market prices for oil,tthe exchange rate and domestic prices. There is no reason whypetroleum consumers should not pay the full cost of supply; mostconsumers would probably be willing to pay more for greateravailability. The pricing structure must also take into account theneed of the industry to generate the financial resources necessary formodernization and expansion.

(iii) Manpower training. The Government, through its educationalinstitutions, should cooperate with the petroleum firms in setting uptraining programs for nationals who could eventually replaceexpatriates. The process should be orderly, because haphazard andforced withdrawal of expatriates could aLdversely affect ia-housetraining and impact on the confidence of the private sector ingeneral.

(iv) SOZIR refinery. The Sozir refinery is an uneconomical operation whichis not iadapted to processing Zairian crude nor to producing the rangeof products required in Zaire. Accordirg to industry estimates, giventhe present differential between the import prices of crude oil andpetroleum products, closing down the refinery would save the countrysome US$20 million a year. There is a need for the Authorities toreexamine the economic and financial viability of the refinery in thecontext of foreign exchange availability on the one hand, and theurgent need to increase imports, on the other.

29. Regarding the electricity sub-sector, the main issues are:

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(i) SNEL's tariff schedule. SNEL's tariff schedule is distorted in thatenergy sold at medium voltages is more expensive than that sold at lowvoltages. The Government is aware of the problem and is supporting astudy of SNEL's tariff structure with a view to introducing a newstructure.

(ii) Streamlining of SNEL's billing/collection system. The shortcomings ofthe billing system, which deprive the company of financial resources,need to be dealt with. At present: (a) meters are not read regularlyand meter-readers are inadequately trained; (b) billing is severalmonths late and inaccurate; (c) customers with unpaid bills are notdisconnected systematically; and (d) substantial accounts are notcollected.

(iii) Inga-Shaba hydro transmission complexes. Since no more than 13 to 20percent of the capacity of the Inga-Shaba complex will be required orused for the Shaba region, meeting the full operating and depreciationcosts of the assets would necessitate at least a 400 percent increasein tariffs which cannot be regarded as a reasonable charge on SNEL'sShaba consumers and primarily Gecamines. Government subsidies foroperation and maintenance of the Inga-Shaba complex will, therefore,continue to be necessary.

(iv) Industrial zone at Banana. The availability of plentiful electricpower will be only one factor in the overall justification of aproposed large industrial zone at Banana. A number of projects havebeen proposed and are in varying degrees of preparation. (Anagreement has already been signed between Alusuisse and the Governmentregarding an aluminum smelter.) The Government should proceed verycarefully in order to avoid costly mistakes, because the issue of theindustrial zone goes beyond the mere use of electricity and requiresanalysis of (a) how the industrial zone would fit into a rationalindustrial strategy for Zaire, and (b) the justification, on anopportunity cost basis, of the investment (viz. the Banana port,railway, electricity lines, other infrastructure) to be funded byZaire.

6. Education

30. Aside from the broader budgetary management issue of monitoring andcontrolling teacher salaries, which was discussed in the previous Chapter, themost important issue in the education sector concerns the cost-effectiveness ofexpenditures. This issue could be addressed in four ways:

(i) Controlling the number of teachers. Official studies have shown thatin both primary and secondary schools, the number of teachers exceedsthe norms by about 30 percent.'/ The savings resulting from a tighterteacher hiring policy at all levels could be used to raise thesalaries of the remaining teachers (which are excessively low), toprovide teacher in-service training (see below), to increase thesupply of education materials, and to improve maintenance offacilities, which are well below educational and health standards.

1/ The existing norms of 1:30 at the primary level and 1:20 at the secondarylevel are, in fact, more favorable than in many developed countries. Thesefigures should be considered with caution because a number of teachers are

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(ii) Increasing the level of qualified teachers. In order to address theshortage of qualified teachers at the primaty and vocational/technicallevels, the Government should consider closing the existingteacher-training institutes operating withir. secondary schools andreplacing t'hem with a fewer number of instit:utes, which couldconcentrate on training qualified teachers to fill, at a mininum,those posts left vacant by attrition. To ensure a steady supply ofteachers, teacher trainees could be bonded to teach for three years.In addition, since only 35 percent of the primary teachers arequalified, an in-service program to train unqualified teachers workingin the schools could be initiated. A similar problem affects teachersat the vocational/technical level, where over 60 percent of currentteachers are inadequately prepared; the problem could be addressedthrough programs to increase the output of qualified secondaryteachers, particularly for science, mathema':ics and vocational/technical subjects.

(iii) Channeling enrollments to areas of manpower needs. Easy access tohigher education and the attractiveness of student allowances have ledto a massive and uncontrolled expansion of enrollments at theUniversity of Zaire (UNAZA). More important, the low passingstandards for examinations at all levels partially explains t:heoversaturation of the humanities field as opposed to the moredifficult fields of science and administration. Thus, the Governmentmay seriously consider raising the primary passing average to 65 or 70percent and wish to administer a university/higher institute entranceexamination, which would limit enrollments to the areas of manpowerneeds. Little progress has been achieved in training skilledl manpowerbecause of lack of direction and resource constraints. The Governmenthas focused its attention on traditional higher education. Mosttraining programs are unrealistic, lengthy and directed towarduniversity entry. Skills acquisition could be accomplished morerapidly and economically if more emphasis were given toskills-specific education and on-the-job training.

(iv) Reorganizing the administration of the sect:or into one ministry. Thepresent administrative structure of the education sector, headed bythree Ministers, is unwieldy and inefficient. Administration is sodiffused that financial control is almost impossible and pedagogicalcontinuity difficult. Coordination and continuity would be moreefficient if the education sector were reorganized under one minister,with divisions for primary, secondary, vocational and highereducation, and scientific research. Through a reorganization, theGovernment would be able to establish new budgetary and personnelguidelines which would give each division the opportunity to planeducation programs more in response to needs than to social andpolitical pressures. There is also a need for greater cooperationbetween tbhe education ministries and the technical ministries,including better coordination of training programs financed byexternal dLonors, because the education sector carries the major burdenof meeting the manpower needs of other sectors.

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31. On the operational side, the execution of education projects, whichhas suffered from weak management and the lack of timely provision ofcounterpart funds, is also a key issue. The problem has arisen because ofinadequate planning: the Government has not set priorities and has allowed toomany projects to start at the same time, with the result that none have beeneffectively implemented. The Government should set specific sector priorities,adhere to them and limit budgetary allocations to related projects.

7. Health and Water Supply

32. The Government has committed itself to providing the primary healthneeds of its population, as outlined in the Health Action Plan for 1982-86.Malnutrition, which has reportedly been worsening with the continuous fall inreal income, is a primary problem. Although various programs and projects,under the auspices of the National Center for Nutrition Planning and externaldonors, have started to attack this problem, the issue requires policy action ona broader front, namely, agriculture, water supply, education, andtransportation. Moreover, the various objectives identified by the Ministry ofPublic Health (Volume II, Chapter VI) can only be achieved if the Government:(a) attempts to put in place a unified health system with strong institutionsand an efficient management capability; (b) ensures a rational collection systemfor health statistics that are vital for planning, administrativedecision-making and policy-making in the health sector; (c) coordinates theactivities of the various public agencies so as to avoid overlapping orconflicting responsibilities; (d) provides training of health personnel (bydeveloping new curricula) that will meet the needs of the people and motivateexisting staff; (e) assures an adequate salary structure for medical personnelthat will discourage the move toward private practice; and (f) revises andreorganizes the allocation system for drugs and supplies.

33. Above all, the objective of meeting basic health needs should be seenin an overall macroframework, requiring well-thought-out sectoral policies aswell as realistic budgetary and financing decisions. While the goals of theHealth Action Plan are justified, it would be hazardous to attempt too much toofast and to spread the existing limited resources too thinly.

34. Overall health status is determined to a very large degree by improvednutrition and access to potable water.'/ Although Regideso has in a very shortperiod made progress in meeting the growing demand for water facilities, thecontinuation of its good performance in carrying out day-to-day operations andin undertaking new investments depends on its financial viability. In thiscontext, the following problems need to be addressed:

(i) Accumulation of arrears. A major problem in the past has been theaccumulation of arrears owed by the Government and the municipalities.Revenues from sales to the Government account for approximatelyone-third of Regideso's total revenues. Arrears result both fromdelayed billing by Regideso and from excessively late payments by theGovernment. In 1981, Government arrears accumulated since 1973reached an all time high of Z 42 million, or the equivalent of seven

1/ Diseases associated with contaminated water and/or sanitation includegastroenteritis, parasitic diseases, dysentery, and typhoid.

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months of sales to Government (these arrears were eliminated atend-1981 through a budget transfer). By improving its billingpractices and through agreement with the Government that payments willbe made promptly, Regideso and the Goverament should aim at a gradualreduction of arrears to at most the equivalent of four months of salesto Government.

(ii) Tariff policy. A tariff policy based on consumer category rather thanthe cost: of water production in the area served has resulted in adisproportionate subsidization by large urban centers (mel:eredcustomers). Moreover, tariff adjustments have been sporadic and havethus led to unpredictable, sharp increases in rates. Altlhough thepolicy of subsidization from larger consumers seems likely tocontinue, this policy could undermine the Government's objective toexpand wqater service. A reasonably remunerative standpipe tariffshould be fixed, so that metered consumers do not assume too largeaproporl:ion of the costs of standpipe services in addition to costincreases associated with their own service; unreasonable meteredtariffs could lead to increased vandalism of meters, a well-knownpractice to avoid payment. If the stancpipe tariff is not adjustedand other consumers do not bear the subsidy for standpipes, thisresponsibility will fall on Regideso, which would then find additionalinvestment in standpipes financially unattractive.

1). Conclusions: The Issue of Priorities

:35. The preceding review of sectoral developments and issues demonstrates,inter alia: (i) the impact that external developmnents have had on nearly allsectors; (ii) the failure to design and implement policy measures to compensatefor and minimize the adverse consequences of external factors; and (iii) the(dimension of the adjustments required to stimulate eocnomic recovery andlong-term growth. The review also highlights -- particularly for the productivesectors -- the impact of macroeconomic policies on performance, given theimportant role played by fiscal, monetary, exchange rate and pricing policies inshaping the economic environment of producers and investors. Sustained economicrecovery and, later, growth will have to depend increasingly on improvedperformance of the non-mining productive sectors -- agriculture andmanufacturing. This requires attention to the whole range of issues discussedin this chapter relating to the role that the private sector should play inZaire's economic development, the appropriate pricing and tariff policies, andthe adequate supply of inputs for maintaining existing infrastructure,especially transport.

36. The financial requirements of all the sectors are great and so is,therefore, the importance of identifying priorities. The Mobutu P'Lanrepresented an attempt to do that, and some lessons can be drawn from it. Theapproach adopted in the Mobutu Plan and, more specifically, in the publicinvestment program (PIP) was to determine the "es sential" or "minimum"requirements of the main sectors, to designate scme of them (agriculture,mining, transport, and energy) as "priority" sectors, and to assign priority totwo categories of tasks, namely rehabilitation investments and completion of

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projects with large sunk costs. This approach has not proven adequate i"or tworeasons. First, the setting of meaningful priorities presupposes the definitionof clear economic and social objectives, a strategy to attain them, a realisticassessment of available resources (a macroeconomic framework), and systematicreviews of sectoral problems, issues and strategies (similar to those includedin Volume II). Most of these either have been lacking or have not been followedup. Second, the country's resources have proven inadequate to meet he aggregate"minimum" requirements of the main sectors. What is needed under thesecircumstances is to determine intersectoral priorities in some detail. Theabsence of a process for doing that has seriously compounded the execution ofthe Mobutu Plan as explained below.

37. The 1979-81 PIP was divided into three tranches representing orders ofpriority. The first problem was that in addition to the four priority sectorsnoted above, the PIP contained programs for education and health, each of whichhad projects designated as "first priority". The second problem was andcontinues to be the addition of "other projects" every year since then to thePIP without dropping any from it. When the distinction by tranches could not beobserved, all projects in the PIP were declared as priority.

38. What seems to be needed is to set priorities in terms of tasks orobjectives rather than sectors and to do so on the basis of macroeconomic ratherthan purely sectoral criteria. The determination of priorities in terms ofwhole sectors -- no matter how carefully the minimum requirements within eachhave been established -- creates rigidities inconsistent with a realisticappraisal of Zaire's resources. A task or objective-specific approach, on theother hand, permits differentiation between the types of constraints faced,which may not always be financial. A corollary to this approach is to givepriority to the fulfillment of all the necessary conditions for the execution ofa priority objective before acting on others. Experience provides many examplesof priority activities which could not be carried out because, according to anumber of project managers, "if you have the road, you don't have the trucks; ifyou have the trucks, you don't have the fuel; if you have the local currency,you don't have the foreign exchange; if you have the capital budget allocation,you don't have the current budget allocation". For this approach to work, thedonors would also need to modify their interventions -- from sector orientationto objective orientation -- and be prepared to show greater flexibility in bothdesigning and, when appropriate, modifying projects.

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IV. PROSPECTS AND IMPLICATIONS

1. The projections presented in the last two economic memoranda aimed atillustrating the interrelationship among imports, debt rescheduling, externalassistance, and economic management. These remain the essential building blocksof recovery, and this chapter, therefore, reexamines their interdependence fromtoday's vantage point.

A. The Current Setting

2. The ecornomic environment of Zaire is considerably different from whatwas anticipated only a year and a half ago. Performance fell short of thetargets under the medium-term program in 1981 and, on the basis of developmentsto date, it is likely to deviate from expectations even more in 1982. The last1.8 months have witnessed a progressive deterioration of the export outlook (seebelow), a weakening of economic management, a cancellation of the extendedarrangement with 'the IMF, and the non-implementation of the latest debtrescheduling agreement with the Paris Club -- in short, the slipping away of thescenario on which the hopes for recovery had been built. The absence of ascenario at the present time magnifies the normally great uncertaintiessurrounding the future course of the Zairian economy.

:3. Paradoxically, although the uncertainties are greater, the choicesaave never been clearer; they reconfirm the need "or simultaneous and determinedaction on the economic management, debt reschedul:Lng andtexternal assistancefronts, without which economic recovery is not possible or cannot te sustained.The choices have been put into sharper focus by the recent experience itself.For example, the relatively poor export performanze and outlook havedemonstrated the weakness and variability of Zaire's debt servicing, capacity;the problems faced by the industrialized countrie3 have pointed to the need tomoderate expectations concerning external assistance; and experience withZaire's economic performance has shown that (a) neither debt rescheduling norexternal assistarnce, financial or technical, can substitute for the role thateconomic management has to play in the recovery, and (b) achieving the desiredimprovement in economic management will take longer than anticipated. Thus,although the situation has deteriorated, recent experience and the currentsetting provide the basis for Zaire and its partners to consider more pragmaticscenarios in which economic management, debt rescheduling and externalassistance are assigned more balanced yet realistic roles.

B. The Changed Export Outlook

4. The mission's commodity-by-commodity projections (Table 8) indicatethat in 1982 Zaire's merchandise exports will probably decline 15 percent belowthe 1981 level and 35 percent below that of 1980 in nominal terms. Although asharp recovery is indicated thereafter, by 1985 exports are likely to be only 16

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Table 8: Export Projections in Current Prices

(Value in million US$, volume in thousand metric tons,(unit value in US$/ib., unless otherwise indicated)

Actual Preliminary Estimated Projected1980 1981 1982 1983 1984 1985

A. CopperValue 1 978 806 676 867 1194 1383Gecamines - 912 751 630 806 1116 1295Sodimiza 66 55 46 61 78 88

Volume 460 473 451 452 492 502Gecamines 437 440 420 420 460 470Sodimiza 23 33 31 32 32 32

Unit Value 0.96 0.77 0.68 0.87 1.10 1.25

B. Cobalt 1/Value -/ 413 169 75 93 141 220Volume 8 4.5 4 6 8 10Unit Value 23.43 17.00 8.5 7 8 10

C. DiamondsValue 97 67 66 60 68 79Volume 9 7 7 6 6 7

(mill. carats)Unit Value(carats) 11 10 9.5 10 11.3 11.3

D. CoffeeValue 163 104 129 129 137 141Volume 74 63 73 73 75 75Unit Value 1.00 .75 .80 .80 .83 .85

E. PetroleumValue 228 260 243 243 266 291Volume 6.5 7.3 7.1 7.1 7.1 7.1(mill. bbls.)

Unit Value 34.55 35.62 34.25 34.25 37.5 41.0($/bbls.)

F. Other - 76 88 90 125 135 150

G. Total Exports 1955 1494 1279 1517 1941 2264

1/ Gross of marketing and refining costs normally deducted before SOZACOM returnsthe sales receipts.

2/ Other export earnings, net of marketing and refining costs for Gecamines exports.

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percent higher than in 1980, implying a decline in the capacity to import.1/This contrasts sharply with the projections made in. mid-1981 which foresaw agr-owth more than three times higher (54 percent) over the same period. Thedownward revision of the 1983-85 forecasts averages about US$800 million a year(or 30 percent) and exceeds the average debt sevice due, not counting arrears.The revisions are explained largely by the sharp downward adjustment of theprojections for cobalt volume and price and for the copper price.

5. The projections presented may even be on the high side for at leasttharee reasons: (i) the copper volume projections assume that the long-delayedrelhabilitation of Gecamines' productive capacity wLll start in 1983 and begin tosihow results in 1984. This is not yet assured and has significant financialimplications (see below). (ii) The copper price p,rojections assume that therecovery of the world economy in 1983 will be sufficiently robust to pull thecopper price from its October level of US$0.66/lb to US$0.87/lb. The longer theprice remains at or near the current level, the less likely this scenariobecomes. Even if the price reached US$0.87, total export earnings in 1983 wouldstill be 22 percent below the 1980 level in nominaL terms. (iii) The cobaltprice projections may also be optimistic because Zairian production willcontinue to exceed. sales, adding on to the already vast stocks (see Vol. II,Ch. II). The reduction of these stocks presupposes not just a recovery of theworld economy, but, a very major upsurge in cobalt's main end-use sectors. Inshort, while it is difficult to predict commodity prices and copper prices inparticular, no major breakthrough on the export side is in sight.

C. Minimum Recovery Scenario

1. Assumptions and Approach

6." Because of the constraints on Zaire and the donors/creditors, it isurlrealistic to consider anything more than a minimum recovery scenario.Recovery is defined here in its simplest form, namlely, a return of total realGDP to its pre-crisis (1972-74) level. The pace at which this can be postulated1o be achie-ved is dictated by the length and cumulative effect of the crisis.As noted in Chapter I, by 1982, per capita income will have declined for eight,onsecutive years to about a third below the average 1972-74 level; the impactof this on the standard of living as well as efficiency has been severe and wasparticularly felt in 1981. Although it is difficult to establish whether or towhat extent socioeconomic tolerances have been reached, it is hazardous topostulate a further decline in per capita income. Real GDP is assumed to growat a constant annual rate of 3.0 percent (approximating the population growthrate of 2.7 percent) in the next three years. Under this scenario, GDP wouldrieturn to its pre-crisis (1972-74) level by 1985, which, from the viewpoint ofthe population affected, constitutes a modest hypothesis.

7. In the last two economic memoranda, imports -- the main determinant ofexternal capital requirements -- were derived on the basis of the relationshipsbetween investment and GDP and imports and investment. This is no longer

1/ This is because the unit value index of manufactured exports from theindustrialized countries (the proxy for Zaire's import price index) isprojected to increase by 22 percent over the 1980-85 period.

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possible because of: (i) the accentuated weaknesses of data on investmeat (whichhave very serious shortcomings), (ii) the lack of information on the executionof the public investment program, and (iii) the doubts that emerged regardingthe adherence to priorities, the execution timetable, and the cost estimates ofthe PIP. Imports were, therefore, estimated mainly on the basis of thefollowing assumptions on import elasticities:

Import Elasticity

1983 3.01984 2.31985 1.7

8. During the most recent sustained upswing of the Zairian economy,1970-74, the import elasticity averaged 1.47. The data for the years since showno statistically significant or meaningful relationship between imports andGDP. However, the contraction of imports proportionately four times more thanGDP since 1975 as well as the sectoral analyses summarized in the last chaptersuggest that the decline in GDP could be contained largely at the expense of thepervasive decapitalization of the economy and through practices such ashigh-grading and "cannibalization" of equipment which mortgaged futureproduction. This explains to a large extent the high level of the elasticitiesassumed above compared to the average for 1970-74. Indeed, the productivecapacity and infrastructure of Zaire have deteriorated to such an extent thatsubstantial investments with a large import content are needed just to maintainproduction at recent levels. This is especially the case with Gecamines, Mibaand Kilo-Moto in the mining sector. Moreover, raising production levelsrequires large imports not only of spare parts and replacement equipment butalso of raw materials because of the lag in expanding domestic production. Inaddition, national support for the recovery program and an increase inproductivity require greater attention to social needs, including noticeablylarger imports of drugs, medical equipment and selected mass-consumption goods.The decline in the import elasticities assumed for 1983-85 is explained by thetemporary character of some of the above forces and especially by theprogressive decline of food imports as the Agricultural Action Plan begins totake hold.

9. Two key assumptions were made regarding external assistance: (i) Theprovision to Gecamines of US$60 million a year beginning in 1983 for its urgentrehabilitation program.'/ (Such an amount has been committed this year by theCCCE and by the European Community under the SYSMIN facility, but disbursementshave been delayed.) This figure refers to disbursement requirements; thecommitments equivalent cannot be estimated, since an appropriate financingprogram has not yet been put together. (ii) The continuation of project aidcommitments, other than aid to Gecamines, at the estimated 1982 level, namely,about US$240 million.

10. Zaire's contractual external debt service in 1983-85 (includingestimated arrears at the end of 19822/) amounts to about 45 percent of

1/ Athough the program has not been fully costed yet, rehabilitationrequirements are believed to be on the order of US$100 million a year (for aperiod of 3-5 years), of which 60 percent in foreign exchange (Vol. II, Ch.II).

2/ Except those reschedulable without conditionality under the last Paris Clubagreement.

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projected exports of goods and non-factor services, Clearly, a debt service oftnis order cannot be fitted into any economic recovery scenario; a public debtservice ratio of 17 percent seems more realistic. This ratio is lower than thefigure of 20 percent assumed in the last economic iemorandum and resulting fromthe last Paris Club agreement, largely because of t:he severe deterioration ofthe medium-term export outlook, compared to mid-1981 (para. 4), and the likelyupward bias of the export projections (para. 5). l{owever, the ratio assumed ishigher than the average actual public debt service ratio of the period 1979-81,namely 13 percent; moreover, together with IMF repu:rchases and "otheramortization" (mostly reduction of arrears on suppLiers' credits), it implies atotal debt service ratio of about 22 percent, on average. It should beemphasized, that uinder this assumption, Zaire's total annual debt service wouldincrease significantly in absolute terms in the next three years, namely, froman estimated US$275 million in 1982 to about US$600 million in 1985.

11. In short, the "minimum recovery scenario" assumes (i) an annual realGDP growth of 3 percent; (ii) a continuation of commitments at their 1982 level;(iii) the provision of US$60 million per year to Gecamines; and (iv) a constantpublic debt service ratio of 17 percent.

2. Results

12. The results of the "minimum recovery scenario" are presented inTable 9 and the implied foreign exchange inflows and outflows are depicted inChart 5. Under this scenario, by 1985, GDP would exceed the 1972-74 level by 2percent, but real imports would remain 75 percent below the pre-crisis level;net transfers of medium and long-term capital (i.e., the difference betweenproject aid disbursements and public debt payments) would be negative two out ofl:hree years and total -US$125 million over the projection period; and the gapwould average about US$425 million a year. The total "new" external assistancerequirements would be as follows:

(In US' Million)1983 1L984 1985

B3alance of Payments Aid 1/ 461 403 408Gecamines Rehabilitation 60 60 60New Project Aid 2/

Disbursements 69 3/ 129 170(Commitments) (240) (240) (240)

1/ Equals "gap" in Table 9.2/ Excluding Gecamines.3/ Partly disbursements on 1982 commitments.

If Gecamines' neebds cannot be provided in the time foreseen throughquick-disbursing project lending, they would need to be financed from its ownearnings, reducing the Government's foreign exchange resources and increasingthe BOP aid requirements by the same amount. In that case, BOP aid needs wouldaverage approximately US$485 million a year. If the gap could not be fullyclosed through BOP aid, either the recovery objective would need to be scaleddown or the shortfall would need to be made up by additional debt relief.

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Table 9: Minimum Recovery Scenario: Capital Requirements, 1982-85(Million US$)

Actual Estimated Projected1980 1981 1982 1983 1984 1985

GDP Growth Rate 2.4 2.4 0.0 3.0 3.0 3.0

Exports (f.o.b.) 1955 1494 1279 1517 1941 2264

Imports (f.o.b.) 1201 1097 980 1374 1573 1770

Services, netl/ -607 -579 -670 -700 -730 -760

Transfers, net 133 106 120 125 130 135

Service on existing debt 457 408 200 332 457 570Public debt 308 230 150 -271- IW 70-4IMF Repurchases 84 130 25 11 71 116Other amortization 65 48 25 50 50 50

Project Aid (Disbursements) 284 263 256 303 296 293Existing pipeline 284 263 256 174 107 63New Aid-/ - - - 129 189 230

Balance of Payments Aid -107 221 195 - - -

IMF Purchases 102 230 120 - - -Other3! -209 -9 75

Cap - - 461 403 408

MEMO ITEMDebt service ratio (%) 22.2 25.9 14.9 20.2 22.4 23.6

- public debt only 15.0 14.6 11.2 17.0 17.0 17.0

Public debt service due4/ - - 9305/ 712 647 637

Debt rescheduling assumed6/ 780 441 301 233

Exports GNFS 2056 1576 1343 1593 2038 2377

Net transfers7! -24 33 106 32 -50 -111

1/ Includes IMF charges but excludes contractual interest on public debt.2/ For 1983-85, assumes yearly commitments of US$60 million to Gecamines and

US$240 million general commitments.3/ Includes short-term capital, capital not elsewhere included, errors and

omissions and changes in reserves.4/ For 1983-85, excludes interest on the new commitments assumed.5! Includes arrears at the end of 1981 and debt service on the rescheduLable

1981 maturities.6/ Represents reduction in debt service, assuming that the debt service ratio

is kept at 17 percent.7/ Defined as the difference between project aid and service on public debt.

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CHART SMINIMUM RECOVERY SCENARIO, 1!382-85

(MILLION US$)

A. FOREIGN EXCHANGE INFLOWIS9,a .06

pL2j T AD

NET TRA56PInRs

L

r EXPO-Mx Ns J rWX

1070 1080 1988 1082 1O8S 1064 1O8S

YEARS

S. FOREIGN EXCHANGE OUTFLOWS

_ r.m- >s Y fr. Tr rrr r } rrT ..h: . T SrS. rrTIBI .... T

PUBLIC DOT SEWIMCE

MET SERVZCU

L

E H . eii* .IMORTS

1870 1988 t861 1982 1963 1964 1986

IWT*. FM 1070 A. I.63. FOREIM ECC.t4E . LOC. E)WEE OUTFLO3SBECWGE OF THE EFFECTS OF DEBT RESCEWI.LIt4 ANP ACCtKILATZO14 OF ARlARS.

FO 170-6. THE AP RRESDITS BALANCE OF .AYMENTS AX.

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3. Alternative Scenarios

13. In order to test the sensitivity of the above results, three

alternative scenarios were considered:

(i) No gap; GDP and imports dependent variables; other assumptionsunchanged. Under this scenario, GDP falls short of the 1972-74average by 2.6 percent in 1985, implying a decline in per capitaincome for eleven consecutive years. Real imports in 1985 correspondto 60 percent of the pre-crisis level.

(ii) Net transfers zero (rather than negative); other assumptionsunchanged; debt relief and gap dependent variables. The public debtservice ratio averages 15 percent. The gap (inclusive of Gecamines'needs) is reduced from US$485 million to US$305 million a year.

(iii) GDP growth 3 percent in 1983, 4 percent in 1984 and 5 percent in 1985;other assumptions unchanged. GDP exceeds the pre-crisis level bynearly 4 percent in 1985. Real imports reach 80 percent of the1972-74 level. The external gap rises from US$425 a year (under theminimum recovery scenario) to US$475 million a year.

14. The above scenarios show the sensitivity of economic recovery to debtrescheduling. The reasons for this lie in the current low level of imports andthe import elasticities assumed above. The current low level of imports is duenot only to Zaire's economic difficulties but also to its huge negative balancein services" compared to other countries.

4. Sensitivity to Copper Prices

15. In the past, the long experience with the volatility andunpredictability of copper prices has interfered with a realistic appreciationof the hard choices confronting Zaire and their implications for externalassistance. The indispensability of external assistance and substantive debtrescheduling to the "minimum recovery scenario can be illustrated with thefollowing sensitivity analysis. In order to achieve the objectives of thatscenario without new BOP support (including the postulated aid to Gecamines),the average price of copper in 1983-85 would have to be 63 percent greater thanthe projected average, or more than twice the October 1982 level of US$0.66/lb.Given the surplus capacity existing in the world copper mining industry, suchprice levels are not likely to materialize in the next few years, except forbrief periods. On the contrary, because the copper price projections aredirectly related to expectations of world economic recovery -- which, in thelast two years, have proven just as optimistic as copper price projections --there is just as much reason to consider the impact of lower projections. Ifthe price of copper in the next three years were to average 10 cents per pound(or 9 percent) lower than projected in Table 8, Zaire's import capacity would be

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1(1 percent less and GDP would grow at a slower rate than population, extendingthe uninterrupted decline in per capita income to eleven years. Obviously, theabove calculations involve gross oversimplification as they assume "otherfactors unchanged"; they nevertheless serve to illustrate that, on tihe one hand,copper price developments are unlikely to produce miracles and, on the other,because of the already significantly depressed level of the Zairian economy andper capita income, it is more hazardous to overestimate copper prices than tounderestimate them.

D.. Implications for Zaire

1/i. Although the revitalization of the world economy, external assistanceand debt rescheduling are critical to the "minimum recovery scenario", therecovery plotted will depend in the last analysis on actions by Zaire. To beginwiLth, even if the external assistance and debt reli.ef needed were available,w'hether and how rapidly these produce the GDP growt-h postulated will bedetermined by the ability of Zaire to make judicious use of that assistance anddebt relief and to take the appropriate macroeconomic and institutionalmeasures. More fundamentally, the availability of the assistance ar.d debtrelief itself is bound to depend on Zaire's ability to persuade thedonors/creditors -- with deeds as well as firm commitments -- of itsdetermination to improve the management of the economy. Historical experienceleaves room for no illusion on this point: the sharp decline in conmmitments ofmedium- and long-term aid during 1979-81 and their modest recovery in 1982 aredirectly attributable to the trend in economic performance (after a normal lag);additionally, the provision of emergency aid following the Shaba invasion of1978, the progressive liberalization of the debt rescheduling terms as theexport outlook deteriorated, and the approval of "compensatory financing"simultaneously with the cancellation of the "extended facility" show that thereexist both the will and the analytical tools to distinguish between the effectscf exogenous factors and those of economic management on performance. In short,w'hile even the continuation of the current levels of assistance (including debtrelief) cannot be assured without improved economic management, there issubstantial evidence that assistance will respond favorably to a sttsadyimprovement. The donors have made that clear in the last two meetings of theConsultative Group.

17. The problem is that the agenda for action by Zaire is heavy, indeed.T'he reasons lie not just in the long neglect of nuLmerous areas of policy-making("agriculture, industry, energy, taxation, role of the public sector, etc.), buta:lso in the pernicious, "hidden" effects of the protracted crisis. For example,t:he expansion of government employment is indicative less of a politicalphilosophy than of the contraction of the economy; the multiplication of:intermediaries, which tends to raise retail prices, is partly the result ofscarcities as well as the lack of employment opportunities in the productivesectors; and the increased rural/urban migration is stimulated partly by thedeterioration of health services in the interior due to the lack of resources.The weighty content of the agenda has two strategLc implications: (i) the needfor both Zaire and the donors/creditors to realize that the desired recoverywill take time; this is also dictated by the unfavorable world economic

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situation, which affects all countries, developing as well as developed; and(ii) the need to be selective in approach, as stated in the Introduction. Thechoices must be pragmatic, and two broad guides seem appropriate in that regard:

(i) Focus on short-term management. Zaire has, naturally, long-termaspirations and faces long-term constraints in realizing them, but thebest hope of success is to address the near-term issues withdetermination and to do so within the context of a medium-termfinancial and economic framework. To illustrate, even with the"minimum recovery scenario", at the end of 1985 Zaire's undisbursedpipeline of project aid will be no greater than at the end of 1981, orapproximately US$700 million compared to US$1.2 billion in 1975.Unless improved short-term management stimulates larger commitments inthe next few years, what will resource flows be like in the longterm? Unless the problems affecting the mining sector are addressedeffectively without delay, what will be its contribution to theeconomy in the late 1980's? More broadly speaking, unless existingpolicies are executed, what will be the value or impact of newpolicies?

(ii) Focus on stimulating external and internal (private sector)confidence. The recovery sought cannot be brought about withouteither of these; the two are, furthermore, closely interrelatell: theprivate sector's confidence will not be sufficiently stimulated unlessthat sector sees signs of improved external confidence, which itinterprets as improving prospects of expanded or stable supplies ofnecessary inputs and a better functioning and growing infrastructure;and external confidence is not likely to increase measurably unlessthe economic, administrative and policy environment of the domesticprivate sector (especially but not exclusively in agriculture) ismarkedly improved. Many government interventions have had theopposite effect, most often because of inadequate consultation withthe private sector and/or malimplementation. The demonetizationmeasures of 1979 and the recent developments concerning Petro-Zaireand the domestic textile industry are cases in point. The key tostimulating both external and internal confidence remains -- asrecognized by the Consultative Group -- achieving consistency ofrational decision-making, coupled with greater fiscal discipline andimproved execution of policies in general.

18. What are the actual broad steps needed to put the "minimum recoveryscenario" or any similar scenario in place? It should be recalled that inmid-1981 Zaire did adopt a medium-term program of adjustment after longpreparation and close consultation with the international organizations. Thatprogram, which provided a framework for setting short-term priorities, wasstrongly endorsed by the Consultative Group in June 1981. Basically, thediagnosis of the problems has not changed, nor have the avenues available foraddressing them. The first step, therefore, is to take the actions necessary toget back on course, namely: (i) to reach as soon as feasible an appropriate newagreement with the IMF by designing a new program of economic and financialstabilization; (ii) to achieve a realistic, implementable debt reschedulingagreement faire to both Zaire and the main categories of creditors; (iii) to

- 71 -

ilake the measures needed to improve the prospects of financing Gecam-ines' urgentrehabilitation program; (iv) to implement the Agricultural Action Plan, bearingILrL mind that a number of policies still have to be formulated, and to keep thesituation under close review; (v) to adopt a program for implementing therecommendations of the IMF/Bank fiscal study; and (vi) to execute the publiciLnvestment program as closely as possible, while continuing to improve theinvestment planning process. While some of these actions are medium-termoriented, they belong on the short-term agenda, because Zaire needs todemonstrate progress in them without delay in order to increase the chances ofobtaining the external assistance and debt relief on which the minimum recoveryScenario is conditioned.

19. Similarly, the specific policies and institutional changes aimed at inthe medium-term program (Chapter I, paras. 5-6) anc also recommended in the lasteconomic memorandum remain largely appropriate; since they failed to be fullyimplemented, they were not adequately tested. Zaire needs to make greatereEforts in this direction, however with some modifications or supplementarymeasures, as suggested below:

(i) Foreign Exchange Rate and Allocation. Despite the announcement of apolicy of flexible exchange rates in November 1978 and itsreaffirmation in mid-1981, the exchange rate has not been adjustedsince June 19, 1981 and is currently less than a third of the parallelmarket rate. The Zairian authorities should consider, in consultationwith the IMF, the policies and measures necessary to bring the zaireto a more appropriate level in order to expand exports and diminishthe role of the parallel market. In addition, the efficiency andtransparency of the central goverment's foreign exchange e!xpenditurescan be improved. In this connection, specific attention t:ostabilizing petroleum imports (e.g., by building a more adequateminimum stock) may be appropriate.

(ii) Prices. The price liberalization measures of the last two years havebeen positive if not totally effective. Regarding agricu]Lturalprices, what is now needed is for the Government to claril-y the policy(which is direly required) and to discourage local authorjities fromignoring or misinterpreting it (which is reportedly being done).However, as long as factors such as the state of the transport networkand the shortage of trucks or petroleum permit the emergence ofmonopsotnies, the application of the policy -- and, therefore, itsimpact on resource allocation and income distribution as well -- willcontinue to be uneven. More time will be required for the powerstructure affecting markets to change and for the liberalizationpolicy to take hold. Since the measures are addressed to the privatesector, the Government should work closely with ANEZA to both monitorand generalize the application of the pelicy. As far as ithe prices ofmanufactured goods are concerned, the retention of the "cost plus 20percent" formula, even as a guide, has shown no clear benefit; on thecontrary, this conditional liberalizaticon may have had a negativeimpact by suggesting to the private sector that the Government is notfully or uniformly behind the liberalization measures. TheAuthorilties may wish to consider rescinding the formula altogether.

- 72 -

(iii) Interest Rates. The level and structure of interest rates have notbeen reviewed since April 1981. (A program of semi-annual reviews wasrecommended in the last economic memorandum in order to achievepositive real interest rates as soon as practicable.) The next reviewor reviews should be undertaken in conjunction with a review of thecredit market and institutions in order to gauge better the actualrates charged or paid and the implications of this and other factorson the allocation of credit.

(iv) Fiscal Aspects. The appropriate objective remains to reduce thedeficit. The reforms needed have been detailed in the IMF/Bank fiscalstudy. The Government should draw up without delay an action programfor implementing the measures it considers the most appropriate andimportant. Measures in the budgetary field would in particularinclude a marked improvement in expenditure control. With respect tothe tax system in general, apart from some possible rate adjustmentsrecommended in the IMF/Bank report, the thrust would have to beimproving the administration through measures such as tax clearancecertificates for SAD importers and other actions to identifytaxpayers, intensified control, including better use of cross-checkingopportunities, and speeding up of the collection procedures to makethem more effective. Concerning Gecamines, the most urgent step,which is about to be implemented, would be directed to improving theaccounting and control of sales; with the better chances this wouldgive to produce up-to-date and complete accounts, the basis could befound for introducing a permanent tax regime along the lines of theIMF/Bank report. In view of historical experience, the followingactions may also be helpful in the fiscal area and especially inrestoring internal and external confidence:

- Undertake a study of the parastatals sector in order to assess itsnet impact on government finances, which should help in thepreparation of the budget.

- Prepare realistic estimates of the operating costs of theGovernment to permit the proper functioning of at least keybranches and the financing of at least key tasks. The last twoeconomic memoranda have emphasized the relationship betweeneconomic management and the availability of such basic work aids astypewriters, photocopying machines, paper, and pencils, not tcspeak of cars and gasoline. Among the key tasks or functionsaffected have been project supervision, tax inspection, andcollection and dissemination of socio-economic data.

- In this connection, pursue a government employment and wages andsalaries policy. The efficiency of the public administration hasdeteriorated, paradoxically, at a time when Zaire's pool of trainedor educated manpower has never been larger. Attendance at thenational university is estimated at more than 27,000, in sharpcontrast to the situation at the time of Independence when Zaire

- 73 -

had, reportedly, only about 15 college graduates. The problemseems to lie partly in the lack of incentive or motivation. It maybe useful to examine the problem in the context of a broad reviewof the public administration, as that is likely to assisi: also inthe proper implementation of the policy of decentralization.

- Undertake a study of the net impact of authorizing the revaluationof assets on tax revenue, taking into account the possible benefitsof increased production induced by the revaluation.

(v) Public Investment Program. The Government' was expected to update the1981-83 PIP and to roll it over to 1982-84. This has not beenattempted partly because the Planning Ministry has been consideringthe preparation of a "medium-term developmaent plan". It is notcertain that this is the appropriate time for such an initiative, asneither has the stabilization phase (let alone the recovery phase)been completed nor has the necessary data and institutional base beenestablished. Recently, the Planning Ministry has announced itsdecision to prepare a PIP for 1983-1985. The decision, which iswelcome, should be executed speedily, however without sacrificingquality. The most effective way for the donors to show their supportof the PIP (which they endorsed at successive Consultative Groupmeetings) is to make every effort to finance the foreign exchange gapfully. T'his will prove difficult if the 'rolling over" is undulydelayed.

(vi) Institutional Change. Up to now, emphasis has been placed onimproving the functioning of key institutions: Central Bank, Ministryof Finance, Ministry of Agriculture, Customs, etc. While t:heseefforts should continue, commensurate attention should be given tostrengthening coordination and integration of policies and actions.In this connection, it seems important not only to revive the ExternalResources Coordination Committee but also to strengthen it byestablishing the technical secretariat wbich was proposed in 1981 andfor which some external support was promised. The Committlee, whichhad made an excellent start nearly two years ago, had succeseded inincreasing coordination between Zaire and the donors, amongy the donorsthemselvtes and among the Zairian agencies as well.

Priority should also be given to strengthening the analyticalcapability of government agencies. The economic analysis currentlycarried out in Zaire is minimal and, in any case, either very weak ortoo narrowly focused. The public investment program has never beenplaced into a macroeconomic perspective in order to arrive atrealistic assessments of financial constraints, economic impact,

- 74 -

etc.; little consistency is assured between foreign exchangeprojections and fiscal projections; and few policy decisions are basedon a comparative analysis of the impact of alternative policies.Sectoral integration is the weakest. The tasks requiring attentioninclude the preparation of short-term and medium-term forecasts; thedefinition of macroeconomic objectives and strategies; theidentification of priorities on that basis, including intersectoralpriorities; and the appraisal of sectoral programs from amacroeconomic perspective. While a focus on the short term wassuggested earlier, this is not tantamount to advocating short-termreasoning. On the contrary, it is quite important to watch thatdecisions made during the stabilization and recovery phase do notforce Zaire into a development path not consistent with itscomparative advantage or that short-term benefits do not have long-runcosts -- and this for good historical reason. As the policies of1972-74 shaped the present to a significant extent, so can today'sdecisions shape the not-too-distant future. The fundamental long-termissues which will have to be confronted before long include theoptimum use of the surplus electricity capacity, the development ofthe already established export processing zone, the role that miningshould play in long-term growth (in view of its capital intensivenessalone), the orientation that agricultural development should take oncethe rehabilitation phase is completed, the appropriate industrialpolicies that should be followed, and the proper approach to manpowerdevelopment.

20. Achieving this agenda will take time. The goal should be systematicoexecution" -- to repeat the theme of this report -- rather than speed, and theapproach should be to proceed on the basis of well thought-out and integratedaction programs. But if systematic and sustained progress is preferable to adhoc decisions and fluctuating performance, the donors/creditors must give Zaireroom to maneuver, i.e., to adjust to the needs of a long neglected human andcapital stock and of an unstable world economic environment.

- 75 -

STATISTICAL APPEND[X

Note: For detailed sectoral statistics, see Volume II.

- 76 -

STATISTICAL APPENDIXLIST OF TABLES

Table No. Table Title Page No.

Section I: Employment Statistics

1.1 Central Government Employment and Payroll, 1976-81 81

1.2 Central Government Employment, by Department, 1976-81 82

1.3 Employment of Private Sector Affiliated to INSS, byRegion, 1975-79 83

1.4 Monthly Base Salary and Subsidiies for Unskilled Workersin Selected Private Enterprises, March 1982 84

1.5 Average Actual Monthly Salaries and Subsidies by Skillin Private Sector, March 1982 85

1.6 Salary Indices of Private and Public Sectors, 1975-81 86

Section II: National Accounts Statistics

2.1 Gross Domestic Product by Sectors in Current Prices,1972-81 87

2.2 Gross Domestic Product by Sectors in Current Prices -Percentage Shares, 1972-81 88

2.3 Gross Domestic Product, by Sectors in 1970 Prices,1972-81 89

2.4 Implicit GDP Deflators by Sectors, 1972-81 90

2.5 GDP Annual Growth Rates by Sectors, 1973-81 91

2.6 Expenditure on Gross Domestic Product in CurrentPrices, 1972-80 92

2.7 Expenditure on GDP in Current Prices - PercentageShares, 1972-80 93

2.8 Expenditures on Gross Domestic Product in 1970 Prices,1972-80 94

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Table No. Table Title Page No.

2.9 Expe.nditures on Gross Domestic Product - AnnualGrowth Rates, 1973-80 96

2.10 Gross Fixed Capital Formation, Current and 1970Prices, 1972-80 97

Secition III: Balance of Payments Statistics

3.1 Summary Balance of Payments, 1974-81. 98

3.2 Balance of Payments, 1974-81 99

3.3 Exports by Commodity: Value, Volume and UnitValue, 1972-81 102

3.4 Volume of Principal Agricultural Exports, 1973-81 104

3.5 Composition of Imports by End Use, :1978-81 105

3.6 Direction of Trade, 1973-80 106

3.7 Terms of Trade, 1973-81 107

3.8 Tot:al Aid and ODA Flows to Zaire (as reported byDAC), 1976-80 108

3.9 DAC Grants and Technical Assistance by Source, 1978-80 109

Section IV: External Debt Statistics

4.1 Structure of Commitments by Type oi- Creditor,1975-81 112

4.2 Commitments by Creditor Country, 1975-81 113

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Table No. Table Title Page No.

4.3 Average Terms Structure of Commitments byType of Creditors, 1977-81 114

4.4 Debt Service Payments by Type of Creditors,1976-81 115

4.5 Cumulative Arrears on Debt Service, End of Year, 1976-81 116

Section V: Public Finance Statistics

5.1 Budgetary Revenue, 1973-81 117

5.2 Budgetary Revenue Composition, 1973-81 119

5.3 Tax Revenue Excluding Gecamines, 1973-81 121

5.4 Budgetary Expenditure, Economic Classification,1973-80 122

5.5 Budgetary Current-Expenditure, FunctionalClassification, 1973-80 123

5.6 Budgetary Current Expenditure, Functional 125Classification, 1973-80

5.7 Budgetary Capital Expenditure, Functional L27Classification, 1973-80

5.8 Public Enterprises Dividends Credited by Sector, 2E1976-80

5.9 Parastatals by Sector and Ownership, 1981 :129

5.10 -List of Public Enterprises to be Privatized, as ofFebruary 1982 . 30

5.11 Public Investment Program for 1981-83, byMajor Programs J3:

Section VI: Monetary Statistics

6.1 Monetary Survey, 1976-81 132

6.2 Factors Affecting Monetary Expansion, 1977-81 133

6.3 Commercial Bank Loans Outstandin-g by Sector, 1973-81 134

6.4 Interest Rate Structure, 1979-81 135

- 79 -

Table No. Table Title Page No.

Section VII: Sectoral Production Statistics

7.1 Agricultural and Export Crop Production, 1973-81 136

7.2 Mineral Production, 1973-81 137

7.3 Selected Petroleum Statistics, 1974-81 138

7.4 Cement: Production, Exports and Consumption, 1973-80 139

7.5 Activities of Major Transportation Carriers, 1973-80 140

Section VIII: Price Statistics

8.1 Consumer Price Index for Kinshasa (INS Estimates), 1411976-82

8.2 Inflation Rates for Kinshasa (INS Estimates), 1977-81 142

8.3 Market Price Index of Consumer Gocds - Kinshasa 143(IRESEstimates), 1975-81

8.4 Ex-Factory and Market Prices of Selected Locally- 144Produced Goods in Kinshasa, 1S79-81

8.5 Evolution of Water and Electricity Rates, 1976-82 145

Section IX: World Tables

9.1 Copper: Reserves, 1981 147

9.2 Copper: Mine Production and Exports by Main Countries 148and Economic Regions, 1970, 1375 and 1980

9.3 Copper: Refined Consumption and Imports by Main 149Countries, 1970, 1975 and 1980

9.4 Copper: London Metal Exchange,Average Annual Prices, 1501960-81

9.5 Copper: London Metal Exchange,Average Monthly Prices, 1511980-82

9.6 Cobalt: Reserves and Resources, 1980 152

- 80 -

Table No. Table Title Page No.

9.7 Cobalt: Production of Metallic Cobalt, 1972-1980 153

9.8 Cobalt: Consumption by End Use (United States and 154Japan), 1972 to 1979

9.9 Cobalt: World Trade Flows, 1978-80 155

9.10 Cobalt: Average Annual Producer Prices, 1954-81 156

9.11 Cobalt: Average Monthly Spot and Producer Prices 157(Zaire), 1980-82

9.12 Diamonds: World Mine Reserve Base 158

9.13 Diamonds: Production, 1970-79 159

9.14 Diamonds: Average Annual Prices for Industrial 160Diamonds, 1954-81

9.15 Coffee: World Prices, 1975-82 161

- 81 -

Table 1.1 ZAIRE: Central Government Employment and Payroll, 1976-81

Total Employeesl/ Tol:al Payments Average Payment('000) (M:Lll. zaires) per Individual

(zaires)

January

1976 300.2 15.7 52.3

1977 326.1 21.1 64.7

1978 374.1 25.1 67.1

1979 393.1 43.4 110.4

1980 397.0 63.3 159.4

1981 429.4 n.a. n.a.

I/ Includes only civil employees of national defense

and excludes those involved in services of the

Presidency.

Source: Ministry of rinance.

10:28 AM 07/26/82FAGE i

TABLE 1.2ZAIRE: CENTRAL GOVERNMENT EMFLOYMENT BY DEPARTMENT, 1976-81 1/

(END OF JANUARY)

------------------------------------------------------------------ __---------__----------

ITEM 1976 1977 1978 1979 1980 1981

NATIONAL EDUCATION 2/ 1 165,105 180,762 204,664 218,486 225,592 248,807PUBLIC HEALTH 2 26,262 27,481 28,257 29,256 30,368 30.737TERRITORIAL ADMINISTRATION 3 16,495 20,420 30,591 31,391 29,660 28,608PllBLIC WORKS 4 23,806 24,413 28,343 27,373 26,914 24,828AGRICULTURE 5 17,967 18,347 21,916 21,606 19,B47 18.532

PUBLIC ADMINISTRATION 6 13,879 14,419 15,204 16,409 17,282 1,258FINANCE 7 5,388 5,589 6,241 6,251 5,723 45,556JUSTICE 8 3,871 4,618 5,295 5,003 4,460 4,347VETERANS 9 7,009 9,43Z7 12,289 13,841 14,7613 414SOCIAL AFFAIRS 10 5,221 6,807 6,546 5,604 4,944 4,862

NATIONAL DEFENSE 11 1,626 2,124 2,085 2,035 2,080 6,094INFORMATION 12 1,520 1,472 1,948 1,657 1,516 1,342SFORTS 13 1,775 1,999 2,767 3,441 1,910 1,279TRANSPORT AND COMMUNICATION 14 3,783 1,680 1,486 1,302 1,251 1,153LAND MANAGEMENT 15 1,469 1,838 1,680 1,725 1,579 1,534

FOREIGN AFFAIRS 16 974 1,194 1,037 1,051 834 869ENVIRONMENT 17 3 5 244 2,056 3,326 4,158NATIONAL ECOCOMY 18 973 960 1,052 1,070 930 865 XLABOR 19 842 651 668 707 561 508OTHER 20 2,239 1,905 1,803 2,840 3,497 3,680

TOTAL 21 300,207 326,121 374,116 393,104 397,042 429,431

SOURCE: BANK OF ZAIRE AND MINISTRY OF FINANCE

NOTE: THE FIGURES FOR 1981 REFLECT EMPLOYMENT AS OF DEC. 1980.

1/ INCLUDES ONLY CIVIL EMPLOYEES OF NATIONAL DEFENSE AND EXCLUDESTHOSE INVOLVED IN SERVICES OF THE PRESIDENCY.

2/ INCLUDES STUDENTS WITH FELLOWSHIPS IN ZAIRE.

DATA SET: ZAI/lE

10.30 AM 07/26/82FAGE 1

TABLE 1.3ZATRE!. F _LnYMFNT OF FPRTUA4TF SCFrTnR AFFTILTTEp TO INSS, 1975-791/

ITEM 1975 1976 1977 1978 1979

KINSHASA 22 130,000 125,856 250,000 115,067 110,346BANnIuNDU 23 22,164 30,996 45,S28 79,205 20,988

BAS ZAIRE 24 25,657 56,328 54,808 49,837 57,203EQUATEUR 25 69,639 51,150 60,972 130,469 64,894

K IVU 26 98,264 90,298 115,001 107,160 40,059HAUT-ZAIRE 27 52,117 82,164 102,705 83,738 56,17:1

KASAI-OCCIDENTAL 28 16,330 20,432 15,374 19,257 17,637KASAI-ORIENTAL 29 15,009 37,754 39,304 21,493 18,651SHABA 30 131,312 110,466 114,249 110,249 143,782

TOTAL 31 560,492 605,444 798,241 716,495 529,731

SOLJRCE: INSS 0

1/ INSS is the Institut National de la SEcurite Sociale.

DATA SET: ZAI/1E

- 84 -

Table 1.4 ZAIRE: Monthly Base Salary and Subsidies forUnskilled WorkersL/ in Selected Private

Enterprises, March 1982(zaires)

Mean Base SalaryType of Base Subsidies a,s percent

Enterprises2/ Salary Transport Housing Total of total salary

Clothing 58.95 40.00 38.33 137.28 42.9

Brewery 82.58 49.25 41.05 172.88 47.8

Pharmacy 156.97 104.00 72.16 333.13 47.1

Agro-industry 83.51 123.84 56.25 263.60 31.7

Metal industry 69.97 87.20 53.00 210.17 33.3

Bakery 50.00 35.00 25.00 110.00 45.5

Automobile 97.79 67.40 36.40 201.59 48.5

Energy 75.00 109.86 75.00 259.86 28.9

Hotels 62.76 88.40 52.41 203.57 30.8

Trade 98.95 86.00 42.50 227.45 43.5

Mean 88.88 81.98 48.95 219.81 40.4

Median 77.74 80.60 40.00 198.34 39.2

1/ Refers to workers in Category I with no seniority.

2/ Includes 43 enterprises whose names are withheld because of confidentiality.

Source: ANEZA.

Table 1.5: ZAIRE: Average Monthly Salaries and Subsidies by Skill in Private Sector,- March 1982(zaires)

Unskilled Semi-Skilled SkilledCategory I Category II Category III Category IV Category V

Step 1 Step 2 -Step 1 Step 2 Step 3 Step 1 Step 2

Clothing 58.95 65.65 70.06 80.76 93.48 101.26 114.10 133.49 169.52Brewery 82.58 91.73 103.93 120.83 132.99 145.08 161.23 185.35 241.88Pharmacy 156.97 165.00 176.64 180.48 188.34 221.05 273.74 308.65 507.00Agro-industry 83.51 94.78 107.27 123.40 139.85 153.45 188.16 232.79 313.43Metal industry 69.97 84.80 95.25 109.60 118.63 128.27 144.61 166.10 204.54Bakery - 50.00 60.00 70.00 - - 100.00 100.00 200.00Automobile 97.79 108.71 126.65 147.56 171.56 196.50 224.32 253.12 297.43Energy 75.00 102.28 140.82 156.36 164.32 170.30 182.07 207.07 230.33Hotels 62.76 68.09 75.61 88.23 96.89 105.63 112.13 133.45 229.69Trade 98.95 108.05 115.88 147.63 169.60 193.52 223.39 256.29 324.09

Total salary 88.88 96.50 109.10 127.36 142.11 156.21 185.68 204.22 263.47(median) (77.74) (88.21) (99.45) (116.74) (128.18) (143.61) (159.57) (180.00) (233.22) 0

Tr:inn8nori Siihsitvmean 81.98 81.31 84.11 86.02 86.54 84.77 87.35 85.52 92.19median 80.60 80.60 88.00 88.00 88.00 83.20 88.00 83.20 88.00

Housing allowancemean 48.95 49.74 53.66 55.15 54.23 55.41 60.56 60.83 71.65median 40.00 40.00 45.00 45.00 45.00 45.00 50.00 50.00 60.00

Base salary as % ofLotal salary 40.4 42.4 44.2 47?4 50=2 52.7 55.7 58.3 61.7

1/ Includes 43 enterprises whose names are withheld because of confidentiality.

Source: ANEZA.

10'32 AM 07/26/82PAGE 1

TABLE 1.6ZAIRE: SALARY INDICES OF PRIVATE AND PUBLIC SECTORS. 1975-81

(1975=100)

---------------------------------------------------------- __-----------------__-----------------

ITEM 1975 1976 1977 1978 1979 1980 1981

CONSUMER PRICE INDEX 38 100 18 305 454 913 1,313 1,S13

PRIVATE SECTOR

NOMINAL 32 100 131 160 207 277 378 -

REAL 33 100 77 57 49 30 28 -

PUBLIC ADMINISTRATION

NOMINAL 34 100 128 133 156 320 372 450REAL 35 100 75 48 37 35 28 25

MINIMUM LEGAL SALARY

NOMINAL 36 100 131 137 157 210 223 270REAL 37 100 77 49 38 23 17 15

SOURCE: BANK OF ZAIRE, INS AND MISSION ESTImAATES

DATA SET: ZAI/lE

3:4i PM 12i//O92I-iWL i

TABLE 2.1ZAIRE: GROSS DOMESTIC PRODUCr BY SECTORS IN CURRENT PRICES, 1972-81 1/

(ZAIRE MILLIONS)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981

PRIMARY SECTOR 41 188.5 239.5 309.2 373.6 735.2 1,077.4 1,658.7 3,442.8 4,948.2 7,550.0

AGRICULTURE 42 188.5 239.5 309.2 373.6 735.2 1,077.4 1,658.7 3,442.8 4,948.2 7,550.0COMMERCIAL 43 88.5 125.1 160.3 171.2 370.8 473.1 679.4 1,313.3 1,822.9 2,843.7TRADITIONAL 44 100.0 114.4 148.9 202.4 364.4 604.3 979.3 2,129.5 3,125.3 4,706.3

SECONDARY SECTOR 45 365.4 528.6 656.2 606.7 762.7 900.0 1,171.8 2,552.7 4.961.5 5,565.6

MINING I METAL PROCESSING 46 203.6 342.4 410.7 293.2 376.3 460.0 638.9 1,786.7 3,742.5 3,745.6MANUFACTURING 47 98.8 116.0 150.5 191.6 239.2 280.2 336.0 419.2 518.5 64B.0CONSTRUCTION 48 53.4 59.8 85.6 111.7 136.2 148.6 185.5 335.8 688.9 1,160.7

COMMERCIAL 49 35.6 39.9 57.1 74.4 90.9 99.2 123.8 226.9 460.5 774.8TRADITIONAL 50 17.8 19.9 28.5 37.3 45.3 49.4 61.7 108.9 228.4 385.9

ELECTRICITY, GAS S WATER 55 9.6 10.4 9.4 10.2 11.0 11.2 11.4 11.0 11.6 11.3

TERTIARY SECTOR 51 535.8 626.3 746.3 853.3 1,275.9 1,887.7 2,539.7 4,850.8 6,694.4 9,573.2

NON-GOVERNMENT SERVICES 52 368.6 459.0 532.8 604.5 942.1 1,426.4 1,892.0 3,735.7 5,062.5 7,063.4COMMERCE 53 148.6 175.7 222.0 275.3 452.9 731.3 967.2 2,044.3 3,161.9 4,625.9TRANSPORT & TELECOMM 54 94.4 122.5 93.6 82.3 91.6 84.4 92.7 104.4 325.6 559.1OTHER PRIVATE SERVICES 2/ 56 125.6 160.8 217.2 246.9 397.6 610.7 832.1 1,587.0 1,575.0 1,878.4

GOVERNMENT SERVICES 57 167.2 167.3 213.5 248.8 333.8 461.3 647.7 1,115.1 1,631.9 2,509.8

GDP, FACTOR COST 58 1,089.7 1,394.4 1,711.7 1,833.6 2,773.8 3,865.1 5,370.2 10,846.3 16,604.1 22,688.8

INDIRECT TAXES 59 67.6 81.0 87.4 85.5 86.4 91.1 110.3 258.7 603.2 915.0

GDP, MARKET PRICES 60 1,157.3 1,475.4 1,799.1 1,919.1 2,860.2 3,956.2 5,480.5 11,105.0 17,207.3 23,603.8

LESS TRADITIONAL ACTIVITIES 61 117.8 134.3 177.4 239.7 409.7 653.7 1,041.0 2,238.4 3,353.7 5,092.2

MONETIZED GDP 62 1,039.5 1,341.1 1,621.7 1,679.4 2,450.5 3,302.5 4,439.5 8,866.6 13,853.6 18,511.6

SOURCE; BANK OF ZAIRE, ANNUAL REPORTS.

1/ REVISED SERIES FOR 1972-79; SEE FOOTNOTE TO PARAGRAPH 13 IN MAINREPORT (VOL I).

2/ IN 1981, THIS CATEGORY IS INCLUDED IN GOVERNMENT SERVICES.

DATA SET: ZAI/2N

NOTE: 1981 FIGURES ARE PRELIMINARY.

3:45 PM 12/09/82PAGE 1

TABLE 2.2ZAIRE: GDP BY SECTORS IN CURRENT PRICES - PERCENTAGE SHARES, 1972-81 1/

(PERCENTAGES)

------------------------------------------------------------ __---------------__--------------------------------------------

ITEM 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981PRI________AR______ SECTOR_______41 ___1__.3 ____16._____ 17____2 __ 19.______ 2____7 ___ 27.2____ 30.3_____ 31___0___ 28.8_____ 32.0__

PRIMARY SECTOR 41 16.3 16.2 17.2 19.5 25.7 27.2 30.3 31.0 28.8 32.0

AGRICULTURE 42 16.3 16.2 17.2 19.5 25.7 27.2 30.3 31.0 28.8 32.0COMMERCIAL 43 7.6 8.5 8.9 8.9 13.0 12.0 12.4 11.8 10.6 12.0TRADITIONAL 44 8.6 7.8 8.3 10.5 12.7 15.3 17.9 19.2 18.2 19.9

SECONDARY SECTOR 45 31.6 35.8 36.5 31.6 26.7 22.7 21.4 23.0 28.8 23.6

MINING I METAL PROCESSING 46 17.6 23.2 22.8 15.3 13.2 11.6 11.7 16.1 21.7 15.9MANUFACTURING 47 8.5 7.9 8.4 10.0 8.4 7.1 6.1 3.8 3.0 2.7CONSTRUCTION 48 4.6 4.1 4.8 5.8 4.8 3.8 3.4 3.0 4.0 4.9

COMMERCIAL 49 3.1 2.7 3.2 3.9 3.2 2.5 2.3 2.0 2.7 3.3TRADITIONAL 50 1.5 1.3 1.6 1.9 1.6 1.2 1.1 1.0 1.3 1.6

ELECTRICITY, GAS & WATER 55 0.8 0.7 0.5 0.5 0.4 0.3 0.2 0.1 0.1 0.0

TERTIARY SECTOR 51 46.3 42.4 41.5 44.5 44.6 47.7 46.3 43.7 38.9 40.6

NON-GOVERNMENT SERVICES 52 31.8 31.1 29.6 31.5 32.9 36.1 34.5 33.6 29.4 29.9COMMERCE 53 12.8 11.9 12.3 14.3 15.8 18.5 17.6 18.4 18.4 19.6TRANSPORT S TELECOMM 54 8.2 8.3 5.2 4.3 3.2 2.1 1.7 0.9 1.9 2.4OTHER PRIVATE SERVICES 2/ 56 10.9 10.9 12.1 12.9 13.9 15.4 15.2 14.3 9.2 8.0

GOVERNMENT SERVICES 57 14.4 11.3 11.9 13.0 11.7 11.7 11.8 10.0 9.5 10.6

GDP, FACTOR COST 58 94.2 94.5 95.1 95.5 97.0 97.7 98.0 97.7 96.5 96.1

INDIRECT TAXES 59 5.8 5.5 4.9 4.5 3.0 2.3 2.0 2.3 3.5 3.9

GDP, MARKET PRICES 60 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.(

LESS TRADITIONAL ACTIVITIES 61 10.2 9.1 9.9 12.5 14.3 16.5 19.0 20.2 19.5 21.6

MONETIZED GDP 62 89.8 90.9 90.1 87.5 85.7 83.5 81.0 79.8 80.5 7B.4

SOURCE: BANK OF ZAIRE, ANNUAL REPORTS.

1/ REVISED SERIES FOR 1972-79; SEE FOOTNOTE TO PARAGRAPH 13 IN MAINREPORT (VOL Ii.

2/ IN 1981, THIS CATEGORY IS INCLUDED IN GOVERNMENT SERVICES.

DATA DERIVED FROM: ZAI/2N

NOTE: 1981 FIGURES ARE PRELIMINARY.

3s.47 PM i2Zu9i82PAGE 1

TABLE 2.3ZAIRE: GROSS DOMESTIC PRODUCT BY SECTORS. 1970 PRICES, 1972-81 1/

(ZAIRE MILLIONS)

…-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - _ _- - - - - - - - - - - - - - - _ _- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

ITEM 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981______------------------------------------------------------------__--------__--------------------------_________-_-_-_.___

PRIMARY SECTOR 71 165.6 171.9 175.3 172.7 181.9 175.9 176.2 181.6 186.7 191.7

AGRICULTURE 72 165.6 171.9 175,3 172.7 181.9 175.Y 176.2 i816 186.7 191s7COMMERCIAL 73 84.2 88.1 89.0 83.8 90.4 81.7 79.2 81.7 84.1 86.3TRADITIONAL 74 81.4 83.8 86.3 88.9 91.5 94.2 97.0 99.9 102.6 105.4

SECONDARY SECTOR 75 367.8 399.1 419.1 402.4 371.2 374.6 343.4 322.6 336.9 353.1

MINING & METAL PROCESSING 76 226.4 243.4 250.1 242.0 226.7 239.8 218.0 206.3 220.4 236.2MANUFACTURING 77 85.8 93.4 101.1 92.1 84.8 83.0 72.5 68.3 67.5 68.(CONSTRUCTION 78 46.0 51.9 58.5 58.1 48.7 40.6 41.5 37.0 37.4 37.6

COMMERCIAL 79 30.7 34.6 39.0 38.7 32.5 27.1 27.7 25.0 25.0 25.1TRADITIONAL 80 15.3 17.3 19.5 19.4 16.2 13.5 13.8 12.0 12.4 12.5

ELECTRICITY, GAS & WATER 85 9.6 10.4 9.4 10.2 11.0 11.2 11.4 11.0 11.6 11.3

TERTIARY SECTOR 81 408.1 453.6 480.1 446.9 427.3 440.0 416.7 435.8 436.3 438.1

NON-GOVERNMENT SERVICES 82 298.1 333.2 347.8 311.0 284.2 274.2 241.5 227.4 209.3 204.1COMMERCE 83 121.7 129.3 128.7 120.9 113.7 114.0 95.8 95.9 103.8 103.6 1TRANSPORT & TELECOMM 84 73.5 85.7 91.5 82.3 71.1 67.0 65.7 59.2 63.0 67.0

OTHER PRIVATE SERVICES 2/ 86 102.9 118.2 127.6 107.8 99.4 93.2 80.0 72.3 42.5 33.5GOVERNMENT SERVICES 87 110.0 120.4 132.3 135.9 143.1 165.8 175.2 208.4 227.0 234.0

cDPi FACTOR COST S° 94R 1lA-AA 1.074A. 1.022.0 980.4 990.5 936.3 940.0 959.9 982.9

INDIRECT TAXES 89 53.9 51.8 35.6 32.8 18.4 15.9 16.3 15.1 18.6 19.0

GDP, MARKET PRICES 90 995.4 1.076.4 1,110.1 1,054.8 998.8 1,006.4 952.6 955.1 978.5 1.001.9

LESS TRADITIONAL ACTIVITIES 91 96.7 101.1 105.8 108.3 107.7 107.9 110.8 111.9 115.0 117.9

MONETIZED GDP 92 898.7 975.3 1.004.3 946.5 891.1 898.5 841.8 843.2 863.5 884.0

SOURCE: BANK OF ZAIRE, ANNUAL REPORTS

1/ REVISED SERIES FOR 1972-79i SEE FOOTNOTE TO PARAGRAPH 13 IN MAINREPORT (VOL 1).

2/ IN 19819 THIS CATEGORY IS INCLUDED IN GOVERNMENT SERVICES.

NOTE: 1981 FIGURES ARE PRELIMINARY.

DATA SET: ZAI/2N

3.56 PM 12/09/82PAGE 1

TABLE 2.4IMPLICIT GDP DEFLATORS BY SECTORS, 1972-81 I/

(INDEX NUMBERS)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979 1980 198.1

PRIMARY SECTOR 71 113.8 139.3 176.4 216.3 404.2 612.5 941.4 1,895.8 2,650.3 3,938.4

AGRICULTURE 72 113.8 139.3 176.4 216.3 404.2 612.5 941.4 1,895.8 2,650.3 3.938.4

COMMERCIAL 73 105.1 142.0 180.1 204.3 410.2 579.1 857.8 1,607.5 2,167.5 3,295.1

TRADITIONAL 74 122.9 136.5 172.5 227.7 398.3 641.5 1,009.6 2,131.6 3,046.1 4,465.2

SECONDARY SECTOR 75 99.3 132.4 156.6 150.8 205.5 240.3 341.2 791.3 1,472.7 1.576.2

MINING I METAL PROCESSING 76 89.9 140.7 164.2 121.2 166.0 191.8 293.1 866.1 1,698.0 1,585.8

MANUFACTURING 77 115.2 124.2 148.9 208.0 282.1 337.6 463.4 613.8 768.1 952.9

CONSTRUCTION 78 116.1 115.2 146.3 192.3 279.7 366.0 447.0 907.6 1,842.0 3,087.0

COMMERCIAL 79 116.0 115.3 146.4 192.2 279.7 366.1 446.9 907.6 1,842.0 3,086.9

TRADITIONAL 80 116.3 115.0 146.2 192.3 279.6 365.9 447.1 907.5 1.841.9 3,087.2

ELECTRICITY, GAS I WATER 85 100.0 100.0 100.0 100.0 100.0 100.0 100-0 100.0 100.0 100.0

TERTIARY SECTOR 81 131.3 138.1 155.4 190.9 298.6 429.0 609.5 1,113.1 1,534.4 2,185.2

NON-GOVERNMENT SERVICES 82 123.6 137.8 153.2 194.4 331.5 520.2 783,4 1,642.8 2,418.8 3,460.8

COMMERCE 83 122.1 135.9 172.5 227.7 398.3 641.5 1,009.6 2,131.7 3,046.1 4.465.2

TRANSPORT & TELECOMM 84 128.4 142.9 102.3 100.0 128.8 126.0 141.1 176.4 516.8 834.5

OTHER PRIVATE SERVICES 2/ 86 122.1 136.0 170.2 229.0 400.0 655.3 1,040.1 2,195.0 3,705.9 S,607.2

GOVERNMENT SERVICES 87 152.0 139.0 161.4 183.1 233.3 278.2 369.7 535.1 718.9 1,072.6

GDP, FACTOR COST 88 115.7 136.1 159.3 179.4 282.9 390.2 573.6 1,153.9 1,729.8 2,308.4

INDIRECT TAXES 89 125.4 156.4 245.5 260.7 469.6 573.0 676.7 1,713.2 3,243.0 4,815.8

GDP, MARKET PRICES 90 116.3 137.1 162.1 181.9 286.4 393.1 575.3 1,162.7 1,758.5 2,355.9

LESS TRADITIONAL ACTIVITIES 91 121.8 132.8 167.7 221.3 380.4 605.8 939.5 2,000.4 2.916.3 4,319.1

MONETIZED GDP 92 115.7 137.5 161.5 177.4 275.0 367.6 527.4 1,051.5 1,604.4 2P094.1

SOURCE: BANK OF ZAIRE, ANNUAL REPORTS

1/ REVISED SERIES FOR 1972-79; SEE FOOTNOTE TO PARAGRAFH 13 IN MAIN

REPORT (VOL I).

2/ IN 1981, THIS CATEGORY IS INCLUDED IN GOVERNMENT SERVICES.

NOTE: 1981 FIGURES ARE PRELIMINARY.

DATA DERIVED FROM: ZAI/2N

3 ' 59 pM 1 /09/82PAGE 1

TABLE 2.5ZAIRE: GDP ANNUAL GROWTH RATES BY SECTORS, 1973-81 1/

(PERCENTAGES)

_ _ _ _.. .... . . - - - - - - - --.- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

ITEM i973 1974 1975 1976 1977 1978 1979 1980 1981

PRIMARY SECTOR 71 3.8 2.0 -1.5 5.3 -3.3 0.2 3.1 2.8 2.7

AGRICULTURE 72 3.8 2.0 -1.5 5.3 -3.3 0.2 3.1 2.8 2.7COMMERCIAL 73 4.6 1.0 -5.8 7.9 -9.6 -3.1 3.2 2.9 2.6TRADITIONAL 74 2.9 3.0 3.0 2.9 3.0 3.0 3.0 2.7 2.7

SECONDARY SECTOR 75 8.5 5.0 -4.0 -7.8 0.9 -8.3 -6.1 4.4 4.8

MINING S METAL PROCESSING 76 7.5 2.8 -3.2 -6.3 5.8 -9.1 -5.4 6.8 7.2MANUFACTURING 77 8.9 8.2 -8.9 -7.9 -2.1 -12.7 -5.8 -1.2 0.7CONSTRUCTION 78 12.8 12.7 -0.7 -16.2 -16.6 2.2 -10.8 1.1 0.5

COMMERCIAL 79 12.7 12.7 -0.8 -16.0 -16.6 2.2 -9.7 - 0.4TRADi ITIONAL SO 13.1 12.7 --0-5 -16.5 -16,7 2.2 -13.0 3-3 0.8

ELECTRICITY, GAS & WATER 85 8.3 -9.6 8.5 7.8 1.8 1.8 -3.5 5.5 -2.6

TERTIARY SECTOR 81 11.1 5.8 -6.9 -4.4 3.0 -5.3 4.6 0_1 0_4

NON-GOVERNMENT SERVICES 82 11.8 4,4 -10.6 -8.6 -3,5 -11.9 -5.8 -8.0 -2.5COMMERCE 83 6.2 -0.5 -6.1 -6.0 0.3 -16.0 0.1 8.2 -0.2TRANSPORT & TELECOMM 84 16.6 6.8 -10.1 -13.6 -5.8 -1.9 -9.9 6.4 6.3OTHER PRIVATE SERVICES 2/ 86 14.9 8.0 -15.5 -7.8 -6.2 -14-2 -9.6 -41.2 -21.2

GOVERNMENT SERVICES 87 9.5 9,9 2.7 5.3 15.9 5.7 18.9 8.9 3.1

GO'P, FACTOR COST 88 8-8 4.9 -4.9 -4.1 l.0 -5.5 .,_ 2.1 2_ _

INDIRECT TAXES 89 -3.9 -31.3 -7.9 -43.9 -13.6 2.5 -7.4 23.2 2.2

GDP, MARKET PRICES 90 8.1 3.1 -5.0 -5.3 0.8 -5.3 0.3 2.5 2.4

LESS TRADITIONAL ACTIVITIES 91 4.6 4.6 2.4 -0.6 0.2 2.7 1.0 2.8 2.5

MONETIZED GDP 92 8.5 3.0 -5.8 -5.9 0.8 -6.3 0.2 2.4 2.4

SOURCE: BANK OF ZAIRE, ANNUAL REPORTS

1/ REVISED SERIES FOR 1972-79; SEE FOOTNOTE TO PARAGRAPH 13 IN MAINREPORT (VOL 1).

2/ IN 1981, TFIIS CATEGORY IS INCLUDED IN GOVERNMENT SERVICES.

NOTE: 1981 FIGURES ARE PRELIMINARY.

DATA DERIVED FROM: ZAI/2N

2:16 PM 12/28/82PAGE 1

TABLE 2.6ZAIRE: EXPENDITURES ON GDP, CURRENT PRICES, 1972-80

(ZAIRE MILLIONS)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979 1980

TOTAL CONSUMPTION 1 914.8 1,117-2 1,368.3 1,672.2 2,644.5 3,620.8 4,705.6 8,543.3 12,980,3

PRIVATE 2 649.8 804.9 940.5 1,220.3 2,089.2 2,848.6 3,812.2 6,686.3 10,224.5TRADITIONAL 1/ 3 117.8 134.3 177.4 239.7 409.7 653.7 1,041.0 2.238.4 3,353.7COMMERCIAL 4 532.0 670.6 763.1 980.6 1,679.5 2,194.9 2,771.2 4,447.9 6,870.8

PUBLIC 5 265.0 312.3 427.8 451.9 555.3 772.2 893.4 1.857.0 2,755.8SALARY & WAGES 2/ 6 167.2 167.3 213.5 248.8 333.8 461.3 647.7 1,115.1 1,631.9

OTHER 7 97.8 145.0 214.3 203.1 221.5 310.9 245.7 741.9 1,123,9

INVESTMENT 8 386-7 442.0 551.0 612.8 741.6 1,516.5 1,007.0 2,179.0 5,646.6

GROSS FIXED CAPITAL 3/ 9 371.3 372.0 551.0 547.5 655.8 1,371.6 950.2 1,525.9 4,804.2CHANGES IN STOCKS 12 15.4 70.0 - 65.3 85.8 144.9 56.8 653.1 842.4

NET EXPORTS, GNFS 15 -144.2 -83.8 -120.2 -365.9 -525.9 -l,181.1 -232.1 382.7 -1,419.6

EXPORTS,GNFS 13 377.5 561.7 817.2 519.5 926.6 1,116.8 1,216.3 2,742.i 6,102.4IMPORTS, GNFS 14 521.7 645.5 937.4 885.4 1,452.5 2,297.9 1,448.4 2,359.4 7,522.0

GROSS DOMESTIC PRODUCT 16 1.157.3 1,475.4 1,799.1 1,919.1 2,860.2 3,956.2 5,480.5 11,105.0 17,207.3

NET FACTOR SERV INC (FSY) 17 - - -126.4 -153.5 -161.4 -162.0 -165.8 -379.1 -779,1NET CURRENT TRANSFERS (NCT) 18 - - 70.3 87.6 41.2 24.9 32.4 116.8 373.2CURR A/C BAL=EXT SAV 4/ 19 - - -412.4 -396.7 -801.4 -557.9 -69.1 25.6 5.1

GROSS NATIONAL PROD (GDP+FSY) 20 1,157.3 1.475,4 1,672,7 1,765.6 2,698.8 3,794.2 5,314.7 10,725.9 16,428.2

SAVINGSGROSS DOMESTIC (GDP-C) 63 242.5 358.2 430.8 246.9 215.7 335.4 774,9 2,561,7 4.227.0GROSS NATIONAL (GDS+FSY+NCT) 64 242.5 358.2 374.7 181.0 95.5 198.3 641.6 2,299.4 3,821.0

EXCHANGE RATE (Z/US$) 70 0.5 0.5 0.5 0.5 0.8 0.9 0.8 1.7 2.9

SOURCE: BANK OF ZAIRE, ANNUAL REPORTS.

1/ AGRICULTURE AND CONSTRUCTION2/ INCLUDES SALARY AND WAGES OF TECHNICAL ASSISTANCE PAID BY

FOREIGN GOVERNMENTS QR' INTERNATIONAL ORGANIZATIONS.3/ FIGURES SINCE 1977 ARE INCONSISTENT WITH OTHER TRENDS IN THE ECONOMY

AND SHOULD BE USED AND INTERPRETED WITH CAUTION.

4/ REFLECTS BALANCE OF PAYMENTS DATA (TABLE 3.1)

DATA SET: ZAI/2N

7'2~ PM 12/28/82

TABLE 2.7ZAIRE; EXPENDITURES ON GDP, CURRENT PRICES - PERCENTAGE SHARES, 1972-80

(PERCENTAGES)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979 1980

TOTAL CONSUMPTION 1 79.0 75.7 81.8 94.7 98.0 95.4 88.5 79.7 79.0

PRIVATE 2 56.1 54.6 56.2 69.1 77.4 75.1 71.7 62.3 62.2

TRADITIONAL 1/ 3 10.2 9.1 10.6 13.6 15.2 17.2 19.6 20.9 20.4

COMMERCIAL 4 46.0 45.5 45.6 55.5 62.2 57.8 52.1 41.5 41.8

PUBLIC 5 22.9 21.2 25.6 25.6 20.6 20.4 16.8 17.3 16.8

SALARY S WAGES 2/ 6 14.4 11.3 12.8 14.1 12.4 12.2 12.2 10.4 9.9

OTHER 7 8.5 9.8 12.8 11.5 8.2 8.2 4.6 6.9 6.8

INVESTMENT 8 33.4 30.0 32.9 34.7 27.5 40.0 18.9 20.3 34.4

GROSS FIXED CAPITAL 3/ 9 32.1 25.2 32.9 31.0 24.3 36.1 17.9 14.2 29.2

CHANGES IN STOCKS 12 1.3 4.7 - 3.7 3.2 3.8 1.1 6.1 5.1

NET EXPORTS, GNFS 15 -12.5 -5.7 -7.2 -20.7 -19.5 -31.1 -4.4 3.6 -8.6

EXPORTS,GNFS 13 32.6 38.1 48.9 29.4 34.3 29.4 22.9 25.6 37.1

IMPORTS, GNFS 14 45.1 43.8 56.0 50.1 53.8 60.6 27.3 22.0 45.8

GROSS DOMESTIC PRODUCT 16 100.0 100.0 107.6 108.7 106.0 104.3 103.1 103.5 104.7

NET FACTOR SERV INC CFSY) 17 - - -7.6 -6.7 -6.0 -4.3 -3_1 -3 S -4.7

NET CURRENT TRANSFERS (NCT) 18 - - 4.2 5.0 1.5 0.7 0.6 1.1 2.3

CURR A/C BAL=EXT SAV 4/ 19 - - -24.7 -22.5 -29.7 -14.7 -1.3 0.2 0.0

GROSS NATIONAL PROD (GDP+FSY) 20 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

SAVINGSGROSS DOMESTIC (GDP-C) 63 21.0 24.3 25.8 14.0 8.0 8.8 14.6 23.9 25.7

GROSS NATIONAL (GDS+FSY4NCT) 64 21.0 24.3 22.4 10.3 3.5 5.2 12.1 21.4 23.3

EXCHANGE RATE (Z/USS) 70 0.5 0.5 0.5 0.5 0.8 0.9 0.8 1.7 2.8

SOURCE: BANK OF ZAIRE, ANNUAL REPORTS.

1/ AGRICULTURE AND CONSTRUCTION2/ INCLUDES SALARY AND WAGES OF TECHNICAL ASSISTANCE PAID BY

FOREIGN GOVERNMENTS OR INTERNATIONAL ORGANIZATIONS.3/ FIGURES SINCE 1977 ARE INCONSISTENT WITH OTHER TRENDS IN THE ECONOMY

AND SHOULD BE USED AND INTERPRETED WITH CAUTION.

4/ REFLECTS BALANCE OF PAYMENTS DATA (TABLE 3.1)

DATA DERIVED FROM: ZAI/2N

2:25 FM 12/28/82PAGE i

TABLE 2.8ZAIRE: EXPENDITURES ON GDP, 1970 PRICES, 1972-80

(ZAIRE MILLIONS)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979 1980:

TOTAL CONSUMPTION 21 719.5 819.0 804.7 765.2 725.2 664.2 584.8 563.8 604.5

PRIVATE 22 529.9 592.4 548.2 539.0 526.5 449.9 385.3 320.6 340.6TRADITIONAL 1/ 23 96.7 101.1 105.8 108.3 104.8 107.7 110.8 111.9 115.0COMMERCIAL 24 433.2 491.3 442.4 430.7 421.7 342.2 274.5 208.7 225.6

PUBLIC 25 189.6 226.6 256.5 226.2 198.7 214.3 199.5 243.2 263.9SALARY I WAGES 2/ 26 110.0 120.4 132.3 135.9 143.1 165.8 175.2 208.4 227.0OTHER 27 79.6 106.2 124.2 90.3 55.6 48.5 24.3 34.8 36.9

INVESTMENT 28 323.6 351.7 379.7 349.2 272.0 521.7 248.9 390.3 1,O63.''

GROSS FIXED CAPITAL 3/ 29 320.6 298.3 389.7 320.9 244.4 470.0 234.9 273.3 904.6CHANGE IN STOCKS 32 3.0 53.4 -10.0 28.3 27.6 51.7 14.0 117.0 158.6

NET EXPORTS, GNFS 35 -47.7 -94.3 -74.3 -59.6 1-6 -179.5 118.9 1.0 -689.:'

EXPORTS, GNFS 33 493.5 540.1 498.3 467.2 437.9 436.6 442.5 349.4 432.7IMPORTS, GNFS 34 541.2 634.4 572.6 526.8 436.3 616.1 323.6 348.4 1,121.9

GROSS DOMESTIC PRODUCT 36 995.4 1,076.4 1,110.1 1,054.8 998.8 1,006.4 952.6 955.1 978.5

NET FACTOR SERV INC (FSY) 37 - -- -51.4 -58.9 -34.4 -28.3 -24.6 -22.1 -24.0NET CURRENT TRANSFERS (NCT) 38 - - 28.6 33.6 8.8 4.3 4.8 6.8 11-',CURR A/C BAL=EXT SAV 4/ 39 - - -97.1 -84.9 -24.0 -203.5 99.1 -14.3 -701.7

GROSS NATIONAL PROD (GDP+FSY) 40 - - 1,058.7 995.9 964.4 978.1 928.0 933.0 954.5

INCOMEGROSS DOMESTIC (GDP+TTADJ) 94 - - 944.3 787.1 758.1 764.9 690.9 765.5 734.0GROSS NATIONAL (GDY+FSY) 95 - - 892.8 728.2 723.8 736.6 666.3 743.4 710.0

SAVINGSGROSS DOMESTIC (GDY-C) 96 - - 139.6 21.9 32.9 100.7 106.1 201.7 129.5GROSS NATIONAL (GDS+FSY) 97 - - 88.1 -37.0 -1.4 72.4 81.5 179.6 105.5GROSS NATIONAL (GDS+FSY+NCT) 98 - - 116.7 -3.4 7;3 76.7 86.3 186.4 .1 7v

2:25 PM 12/28/82PAGE 2

TABLE 2.8ZAIRE: EXPENDITURES ON GDP, 1970 PRICES, 1972-80

(ZAIRE MILLIONS)

…-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - _ _ - - - - - - - - - - _ _ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

ITEM 1972 1973 1974 1975 1976 1977 1978 1979 1980______------------------------------------------------------------__--------__-----------------_---------------___.

MEMO

TERMS OF TRADE ADJ (TTADJ) 5/ 93 - - -165.8 -267.7 -240.7 -241.5 -261.6 -189.6 -244.5EXPORTS (IMPORT CAPACITY) 102 - - 332.5 199.5 197.2 195.1 180.8 159.8 188.2

EXPORT PRICE INDEX (70=100) 99 - - 164.0 111.2 211.6 255.8 274.9 784.8 1.410.4IMPORT PRICE INDEX (70=100) 100 - - 245.8 260.4 469.8 572.5 672.6 1,716.0 3,242.8TERMS OF TRADE INDEX (70=100) 101 - - 66.7 42.7 45.0 44.7 40.9 45.7 43.5

…-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

SOURCE: BANK OF ZAIRE, ANNUAL REPORTS

1/ AGRICULTURE AND CONSTRUCTION2X TIrl JnFq RAI ARY AND WAGES OF TECHNICAL ASSISTANTS PAID BY FOREIGN

GOVERNMENTS.3/ FIGURES SINCE 1977 ARE INCONSISTENT WITH OTHER TRENDS IN THE

ECONOMY AND SHOULD BE USED AND INTERPRETED WITH CAUTION.4/ REFLECTS BALANCE OF PAYMENTS DATA (TABLE 3.1) >

5/ CALCULATED AS THE DIFFERENCE BETWEEN EXPORTS (GNFS) DEFLATED BY THEIMPORT PRICE INDEX AND EXPORTS (GNFS) DEFLATED BY THE EXPORT PRICEINDEX

DATA SET: ZAI/2N

2:30 Ph 12/28/82PAGE 1

TABLE 2.9ZAIRE: EXPENDITURES ON GDP - ANNUAL GROWTH RATESP 1973-80

(PERCENTAGES)

ITEM 1973 1974 1975 1976 1977 1978 1979 1980

TOTAL CONSUMPTION 21 13.8 -1.7 -4.9 -5.2 -8.4 -12.0 -3.6 7.2

PRIVATE 22 11.8 -7.5 -1.7 -2.3 -14.5 -14.4 -16.8 6.?

TRADITIONAL 1/ 23 4.6 4.6 2.4 -3.2 2.8 2.9 1.0 2.8

COMMERCIAL 24 13.4 -10.0 -2.6 -2.1 -18.9 -19.8 -24.0 8.1

PUBLIC 25 19.5 13.2 -11.8 -12.2 7.9 -6.9 21.9 8.5

SALARY S WAGES 2/ 26 9.5 9.9 2.7 5.3 15.9 5.7 18.9 8.9

OTHER 27 33.4 16.9 -27.3 -38.4 -12.8 -49.9 43.2 6.0

INVESTMENT 28 8.7 8.0 -8,0 -22.1 91.8 -52.3 56.8 172.4

GROSS FIXED CAPITAL 3/ 29 -7.0 30.6 -17.7 -23.8 92.3 -50.0 16.3 231.0

CHANGE IN STOCKS 32 1,680.0 - - -2.5 87.3 -72.9 735.7 35.6

NET EXPORTS, GNFS 35 97.7 -21.2 -19.8 - - - -99.2 -

EXPORTS. GNFS 33 9.4 -7.7 -6.2 -6.3 -0.3 1.4 -21.0 23.8

IMPORTS, GNFS 34 17.2 -9.7 -8.0 -17.2 41.2 -47.5 7.7 222.0

GROSS DOMESTIC PRODUCT 36 8.1 3.1 -5.0 -5.3 0.8 -5.3 0.3 2.5

NET FACTOR SERV INC (FSY) 37 - - 14.6 -41.7 -17.6 -12.9 -10.4 8.8

NET CURRENT TRANSFERS (NCT) 38 - - 17.6 -74.0 -50.4 11.1 41.1 69.0

CURR A/C BAL=EXT SAV 4/ 39 - - -12.6 -71.7 747.9 - - 4,807.0

GROSS NATIONAL PROD (GDP+FSY) 40 - - -5.9 -3.2 1.4 -5.1 0.5 2.3

INCOMEGROSS DOMESTIC (GDP+TTADJ) 94 - - -16.6 -3.7 0.9 -9.7 10.8 -4.1

GROSS NATIONAL (GDY+FSY) 95 - - -18.4 -0.6 1.8 -9.5 11.6 -4.5

SAVINGSGROSS DOMESTIC (GDY-C) 96 - - -84.3 50.4 205.7 5.4 90.0 -35.8

GROSS NATIONAL (GDS+FSY) 97 - - - -96.2 - 12.6 120.4 -41.3

GROSS NATIONAL (GDS+FSY+NCT) 98 - - - - 945.5 12.5 116.0 -37.2

SOURCE: BANK OF ZAIRE. ANNUAL REPORTS

1/ AGRICULTURE AND CONSTRUCTION2/ INCLUDES SALARY AND WAGES OF TECHNICAL ASSISTANTS PAID BY FOREIGN

GOVERNMENTS.3/ FIGURES SINCE 1977 ARE INCONSISTENT WITH OTHER TRENDS IN THE

ECONOMY AND SHOULD BE USED AND INTERPRETED WITH CAUTION.

4/ REFLECTS BALANCE OF PAYMENTS DATA (TABLE 3.1)

DATA DERIVED FROM: ZAI/2N

4:16 PM 12/09/82PAGE I

TABLE 2.10ZAIRE: GROSS FIXED CAPITAL FORMATION, CURRENT S 1970 PRICES, 1972-80

(ZAIRE MILLIONS)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979 1980

* CURRENT PRICES *

BY ORIGIN

IMPORTED EQUIPMENT 105 279.7 267.9 398.1 339.8 408.7 1,043.4 467.2 723.9 3,428.8LOCALLY-PRODUCED EQUIPMENT 106 15.1 18.2 30.1 47.8 51.5 115.1 217.9 333.7 385.8CONSTRUCTION I PUB BLDGS 1/ 107 76.5 85.9 122.8 159.9 195.6 213.1 265.1 468.3 989.6

BY DESTINATION

PUBLIC DIRECT INVESTMENT 111 65.9 155.5 280.4 116.9 203.7 220.7 214.5 440.1 785.9OF WHICH:

DOMESTIC FINANCING 112 30.8 65.3 139.0 45.5 84.6 49.2 61.9 94.7 213.6FOREIGN FINANCING 113 35.1 90.2 141.1 71.4 119.1 171.5 152.6 345.4 572.3

ENTERPRISE S PRIVATE INVEST 114 305.4 216.5 270.6 430.6 452.1 1,150.9 735.7 1,085.8 4,018.3

GROSS FIXED CAPITAL FORMATION 9 371.3 372.0 551.0 547.5 655.8 1,371.6 950.2 19525.9 4P804.2

* CONSTANT PRICES *

BY ORIGIN

IMPORTED EQUIPMENT 108 241.7 209.5 287.6 217.0 157.9 395.6 157.8 205.2 838.7LOCALLY-PRODUCED EQUIPMENT 109 13.0 14.4 18.2 20.7 16.6 16.2 17.8 16.5 12.2CONSTRUCTION S PUB BLDGS 1/ 110 65.9 74.4 83.9 83.2 69.9 58.2 59.3 51.6 53.7

GROSS FIXED CAPITAL FORMATION 29 320.6 298.3 389.7 320.9 244.4 470.0 234.9 273.3 904.6

BY DESTINATION

PUBLIC DIRECT INVESTENrT ii5 56.9 i24.7 16.3 6S.3 73.3 7;.V 5 S. :102.S 146.e

OF DYWHICT FINANCING 116 26.6 54.2 84.1 19.7 27.3 6.9 5.1 4,9 6.8

FOREIGN FINANCING 117 30.3 70.5 102.2 45.6 46.0 65.0 51.5 97.9 140.0ENTERPRISE I PRIVATE INVEST 118 263.7 173.6 203.4 255*6 171.1. 398.1 178.3 170.5 757.8

SOURCE: BANK OF ZAIRE

t/ EXCLUDES TRADITIONAL CONSTRUCTION

DATA SET: ZAI/2N

5:0S FM 07/08/82FAGE 1

TABLE 3.1ZAIRE: SUMMARY BALANCE OF PAYMENTS? 1974-81

(MILLIONS US$)

ITEM 1974 1975 1976 1977 1978 1979 1980 1981

EXPORTS (GNFS) 1 1,470.2 971.5 1,136.0 L,293.0 1*639.7 1,904.5 2,056.0 1,575.5MERCHANDISE (FOB) 2 1,345.8 853.2 1.058.0 1*228.0 1,575.0 1,834.0 1,954.9 1,494.0NON-FACTOR SERVICES 3 124.4 118.3 78.0 65.0 64.7 70.5 101.1 81.5

IMPORTS (GNFS) 4 2,182.8 1,633.1 1,980.0 1,784.0 1,562.9 1,738.0 1,909.2 1,756.9MERCHANDISE (FOB) 5 1,578.8 1,115.1 1,425.0 1,248.0 1,024.1 1,106.9 1,201.3 1096.6NON-FACTOR SERVICES 6 604.0 518.0 555.0 536.0 538.7 631.1 707.9 660.3

RESOURCE BALANCE 7 -712.6 -661.6 -844.0 -491.0 76.9 166.5 146.8 -181.4

NET FACTOR INCOME 8 -252.8 -307.0 -200.0 -189.0 -198.3 -219.3 -278.3 -425.8FACTOR RECEIPTS 9 14.4 4.0 35.6 8.4 24.9 10.1 32.4 14.0FACTOR PAYMENTS 10 267.2 311.0 235.6 197.4 223.2 229.3 310.7 439.8(MSLT INTEREST PAID) 1/ 11 -64.0 -84.0 149.0 153.0 184.0 162.8 212.1 342.0

NET CURRENT TRANSFERS 12 140.6 175.2 51.0 29.0 38.8 67.6 133.3 106.2PRIVATE 13 - - - - -103.7 -96.9 -75.7 -82.6PUBLIC 14 - - - - 142.5 164.5 209.0 188.8

CURRENT BALANCE 15 -8-24.8 -793.4 -993.0 -651.0 -82.6 14.8 1.8 -501.0

NET MSLT LOANS 16 428.0 410.4 464.0 225.0 122.7 -49.6 23.8 -159.2DISBURSEMENTS 17 686.0 632.2 655.0 518.0 483.3 198.5 403.8 200.5AMORTIZATION 1/ 18 258.0 221.8 191.0 293.0 360.6 248.1 380.0 359.7

SDR ALLOCATIONS 19 - - - - - 20.4 20.8 18.9

DEBT RESCHED & EMERG ASST 21 - 61.9 124.0 217.0 56.5 65.5 1,632.1 535.3PAYMENTS ARREARS 22 - 265.0 192.0 335.0 348.6 217.3 -1,366.6 -44.8

NET CREDIT FROM IMF 24 - - 124.0 32.0 -12.5 -14.8 16.9 102.6PURCHASES 25 - - 150.0 39.0 - 25.8 101.5 229.9REPURCHASES 26 - - 26.0 7.0 12.5 40.6 84.7 127.3

CAPITAL NEI; ERRORS S OMIS 28 175.7 -151.6 146.0 -54.0 -369.3 -220.4 -280.1 -66.0

CHANGE IN NET RESERVES 2/(- = INCREASE) 27 221.1 207.7 -57.0 -104.0 -63.4 -33.2 -48.7 114.2

EXCHANGE RATE Z/US$ 99 0.5 0.5 0.8 0.9 0.8 1.7 2.8 4-4EXCHANGE RATE US$/SDR 100 1.2 1.2 1.2 1.2 1.3 1.3 1.3 1.2

SOURCE: IMF

1/ DUE BEFORE DEBT RESCHEDULING.2/ INCLUDES VALUATION GAINS ON GOLD SALES OF US$127 MILLION IN 1974, US$30

MILLION IN 197S, AND US$14.2 MILLION IN 1979.

NUTE: 1981 FIGURES ARE PRELIMITAPRY.

DATA SET: ZAI/3B

5:15 PM 07/08/82PAGE i

TABLE 3.2ZAIRE: BALANCE OF PAYMENTS, 1974-81

(MILLIONS US$)

…-------------------------------------------------------------__-------------__--------------------------ITEM 1974 1975 1976 1V77 1978 1979 1980 1981

…-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . . - - - - - - - - . . - - - - - - - - - - - - - - - - - - - - - - - - -..-

* * CURRENT ACCOUNT * *

GOODS AND SERVICES 30 -965.4 -968.6 -1,044,0 -680.0 -121.4 -52.8 -131.5 -607.2

CREDIT 31 1,484.6 975.5 1,171.6 1,301,4 1,664.6 1,914.6 2.088.4 1,589.5DEBIT 32 2,450.0 1,944,1 2,215.6 1Y981.4 1,786.1 1,967,4 2,219.9 2,196,7

MERCHANDISE TRADE 33 -233.0 -261.9 -367.0 -20,0 550.9 727,1 753.6 397,4

EXPORTS (FOB) 2 1,345.8 853,2 1,058.0 1,228,0 1,575.0 1,834.0 1,954.9 1,494,0IMPORTS (FOB) 5 1,578.8 l,ll5.l 1,4250 1,248.0 1,024.1 1,106.9 I,201.3 1,O96,6

SERVICES 34 -732.4 -706.7 -677.0 -660.0 -672.3 -779.9 -885.0 -1,004.6

CREDIT 35 138.8 122.3 113.6 73.4 89.6 80.6 133.5 95.5DEBIT 36 871.2 829.0 790.6 733.4 761.9 860.5 1,018.6 1,100.1

NON-FACTOR SERVICES 37 -479.6 -399.7 -477.0 -471,0 -474.0 -560.6 -606.8 -578,8

CREDIT 3 124.4 118,3 78.0 65.0 64.7 70.5 101.1 81.5DEBIT 6 604.0 518.0 555.0 536.0 538.7 631,1 707.9 660.3

FREIGHT 8 INSURANCE 38 -201.6 -182.5 -260.5 -208.7 -172.0 -208.6 -253.8 -243,0CREDIT 39 27.8 13.6 4.2 0.8 1.0 1,7 1.2 142DEBIT 40 229.4 196.1 264.7 209.5 173.0 210.3 255.0 244.2

TRAVEL 41 -39.4 -31.4 -19.3 -25.8 -34.0 -34.8 -34.4 -31.9CREDIT 42 8.0 5.5 4.4 3.6 3.1 4.9 3.9 3.5DEBIT 43 47.4 36.9 23.7 29.4 37,1 39.7 38.3 35.4

OTHER TRANSP 44 -25.0 -7.3 -21.7 -42.4 -64.6 -45.5 -64.8 -50.8rREDc IT T5 3.6 1. 5t 15. 11 2 4,9 0i9 2;9 3;5DEBIT 46 38.6 23.4 37.5 53.6 69.5 46.4 67.7 54.3

GOVERNMENT N.E.I. 47 -127.6 -81.9 -91.4 -75.3 -77.0 -93.0 -81.1 -755CREDIT 48 30.0 28.2 19.9 31.6 31.8 39.7 47.9 42.5DEBIT 49 157.6 110.1 111.3 106.9 108.8 132.7 129.0 118.0

OTHER SERVICES 50 -86.0 -96.6 -84.1 -118.8 -126.5 -178.7 -172.7 -177,6CREDIT 51 45.0 54.9 33.7 17.8 23.8 23.4 45.3 30,8DEBIT 52 131.0 151.5 117.8 136,6 150.3 202.1 218.0 208.4

5:15 PM 07/08/82PAGE 2

TABLE 3,2ZAIRE: BALANCE OF PAYMENTS, 1974-81

(MILLIONS US$)

ITEM 1974 1975 1976 1977 1978 1979 1980 1981

FACTOR SERVICE INCOME 8 -252.8 -307.0 -200.0 -189.0 -198,3 -219.3 -278.3 --425.8

CREDIT 9 14.4 4.0 35.6 8.4 24.9 10.1 32,4 14.0DEBIT 10 267.2 311.0 235.6 197.4 223.2 229.3 310.7 439.8

WORKERS' REMITTANCES 53 -137,2 -197.8 - - - - - -CREDIT 54 - - - - - - - -

DEBIT 55 137.2 197.8 - - - - - -

INTEREST; OTH INV INC 1/ 56 -115,6 -109.2 -200.0 -189.0 -198.3 -219,2 -278.3 -425.8CREDIT 57 14.4 4.0 35.6 8.4 24.9 10.1 32.4 14.0DEBIT 58 130.0 113.2 235.6 197.4 223.2 229.3 310.7 439.8

CURRENT TRANSFERS 12 140.6 175.2 51.0 29.0 38.8 67.6 133.3 106,2

PRIVATE 13 - - - - -i03,7 -96.9 -75.7 -82.6PUBLIC 14 - - - - 142.5 164.5 209.0 188.8

CURRENT ACCOUNT BALANCE 15 -824,8 -793.4 -993.0 -651.0 -82.6 14.8 1.8 -501,0

t * CAPITAL ACCOUNT * *

PRIVATE CAPITAL; ERR & OMIS 28 175.7 -151.6 146,0 -54.0 -369.3 -220.4 -280.1 -66.0

CREDIT 59 175,7 20.9 245.6 - - - - -

DEBIT 60 - 172.5 99.6 - - - - -

M&LT CAPITAL 16 428,0 410.4 464.0 225.0 122.7 -49,6 23,8 -159,2

CREDIT 17 686,0 632.2 655.0 518.0 483.3 198.5 403.8 200.5DEBIT 18 258.0 221.8 191.0 293.0 360.6 248.1 380.0 359,7

SDR ALLOCATIONS 19 - - - - - 20.4 20.8 18.9

5:15 PM 07/08/82PAGE 3

TABIE -32ZAIRE: BALANCE OF PAYMENTS, 1974-81

(MILLIONS US$)

…-------------------------------------------------------------__-------------__-_------------------------

ITEM 1974 1975 1976 .1977 1978 1979 1980 1981--------------------------------------------------- ____________-________-----------------------~~~~~~~~~~~

NET IMF CREDITS . 24 - - 124,0 32.0 -12.5 -14.8 16.9 102.6

PURCHASES 25 - - 150.0 39.0 - 25.8 101.5 229.9REPURCHASES 26 - - 26.0 7.0 12.5 40.6 84.7 127.3

DEBT RESCHEDULING 61 - 61.9 124.0 203.5 - - 1556.6 471.6

EMERGENCY ASSISTANCE 62 - - - 13.5 56.5 65.5 75.5 63.7

PAYMENTS ARREARS 22 - 265.0 192.0 335.0 348.6 217.3 -1,366.6 -44.8

CHANGE IN RESERVES (-=GAIN) 2/ 27 221.1 207.7 -57.0 -104.0 -63.4 -33.2 -48.7 114.2

SOURCE: IMF °

1/ INTEREST DUE BEFORE DEBT RESCHEDULING.2/ INCLUDES VALUATION GAINS ON GOLD SALES OF US$127 MILLION IN 1974,

US$30 MILLION IN 1975, AND US$14.2 MILLION IN 1979,

NOTE: 1981 FIGURES ARE PRELIMINARY.

DATA SET: ZAI/3B

10:59 AM 07/26/82PAGE 1

TABLE 3.3ZAIRE: EXPORTS BY COMMODITYP 1972-81

(VALUE IN MILLIONS US$; VOLUME IN THS. METRIC TONS';UNIT VALUE IN $/THS MT, UNLESS INDICATED)

----------------------------------------------------------- __----------------__--------------------------------------------

ITEM 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981

V * VALUE * *

COPPER 1 407.2 651.8 904.1 483.6 578.9 476-2 480.0 735.7 978.1 806.3GECAMINES 4 - - - 431.0 404.6 442.0 461.5 679.0 911.7 750.8SODIMIZA 7 - - - 52.6 174.3 34.2 18.5 56.7 66.4 55.5

COBALT 10 53.6 77.2 71.5 92.1 113.9 104.9 260.0 577.5 413.3 168.7ZINC 13 23.8 32.6 52.0 29.7 50.3 32.5 16.9 23.3 21.4 68.8CASSITERITE 19 14.7 13.4 21.7 15.6 20.7 27.0 28.3 18.8 23.8 17.8SILVER 16 - - 7.4 6.2 7.3 7.2 10.9 23.5 54,4 21.9GOLD 22 7.0 9.2 15.9 13.4 9.6 6.7 6.9 12.9 22.4 14.8DIAMONDS 31 42.8 57.4 62.5 61.5 58.6 64.5 125.0 98.7 96.5 66.8

COFFEE 37 56.0 72.6 60.4 54.3 127.6 193.3 163.7 144.5 163.1 104.2PALM OIL & FALM KERNEL OIL 34 25.2 27.1 57.0 41.0 18.5 23.0 11.7 8.7 15.0 11.3RUBBER 40 11.0 15.4 18.3 11.7 14.3 23.9 20.1 16.6 19.8 20.8CRUDE OIL 43 - -- - - - 7.6 1.0 - 152.7 228.2 259.9OTHER 46 57.0 86.6 83.2 47.5 50.8 267.9 449.1 120.7 89.9 113.7

LESS MARKETING COSTS 126 -12.6 -12.8 -15.0 -12.4 - - - -211.0 -240.4 -181.4

ADIJUSTMENT 47 5.1 6.7 6.8 9.0 - - 2.4 111.4 69.4 -

TOTAL EXPORTS FOB 48 690.8 1,037,2 1,345.8 853.2 1,058.1 1.228.1 1,575.0 1,834.0 1.954.9 1,493.6

O.W. GECAMINES 49 - - - - - 1,087.6 1,128.2 830.0

* * VOLUME * *

COPPER 2 448.0 485.0 477.5 455.9 461.4 481.5 423.9 383.6 460.0 472.5GECAMINES 5 - - - 410.4 396.0 446.7 411.2 354.0 436.7 440.0SODIMIZA 8 - - - 45.5 65.4 34.8 12.7 29.6 23.3 32.5

COBALT 11 14.9 18.2 13.5 11.9 12.8 10.2 13.1 12.0 8.0 4.5ZINC 14 69.6 68.8 62.0 44.4 30.0 63.8 41.3 31.5 29.6 80.0CASSITERITE 20 6.3 6.8 6.0 6.0 5.0 4.4 3.6 2.5 2.8 7.5SILVER (METRIC TONS) 17 51.7 49.6 41.0 57.0 48.3 67.9 71.3 68.0 83.5 59.7GOLD (METRIC TONS) 23 3.1 2.5 6.1 3.4 2.6 2.3 1.3 1.4 1.1 1.3DIAMONDS (MILL CARATS) 32 12.0 14.2 13.1 12.9 12.2 11.5 11.1 8.2 8.7 6.7

COFFEE 38 74.0 66.9 77.7 58.9 108.6 64.1 81.8 62.8 74,1 63.0PALM OIL & PALM KERNEL OIL 35 124.2 102.5 96.4 81.8 62.4 36.5 26.8 17.6 28.7 25.1RUBBER 41 37.7 30.2 26.6 24.2 21.1 27.6 26.1 16.6 19.8 21.0CRUDE OIL (MILL BLS) 44 - - - - 9.1 8.3 6.6 7.5 6.6 7-3

10:59 AM 07/26/82

PAGE 2TABLE 34

ZAIRE: EXPORTS BY COMMOOITYr 1972-Si.(VALUE IN MILLIONS US$; VOLUME IN THE. METRIC TONS;

'INIT VALUE IN S/THE MT, UNLESS INDICATED)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979 1 980 198:1

**UNIT VALUE**

COP PER 3 908.9 1 ,343. 9 1,P893. 4 1,P060. 8 1 ?254 .7 989.0 1,132.3 1,917.9 2, 126.3 1,f706,GECAMINES 6 - - - 1,P050.2 1,P021 .7 989.5 1 ,122.3 1P918.1 2,087.8 1,706.4SODIMIZA 9 --- 1,r156.0 2,665.1 982.8 1,P456.7 1,p9 17 .3 2,8 4 98 1, I707.7

COBALT 12 3,597.3 4P241.8 5Y296.3 7,739.5 8,898,4 10,284.3 19,847.3 4 8 9125.O0 51,662.5 37,488.9ZINC 15 342.0 473.8 838.7 668.9 1,Y676.7 509.4 40 9 .2 740.5 723.0 860.0CASSITERITE 21 2,333.3 1,970.6 3,616.7 2,P600. 0 4,91 40 .0 6,t136. 4 7,p861 .1 7,520.0 6,500.0 2,p3 73,.3SILVER 18 -- 180 .5 1 08. 8 151 .1 106.0 152.9 345.6 651.5 366. 8GOLD' 24 2Y258.1 3,680.0 2,606.6 3,941.2 3Y692.3 2,913.0 5,v307 7 9,p2 14 .3 20,363.6 1 1,y3 84 .6DIAMONDS ($/THS CARATS) 33 3,566.7 4,042.3 4,p771 .0 4 ,767. 4 4,803,3 5,P608. 7 1 1,r261.3 12,r036. 6 1 1,i09 2 .0 9,p9 70 .1

COFFEE 39 756.8 1v085.2 777.3 92 1 .9 1,p175 .0 3,015.6 2,v001.2 2Y301.0 2,200.4 1 ,654 .0PALM OIL & P'ALM KERNEL OIL 36 202.9 Z'64 ,4 591i. 3 501.2 296 .35 630.1I 436.6 4494i.3 522.6 4507 C. w"RUBBER 4 2 291.8 509.9 688,0 48 3. 5 6 77 .7 865.9 770.1 1 '00 0 .0 1,r00 0.0 990.5CRUDE OIL (S/BL) 4 5 - - - - - 109,4 - 2 0.3 345 35 8

SOURCE: IMF AND BANK OF ZAIRE

NOTE: 1981 FIGURES ARE PRELIMINARY.

DATA SET: ZAI/3T.

1l:24 AM 07/26/82PAGE 1

TABLE 3.4ZAIRE: VOLUME OF PRINCIPAL AGRICULTURAL EXPORTS, 1973-81

…____________----______________________________________________________________________________________________.ITEM 1973 1974 1975 1976 1977 1978 1979 1980 1981

* * (THS. METRIC TONS) * %

COFFEE 38 66.9 77.7 58.9 108.6 64.1 81.8 62.8 74.1 63.0

ROBUSTA 144 56.3 68.7 50.9 87.9 55.9 71.6 55.0 67.7 59.4ARABICA 145 10.7 9.0 8.0 20.8 8.2 10.2 7.8 6.4 3.6

PALM OIL 146 69.7 62.4 53.2 39.7 21.5 9.6 - 10.0 6,2PALM KERNEL OIL 147 32.8 34.0 28.6 22.7 15.0 17.2 17.6 18.7 18.9PALM HUSKS 148 30.5 39.4 30.8 32.0 26.0 22.6 18.1 24,2 30.7

RUBBER 41 30.2 26.6 24.2 21.1 27.6 26.1 16.6 19,8 21.0TEA 143 6.7 5.9 4.7 5.4 4.2 3.8 2.7 1.5 2.0COCOA 149 4.9 4.7 5.3 4.3 3.9 4.3 3.5 4.2 4.5

* (THS CUBIC METERS) * *

WOOD 153 102.4 72.5 24.8 77.2 91.3 85.1 84.8 96.9 96.6---- -- - - - - -- - -- - - - - -- - - - - - - -- - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - -- - -- - - - - - -

LOGS 150 50.0 29.9 2.2 61.7 59.2 43.2 48.2 66.1 66.4SAWN 151 36.1 24.7 16.6 12.2 29.4 30,7 28.6 21.8 19,7PLANKS AND OTHERS 152 16.3 17.9 6.0 3.3 2.7 11.2 8.0 9,0 105

…__ _ _ _ _ _ _- - --_- -_ _- -__ _ _ _ _ _ _- - --__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _SOURCE: BANK OF ZAIRE

DATA SET: ZAI/3T

NOTE: 1981 FIGURES ARE PRELIMINARY.

12:41 PM 06/25/82PAGE 1

TABLE 3.5ZAIRE: COMPOSITION OF IMPORTS, BY END USE, 1978-81

(MILLIONS USS)

ITEM 1978 1979 1980 1981

CONSUMER GOODS 51 263.5 235.8 244.0 208.3

FOOD,BEVERAGES,TOBACCO 52 155.4 95.7 87.5 76.8CLOTHING 53 28.4 20.5 26.7 21,9OTHER NONDURABLES 54 52.5 78.6 103,2 87.8DURABLE CONSUMER 55 27.3 41.0 26.7 21.8

ENERGY 56 103.9 178.0 241.3 263.0

RAW MATERIALS 57 19.0 63.2 73.7 81,2PROCESSED MATERIALS 58 85.9 114.9 167.6 181.9:

INTERMEDIATE GOODS 59 294.2 299.6 315.8 307.0

FOOD PRODUCTS 60 68.9 87.7 74.1 65.8AGRICULTURAL INPUTS 61 16.4 8.0 21.9 21.9

TEXTILES, RUBBER, LEATHER 62 51.5 37.6 30.3 32.9CHEMICALS 63 65.6 55.8 71.7 71.4CONSTRUCTION MATERIALS 64 15,3 10.2 18.2 21.9

MINERALS S METAL PROD 65 38.3 51.3 47.4 54.8OTHER 66 7R.3 49.0 52.2 38.2

CAPITAL GOODS 67 182.5 173.1 204.1 197.3

AGRICULTURAL MACHINERY 68 6.5 2.3 14.6 16.4COMMERCIAL VEHICLES 69 61.2 60.3 72.9 71.2

OTHER TRANSPORT EQUIPMENT 70 15.3 17.1 13.4 16.4

INDUSTRIAL MACHINERY 71 20.8 22.7 25.5 27.5OTHER CAPITAL 72 78.8 70.7 77.7 65.8

OTHER IMPORTS. c.i.f. 73 353.3 430.5 450.7 383,1

TOTAL IMPORTS 74 1,197.5 1.317.1 1,455.9 1,358.8

SOURCE: IMF

NOTE: 1981 FIGURES ARE PRELIMINARY4

DATA SET: ZAI/3T

12:16 FMN 06/09/82PAGE I

TABLE 3.6ZAIRE: DIRECTION OF TRADEY 1973"-80

(PERCENTAGES)

ITEM 1973 1974 1975 1976 1977 1978 1 97 9 1980

**EXPORTS **EEC 110 82.3 85.7 79,7 70.3 77.0 76.6 73.2 74.8

BELGIUM & LUXEMBOURG I111 4 8 .7 4 7 .4 40.9 4 3. 2 3 9 .7 4 2,1 4 5.1 50.3FRANCE 112 6.7 7.6 6.9 7.2 10.3 8.1 8.4 7.2ITALY 113 13.5 14.4 14.6 8.0 10.0 7.3 6.0 6.3GERMANY 114 6.3 6.8 6,.9 5. 4 7.5 6.9 5.4 4.7NETHERLAND'S 115 2.7 4.0 4.2 1.6 2.4 1.5 1.0 1.0UNITEE' KINGDOM 116 4.5 5.4 6 .2 4.7 6.4 10.5' 7,1 5.0IRELAND, ANDI DENMARK 117 0.0 0.0 0.1 0.2 0.6 0.2 0 .2 0.4

NORTH AMERICA 118 5.9 4.3 6.7 14.4 11.3 12.8 14.4 14.9

JAPAN 119 6.7 6.8 5.5 6.0 5.6 4,6 5.8 5.5

OTHER DECD 120 2.7 1.7 3.9 2.8 3.7 2.8 2.3 2.2

OTHERS 121 2.4 1.5 4.2 6.4 2.4 3.3 4.2 2.5

TOTAL EXPORTS 122 100,0 1 00 .0 100.0 100.0 :100,0 100,0 1i00.0 :100,0

*IMPORTS*

EEC 130 6 3. 0 63.6 62.6 58.0 62.9 66.2 66.4 70.15

BELGIUM & LUXEMBOURG 131 20,4 19.1 16.8 17.1 22.4 23.7 21.1 25.9FRANCE 132 10.9. 11.2 14.0 16.2 11.19 15.3 16.5 12.5ITALY 133 8.0 8.0 6.6 4.3 7.2 7.2 4.7 7.2GERMANY 134 13.9 15.2 14.9 11.0 10.9 12.0 15.3 15.6NETHERLANDS 135 4.8 4.5 4.5 5.5.E 6.3 2.4 3.0 2.7UJNITED KINGriOM 136 4.1 5.0 5.6 3.7 4.0 5. 3 5.4 6.3IRELANDi AND DENMARK 1 37 0.8 0.7 0. 2 0.2 0.2 0.3 0 .4 0.2

NORTH AMERICA 138 16.6 15.2 19.9 :12.4 14.1 10.9 12.8 15.6

JAPAN 139 7.4 7.0 4.0 3.8 4.6 3.2 3.0 4.6

OTHER OECD 140 6.9 6,5 7.6 13,4 11.8 12.6 8,4 8 .,I.

OTHERS 141 6.1 7.7 5.9 12.4 6.7 7.2 9.5 1.3

TOTAL I MPFO RT S 142 .1,00.0 100 c.0C 00o.0 '1.00.0 :i.00,0 :100,0 :100.0 :100.0

SOURCE:. BANK OF ZAIRE

DATA DERIVED FROM: ZAI/3T

- 107 -

Table 3.7: ZAIRE: Terms of Trade, 1973-81(1970-10i))o!7

Index of Export Prices IndexMineral Agricultural Total of import TermsProducts Products Index2/ prices2J of Trade

1973 103.0 109.7 104.0 156.3 66.5

1974 135.0 172.5 140.6 204.4 68.8

1975 83.2 121.6 88.9 214.15 41.4

1976 102.4 196.5 116.4 252.0 46.2

1977 102.6 288.2 130.1 286.1 45.5

1978 113.7 225.0 130.2 321.5 40.5

1979 171.7 226.0 182.1 383.1 47.5

1980 187.2 223.9 191.3 443.4 43.1

1981 165.4 243.5 179.8 496.6 36.2

1/ Original data expressed in SDRs.

2/ Weighted according to the importance of eaclh export item.

3/ Weighted according to the importance of each importing country.

Sources: Bank of Zaire, and IMF.

- 108 -

Table 3.8: TOTAL AID- AND ODA FLOWS TO ZAIRE(AS REPORTED BY DAC), 1976-80

(Million US$)

1976 1977 1978 1979 1980

A. Commitments

1. Total Flows/ 315.4 287.0 421.4 430.5 544.9

Bilateral -/ 217.5 240.2 323.0 266.1 422.6Multilateral 97.9 46.9 98.4 164.4 122.2

2. ODA Loans 92.8 84.5 88.9 96.5 n.a.

Bilateral 42.3 66.5 70.8 29.3 n.a.Multilateral 50.5 18.0 18.1 67.2 n.a.

B. Disbursements

1. Total Flowst net 489.2 512.3 707.1 732.5 775.8

Bilateral 404.3 397.2 571.7 602.9 623.2Multilateral 63.8 115.1 135.4 124.9 129.1OPEC, bilateral 21.1 - - 4.8 23.5

2. ODA, net-/ 193.7 260.6 316.9 416.4 446.03/Bilateral- 148.7 170.9 204.0 293.5 340.3

Multilateral 44.9 89.7 112.9 122.9 105.7

1/ Only flows which qualify as "official development assistance" as defined by DAC;figures are not consistent with other capital account estimates in this reportbecause DAC treats debt rescheduling as new aid.

2/ In addition to aid, includes grants from private agencies (private aid) andtransactions at commercial terms: export credits, bilateral portfolio invrestment(including bank lending) by residents or institutions in DAC countries; directinvestment (including reinvested earnings) and purchases of securities of inter-national organisations active in development.

3/ Includes OPEC Countries.

4/ Less capital repayments on earlier loans.

Sources: Development Assistance Committee (DAC), Paris.

Table 3.9: ZAIRE: DAC Grants and Technical Assistance by Source, 1978-80

(US$ million)

i978 19 070 1980

Technical Technical TechnicalGrants Assistance Grants Assistance Grants Assistance

Bilateral 175.9 126.4 218,1 136.0 245.7 145.3

Belgium 129.0 92.4 147.4 101.2 148.6 106.1France 17.6 11.6 22.4 17.0 24.4 16.2Germany 11.4 11.2 10.0 9.9 11.0 9.7United States 7.0 5.0 9.0 3.0 10.0 7.0Canada 4.1 0.9 5.6 1.2 13.4 0.7OPEC Countries - - 4.8 - 23.5

Other 6.8 5.3 18.9 3.7 14.8 5.6o

Multilateral 39.4 IS.6 4R=4 24.0 36.8 25.2

EEC 18.3 - n.a. n.a. n.a. n.a.UNHCR 9.9 9.9 14.8 n.a. 8.2 n.a.UNDP 4.7 4.7 5.7 5.7 11.6 11.6WFP 2.6 - 5.3 n.a. 2.8 n.a.OTHER 3.9 22.6 18.3 14.2 13.6

Total 215.3 145.0 266.5 160.0 282.5 170.5

Source: Development Assistance Committee, OECD.

Table 4.1: STRUCTURE OF COMMITMENTS, 1975-1981, BY TYPE OF CREDITOR(Million US$)

Average % share

Type of Creditor 1975 1976 1977 1978 1979 1980 1981 1975-77 1978-81

Total 471.3 376.2 240.5 486.8 365.9 290.0 184.0 (100.0) (100.0)

Private Credits 179.4 183.3 102.8 123.1 155.4 20.0 20.7 ( 42.8) ( 24.0)Suppliers 76.8 30.1 22.6 22.3 91.4 7. ( 11.9) ( 9.0)

Financial Inst. 102.6 153.2 80.2 100.8 64.0 20.0 13.7 ( 30.9) ( 15.0)

Official Credits 291.9 192.9 137.7 363.7 210.5 270.0 163.3 ( 57.2) ( 76.0)Multilateral 166.4 67.4 39.2 100.7 127.2 100.0 66.5 ( 25.1) ( 30.0)Bilateral 125.5 125.5 98.5 263.0 83.3 170.0 96.8 ( 32.1) ( 46.0)

Source: OGEDEP.

Table 4.2: COMMITMENTS, 1975-1981, BY CREDITOR COUNTRY(Million US$)

Average % share

Creditor Country 1975 1976 1977 1978 1979 1980 1981 1975-77 1978-81

TOTAL 471.3 376.2 240.5 486.9 365.9 290.0 184.0 (100.0) (100.0)

Belgium - 44.3 62.3 24.9 15.4 34.1 10.8 ( 9.8) ( 5.9)Canada - 2.7 13.5 - - - - ( 1.5) ( - )France 76.0 79.3 17.8 92.8 - 41.0 54.0 ( 15.9) ( 29.3)Germany 2.5 64.6 9.2 39.7 9.0 52.2 17.7 ( 7.0) ( 9.6)Italy 65.1 30.6 15.4 - 91.4 20.1 - ( 10.2) ( - )Japan - - - 165.5 - - - ( - ) ( - )Kuwait 35.0 - - - - - - (3.2) (- )Libya 101.3 - - - - - 9 (93) (- )Spain - - - 6.5 - - - ( - ) ( - )Switzerland - - 17.3 - - - - ( 1.6) ( - )United Kingdom - 6.1 - 8.4 - - - ( 0.5) ( - )United States 25.0 81.1 65.6 48.5 123.0 30.0 12.0 ( 15.8) ( 6.5)Yugoslavia - - - - - 15.2 - ( - ) ( - )Other - - - - - 34.1 9.0 ( - ) ( 4.9)

Int'l Organizations 166.4 67.4 39.3 100.7 127.2 63.3 80.5 ( 25.1) 43.8of which: IBRD 100.0 - - - - - ( 9.2)

IDA 52.0 50.5 18.0 9.0 46.0 30.0 23.6 ( 11.1) ( 12.8)

Source: OEGTEP.

- 112 -

Table 4.3: AVERAGE TERMS STRUCTURE OF COMMITMENTSBY TYPE OF CREDITOR, 1977-1981

Average Terms 1977 1978 1979 1980 1981

Interest (%) 2.3 4.3 6.0 3.4 5.7Suppliers 5.6 9.5 7.5 6.0 13.0Banks 2.31/ 7.0 10.3 10.1 8.5Multilateral 1.6 1.5 1.6 0.6 3.8Bilateral 2.3 3.9 7.9 1.8 6.8

Maturity (years) 22.5 19.1 18.3 20.7 25.4Suppliers 6.3 5.8 8.3 10.0 9.0Banks 14.4 9.5 9.0 8.4 15.0Multilateral 31.9 23.8 31.0 23.0 30.2Bilateral 29.1 22.3 16.8 28.7 22.5

Grace Period (years) 5.0 4.5 6.1 6.6 6.4Suppliers 2.5 0.5 2.3 2.5 -Banks 2.6 3.1 4.6 1.6 4.0Multilateral 7.4 7.1 7.6 7.1 6.3Bilateral 6.5 4.4 10.1 10.5 6.9

Grant Element (%) 48.3 36.6 26.9 46.0 30.0Suppliers 14.1 - 1.3 8.9 16.8 -Banks 42.5 12.1 - 1.9 - 0.8 -Multilateral 61.3 57.5 60.6 60.3 -Bilateral 55.7 41.5 14.7 67.1 -

1I/ This low average is affected by a large interest-free loan from BELGOLAISE forindemnization of former shareholders of the KDL.

Note: Above averages exclude terms of debt reschedulings with the Paris Club andsyndicated private banks.

Sources: OGEDEP and World Bank Debt Reporting System.

- 113 -

Table 4.4: DEBT SERVICE PAYMENTS, 1976-1981 BY TYPE OF CREDITOR(Million US$)

Type of Creditor 1976 1977 1978 1979 1980 1981

Total 87.9 114.1 139.5 168.0 308.3 230.0

Private Creditors 65.8 75.7 92.4 93.2 91.0 111.7Suppliers 28.7 23.4 17.5 22.6 - 3.7Banks 36.8 52.3 74.9 70.6 91.0 108.0Bonds 0.3 - - - -

COfficial Creditors 22.1 38.4 47.2 74.8 217.3 118.3'Multilateral 8.5 9.8 13.3 24.4 24.3 25.0Bilateral 13.6 28.6 33.9 50.4 193.0 93.3

'-ource: OGEDEP.

- 114 -

Table 4.5: CUMULATIVE ARREARS ON DEBT SERVICE, END OF YEAR, 1976-1981(Million US$)

Suppliers andNon-Syndicated Syndicated Official

End-year Bank Credits Bank Credits Creditors Total

1976 44.7 89.8 7.0 141.5Principal 26.2 68.5 0.5 95.2Interest 18.5 21.3 6.5 46.3

1977 173.3 171.6 51.4 396.8Principal 115.6 144.4 24.5 284.8Interest 57.7 27.2 26.9 112.0

1978 327.0 236.8 77.9 641.7Principal 234.6 222.9 40.2 497.6Interest 92.4 13.9 37.7 144.1

1979 629.6 279.6 96.7 1,005.9Principal 448.4 277.6 49.2 775.1Interest 181.2 2.0 47.5 230.8

1980 (33.0)1'PrincipalInterest

1981 84.8 94.0 6.4 175.0Principal 66.8 79.8 3.8 142.0Interest 18.0 14.2 2.6 33.0

1/ Postponed and therefore not considered legal arrears.

Source: OGEDEP.

1:24 PM 07/27/82PAGE 1

TABLE 5.1ZAIRE: BUDGETARY REVENUE, 1973-81

(MILLIONS ZAIRE)

ITEM 1973 1974 1975 1976 1977 1978 1979 1980 1981

NET INCOME S FROFITS TAXES 1 76.1 116.0 116.0 160.7 271.9 327.3 662.5 1,233.2 1,752.6

CORPORATIONS 2 20.0 47.5 37.7 54.4 113.6 117.9 217.4 650.7 953.0UNINC ENTERP&SELF-EMPLOYED 3 2.7 2.1 1.7 2.1 3.0 6.1 14.3 11.1 24.9WAGES & SALARIES 4 43.7 57.6 71.8 97.5 135.1 168.0 362.2 477.0 675.5RENTAL INCOME 5 2.9 3.5 0.9 1.3 1.7 3.6 6.5 6.0 21.6DIVIDENDS & INTEREST 6 2.2 2.0 1.3 2.7 4.5 6.1 8.1 8.4 14.8PAYROLL TAX EXFATS & OTHER 7 4.6 3.3 2.6 2.7 14.0 25.6 54.0 80.0 62.8

PROPERTY TAXES 8 2.8 2.5 2.1 3.1 2.9 4.1 4.5 2.9 4.4

DOM PROD £ CONS TAXES 9 41.4 48.1 54.6 65.9 101.2 129.7 254.6 471.0 739.3

T.JRNOVER TAX 10 10.2 17.5 25.4 43.0 61.0 71.5 135.8 326.7 518.3

SELECTIVE EXCISES 11 30.2 29.6 27.8 22.0 39.0 56.5 113.8 140.0 216.3ALCOHOLIC BEVERAGES 12 14.2 15.5 10.7 B.6 14.0 13.3 8.8 14.6 25.7FETROLEUM PRODUCTS 13 9.3 7.5 8.6 3.9 6.4 10.2 20.6 19.4 30.2TOBACCO 14 5.0 5.3 7.4 8.6 16.4 30.9 82.4 101.6 153.9OTHER 15 1.7 1.3 1.1 0.9 2.2 2.1 2.0 4.4 6.5

MOTOR VEHICLES TAX 16 1.0 1.0 1.4 0.9 1.1 1.2 4.4 3.8 4.1

uIHER TAXES ON 4DS & SvC is - - - 0.14 0.-5 0-. 05 °-I

TAXES ON INTERNAT'L TRADE 19 250.3 326.8 209.2 221.5 254.4 206.2 848.7 1,460.9 1,529.6

IMFORT DUTIES & TAXES 20 102.2 113.2 112.2 114.9 121.5 146.1 334.8 776.5 1,275.1IMPORT DUTIES 21 60.6 64.5 62.6 55.1 56.0 68.9 170.9 412.9 684.3TEMPORARY IMPORT SURCHARGE 22 9.9 10.8 11.0 14.3 15.2 19.4 44.1 93.9 146.0TURNOVER TAX 23 21.2 25.9 26.7 28.5 30.4 35.8 76.1 173.4 290.7STATISTICAL TAX 24 10.5 12.0 11.9 17.0 19.9 22.0 43.7 96.3 154.1

EXPORT DUTIES & TAX 25 146.8 213.2 96.3 105.7 132.5 59.6 513.0 682.2 253.0EXPORT DUTIES 26 113.8 176.1 70.2 58.0 78.8 34.0 344.3 281.5 93.2TLURNOVER TAX 27 29.5 35.3 22.7 40.1 45.4 18.5 144.1 355.7 113.6STATISTICAL TAX 28 3.5 1.8 3.4 7.6 8.3 7.1 24.6 45.0 46.2

OTHER DUTIES 29 1.3 0.4 0.7 0.9 0.4 0.5 0.9 2.2 1.5

OTHER TAXES 30 0.6 12.3 28.6 14.2 28.0 35.5 109.5 101.9 367.9

TOTAL TAX REVENUE 31 371.2 505.7 410.5 465.4 658.4 702.8 1,879.8 3,269.9 4,393.8. ~ ~ ~ ~ ~ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -_ _ _ _ _ _ _-__ _ -. _

1:24 PM 07/27/82PAGE 2

TABLE 5.1ZAIRE: BUDGETARY REVENUE, 1973-81

(MILLIONS ZAIRE)

ITEM 1973 1974 1975 1976 1977 1978 1979 1980 1981

NONTAX REVENUE 32 13.7 17.7 12.5 10.6 10.6 12.7 64.6 507.5 407.7

FEES, CHGS, RECPT GVT PROP 33 8.2 3.5 5.3 5.8 8.4 9.5 59.4 160.3 89.6INVESTMENT INCOME 34 1.6 10.5 2.8 0.7 0.4 - - 52.7 40.0MISCELLANEOUS 35 3,9 3.7 4.4 4.1 1.8 3.2 5.2 294.5 278.1

TOTAL REVENUE 36 384.9 523.4 423.0 476.0 669.0 715.5 1,944.4 3,777.4 4,802.0

SOUIRCE: BANK OF ZAIRE

DATA SET: ZAI/5B

FH

o

1'29 PM 07/27/R2pAIE i

TABLE 5.2ZAIRE: BUDGETARY REVENUE COMPOSITION, 1973-81

(PERCENTAGES)

ITEM 1973 1974 1975 1976 1977 1978 1979 1980 1981

NET INCOME & F'ROFITS TAXES 1 19.8 22.2 27.4 33.8 40.6 45.7 34.1 32.6 36.5

CORrORATIONS 2 S 7.1 .11.4 '7iO 1645 11.2 17?2 19.8UNINC ENTERPSSELF-EMPLOYED 3 0.7 0.4 0.4 0.4 0.4 0.9 0.7 0.3 0-5WAGES 2 SALARIES 4 11-4 11.0 17.0 20.5 20.2 23.5 18.6 12.6 14.1RENTAL INCOME 5 0.8 0.7 0.2 0.3 0.3 0.5 0.3 0.2 0.4DIVIDENDS & INTEREST 6 0.6 0-4 0.3 0.6 0.7 0.9 0.4 0.2 0.3PAYROLL TAX EXPATS & OTHER 7 1.2 0-6 0.6 0.6 2.1 3.6 2.8 2.1 1.3

PROPERTY TAXES 8 0.7 0.5 0-5 0.7 0.4 0.6 0.2 0.1 0.1

DOM F'ROD & CONS TAXES 9 10.8 9.2 12.9 13.8 15.1 18.1 13.1 12.5 15.4

TURNOVER TAX 10 2.7 3.3 6.0 9.0 9.1 10.0 7.0 8.6 10.8

SELECTIVE EXCISES 11 7.8 5.7 6.6 4.6 5.8 7.9 5.9 3-7 4.5ALCOHOLIC BEVERAGES 12 3.7 3.0 2.5 1.8 2.1 1.9 0.5 0.4 0.5PETROLEUM PRODUCTS 13 2.4 1.4 2.0 0.8 1.0 1.4 1.1 0.5 0.6TOBACCO 14 1.3 1.0 1.7 1.8 2.5 4.3 4.2 2.7 3.2OTHER 15 0.4 0.2 0.3 0.2 0.3 0.3 0.1 0.1 0.1

MOTOR VEHICLES TAX 16 0.3 0.2 0.3 0.2 0.2 0.2 0.2 0.1 0.1

OTHER TAXES ON GDS & SVC 18 - - - - 0.0 0,1 0.0 0.0 0.0

TAXES ON INTERNAT'L TRADE 19 65.0 62.4 49.5 46.5 38.0 28.8 43.6 38.7 31.9

IMPORT DUTIES & TAXES 20 26.6 21.6 26.5 24.1 18.2 20.4 17.2 20.6 26.6IMPORT DUTIES 21 15.7 12.3 14.8 11.6 8.4 9.6 8.8 10.9 14.3TEMPORARY IMPORT SURCHARGE 22 2.6 2.1 2.6 3.0 2.3 2.7 2.3 2.5 3.0TURNOVER TAX 23 5.5 4.9 6.3 6.0 4+5 5.0 3.9 4.6 6.1STATISTICAL TAX 24 2.7 2.3 2.8 3.6 3.0 3.1 2.2 2.5 3.2

EXPORT DUTIES & TAX 25 38.1 40.7 22.8 22.2 19.8 8.3 26.4 18.1 5.3EXPORT DUTIES 2'- 2°.6 33.6 l6i6 12.2 t118 4.8 17.7 7.5 1.9TURNOVER TAX 27 7.7 6,7 5.4 8.4 6.8 2,6 7.4 9.4 2.4STATISTICAL TAX 28 0.9 0.3 0.8 1.6 1.2 1.0 1.3 1.2 1.0

OTHER DUTIES 29 0.3 0,1 0.2 0.2 0.1 0.1 0.0 0.1 0.0

OTHER TAXES 30 0.2 2.4 6.8 3.0 4.2 5.0 5.6 2.7 7.7

TOTAL TAX REVENUE 31 96.4 96.6 97.0 97.8 98.4 98.2 96.7 86.6 91.5_ _ _ _ _ _ _ _ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I - - - - - - - - - - - - - - - - - - - - - - - - - - - - _ _

1:29 PM 07/27/82FAGE 2

TABLE 5.2ZAIRE: BUDGETARY REVENUE COMPOSITION, 1973-81

(PERCENTAGES)

ITEM 1973 1974 1975 1976 1977 1978 1979 1980 1981

NONTAX REVENUE 32 3.6 3.4 3.0 2.2 1.6 1.8 3.3 13.4 8.5

FEES. CHGS, RECPT GVT PROF 33 2.1 0.7 1.3 1.2 1.3 1.3 3.1 4.2 1.9INVESTMENT INCOME 34 0.4 2.0 0.7 0.1 0.1 - - 1.4 0.8MISCELLANEOUS 35 1.0 0.7 1.0 0.9 0.3 0.4 0.3 7.8 5.8

TOTAL REVENUE 36 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

SOURCE: BANK OF ZAIRE

DATA DERIVED FROM: ZAI/5B

00

CO

10:10 AN 12/10/82PAGE 1

TABLE 5.3ZAIRE: TAX REVENUE EXCLUDING GECAMINES, 1973-81

(MILLIONS OF ZAIRES)

ITEM 1973 1974 1975 1976 1977 1978 1979 1980 1981

NET INCOME I FROFITS TAXES 41 60.9 70.6 93.9 122.1 204.7 268.3 522.3 740.4 1,464.5

CORPORATIONS 42 20.0 22.1 37.7 54.4 113.6 117.9 194.8 392.6 931.7PETROLEUM CORP 43 - - - - 21.9 15.9 58.5 162.3 -

WAGES S SALARIES 1/ 44 33.1 40.9 52.3 61.6 81.9 134.6 298.6 322.3 470.3OTHER 46 7.8 7.6 3.9 6.1 9.2 15.8 28.9 25.5 62.5

PROPERTY TAXES B 2.8 2.5 2.1 3.1 2.9 4.1 4.5 2.9 4.4

DOM PROD s CONS TAXES 9 41.4 48.1 54.6 65.9 101.2 129.7 254.6 471.0 741.5

INTERNATIONAL TRADE TAXES 49 107.1 112.2 117.7 144.0 173.1 178.6 344.6 1,051.6 1,032.5

OF WHICH:IMPORTS DUTIES & TAXES 50 89.0 99.5 93.4 102.7 99.1 123.0 290.8 751.0 907.9EXPORTS DUTIES & TAXES 51 16.8 12.3 23.6 40.4 73.6 55.2 52.9 298.4 124.6

OTHER TAXES 52 -- 10.5 28.6 5.0 22.2 30.5 94.3 96.4 108.1

TAX REV EXC GECAMINES 53 212.2 243.9 296.9 340.1 504.1 611.2 1,220.3 2,362.3 3,351.0

MEMORANDUM ITEMS:

TAX REVENUE - GECAMINES 54 159.0 261.8 113.6 125.3 154.3 91.6 659.5 907.6 718.8TAX REV GEC/TOTAL TAX REV 56 42.8 51.8 27.7 26.9 23.4 13.0 35.1 27.8 17.7

TAX REV EXC GECAMINES/GDP 55 14.4 13.6 15.5 11.9 12.7 11.2 11.0 14.2 14.2

SOURCE: BANK OF ZAIRE AND GECAMINES

1/ INCLUDES PAYROLL TAX ON EXPATRIATES.

DATA SET: ZAI/5B

11:33 AM 06/23/82PAGE 1

TABLE 5.4

ZAIRE: BUDGETARY EXPENDITURE, ECONOMIC CLASSIFICATION, 1973-80 1/(MILLIONS ZAIRES)

ITEM 1973 1974 1975 1976 1977 1978 1979 1980

CURRENT EXPENDITURE 60 333.6 464.6 493,9 650.6 838.5 1,120.7 2,232.6 3,323.8

WAGES AND SALARIES 61 150.2 196.5 225,9 305.2 407.1 588.4 1,063.7 1,527.2

PUBLIC ADM 2 DEFENSE 62 137.7 180,3 208.8 285.2 380.1 553.8 1,001.0 1,435.2

O.W. EDUCATION 63 - 80.0 105.0 130,0 177.1 251.9 513.8 687.0

PENSIONS 64 4.0 5.6 6.3 7.6 10.7 14.1 28.2 48.8

SCHOLARSHIPS 65 8.5 10.6 10,8 12.4 16.3 20.5 34.5 43.2

INTEREST 66 21.2 32.6 35.2 83.7 107.4 121.3 259.9 360.9

DOMESTIC DEBT 67 5.8 8.8 12.5 18.8 28.6 43.8 59.0 73.2

FOREIGN DEBT 68 15.4 23.8 22.7 64,9 78.8 77.5 200.9 287.7

TRANSFERS AND SUBSIDIES 69 37.7 40.8 51.4 76.9 70.1 93.7 190.4 293.9

DECENTRALIZED AGENCIES 70 19.6 22.9 35.7 52.1 36.1 58.4 130.9 212.4

HOSPITALS 71 3.5 3.7 3.7 8.1 11.7 12.1 25.2 28.6

PUBLIC ENTERPRISES 72 131t 12.6 12.0 16.4 19.4 17.1 24.2 37.6

MISCELLANEOUS 73 1.5 1.6 - 0.3 2.9 6.1 10.1 15.3

OTHER EXPENDITURE 74 124.5 194.7 181.4 184.8 253.9 317,3 718.6 1,141.8

DIPLOMATIC REPRESENTATION 75 4.9 6.8 6.2 12.7 24.9 24.2 118.9 126.0

REGIONAL EXPENDITURE 76 18.3 19,4 20.7 18.1 22.0 39.3 66.3 71,6

PRESIDENCY 2 INSTITUTIONS 77 85.3 96.1 77.8 103.6 114,4 91.9 151.5 213.0

TRAVEL EXPENSES 78 2.1 4.5 2.3 3.3 8.5 8.2 16.9 42.6

OTHER 2/ 79 13.9 67.9 74.4 47.1 84.1 153.7 365.0 688,6

CAPITALEXPENDITURES 80 101.1 252.9 82.4 127.6 102,1 113.8 129.0 246.4

TOTAL EXPENDITURE 81 434.7 717.5 576.3 778.2 940.6 1,234.5 2,36t.6 3,570.2

SOURCE: BANK OF ZAIRE

I/ 1980 FIGURES ARE PROVISIONAL.

2/ INCLUDES EXTERNAL DEBT AMORTIZATION.

DATA SET: ZAI/5B.

9:03 Aii 06/09/82PAGE I

IABLE 5.5ZAIRE: BUDGETARY CURRENT EXPENrITURRE FUNCTIONAl CLASSIFFICATIONY i973-801/

(MI.LIONS ZAIRES)

ITEi 1973 1974 1975 1976 1977 1978 1979 19810

GENERAL SERVICES 82 110.6 204.S :i90.0 242.0 288.7 438.4 J1051.3 1784.2

TERRITORIAL ADMINISTRATION 83 7.2 14.2 10.8 19.4 23.3 28.7 38.8 71.7FOREIGN AFFAIRS 84 12.0 14.8 i6.2 17.5 31.2 32.3 121.5 i27.7NATIONAL DEFENSE 85 24.1 54.0 Si.9 61.8 90.9 173.7 328.3 419.0VETERANS 86 0.2 0.3 2.0 3.4 3.9 5.7 7.9 2.2JUSTICE 87 3-7 7.5 7.3 8.6 10.6 13.7 25.9 28.4FINANCE 2/ 88 59.7 ;&09,0 91.3 i.10.6 104.2 38h.5 467.5 1 041 -NATIONAL ECONOMY 89 0.5 0.7 0.8 1.4 1.3 6.6 2.8 3.7ORIENTATION (INFORMATION) 90 2.2 3.1 i.8 10.3 12.5 15.0 15.9 16.7FERM COMM FUBLIC ADMIN 91 0.8 1.1 7.0 6.7 7.9 9.8 1S.2 6.2TERRITORIAL ORGANIZATION 92 - - 0.7 1.3 1.7 1.9 3.3 4. 0COMMERCE 93 0.2 0.1 0.2 1.0 1.2 2.1 3.4 1.7PLAN 94 - - - - - 4.1 6.8 I1.4PRIME MINISTER'S OFFICE 95 - - - 6. 3 11.0 49.,7

SOCIAL SERVICES 96 88. 6 i02.0 119.8 J.79.0 242,1 343.9 667.4 t,081.3

EDUCATION 97 75.1 84.6 iO9.5 135.7 JS6.9 276.0 S43.8 912.9FUBLIC HEALTH 98 11.3 14.6 8.0 36.1 48.7 56.4 96.6 i14.1CULT PIPE 99,-Q." I.4 1.1 2.2 0.7 1.7 5.2 6. LABOR 100 0.6 0.7 0.7 0.8 0.7 1.L 1.5 1 8SPORTS 101 0.8 1.7 0.5 1.7 2.3 3.6 8.4 11.9ENVIRONMENT 102 - - - 2.5 2.8 5.1 11.9 23.9SOCIAL AFFAIRS 103 0.5 - - - - - - 9.9

ECONOMIC SERVICES 104 28.1 41.0 40.5 65.2 70.4 I04.3 S i.3 282.3

AGRICULTURE 105 5.6 9.8 4.3 20.6 24.0 33.5 40.8 55.2RURAL DEVELOPMENT 106 - - - - - 4.2 13.0 21.0PUBLIC WORKS 107 17.0 23.9 24.6 32.6 38.1 47,0 O3.0 143. 6MINING 108 0.6 0.7 0.8 0.7 0.7 1.3 1.3 1.9TRANSP S COMM 109 4.1. 1 i 1.3 . S.5 7.0 1Q5 1 ¢I7. 30.0POST, TELECOMM 110 0.1 0.1 01 0.1 - 0.8 0.5 3.6ENERGY 111 0.7 0.4 0.4 2.6 0.6 1.0 4.8 7.8PORTFOLIO 112 - - - 0.2 - - 0.2 192.2

TOTAL ALLOCATED EXFENDITURE i13 227.3 347.9 35-0.3 486.2 60i.2 986.6 :1,900.1 3,147.8

9 03 A ii 06 / 09/ i7F A CE

'A'BL E 5 .ZAIRE: BUDGETAR)Y CURRENT EXPENDITURF FUJNCTTONAI. CI..A58 JF F ICATTUN, * 1773-1~30

(ND-.LIOI4S ZAIRFS'j

1.T E H 1 973 1 97 4 1975 1 9 76 1977 197R i979~ 13.

UNCLASSIFIED E'XPENDIITURES I114 1 21 .6 189. 4 1 4 4.2 6 9 .6 246. 0 773.0 y 1Y .

PRESIDENCY & REL SERVICES I.I15 33 .1 6 2 .6 67 .4 8 2 .9 PI 8 9 3 .7 I.1 1. ;9-3 .F

'TOWNS & REGIONS I116 18. -3 1 9. 4 20 .7 [L8 .1 2 2 .0 359 .3 6 5 .5 6.

OTHER 1 17 70 .2 07. 4 56 .1 6 8 .5 36 .2 471.0 74 7 744~

'TOTAL CURRENT EXPENDITURE 11I8 348. 9 537. 2 4 94.5 6 55.8 5,4 7 .2 6 i .6 739 1, <554

SOUIRCE 1 BANK OF ZAIRE

1/ 1980 FIGURES ARE PROVISIONAL.

2! INCLUDES PUBLIC DEBT PAYMENTS.

DATA SET: ZAI/5B

9:06 AMi 06/09/82FAGE 1

TABLE 5.6ZAIRE: BUDGETARY CURRENT EXPENDITURE FUNCd I0NAL C.lASSIFTCATIONr 1973-001/

(PERCENTAGFS)

… .___ ___ _._. ,___ .__. . _ _ _ . _ _ - - - - --- - -- - - ----- - - -- - -__ - - - - _ _ _ - - - - _ _ _ _ - - - _ _ _ _ - - - - _ __-…- - _ _ . _ - -- _ . _ _ ---

ITEM 1973 1974 1975 1976 1977 197P 1979 1980

GENERAL SERVICES 82 31.7 38,1 39.4 36.9 34.1 37.7 44.0 46.3

TERRITORIAL ADMINISTRATION 83 2.1 2.6 2.2 3.0 2.8 2.5 1.6 1.9FOREIGN AFFAIRS 84 3.4 2.8 3.3 2.7 3.7 2.8 5.1 3.3NATIONAL DEFENSE 85 6,9 10.1 10.5 9.4 10.7 15.0 13.7 10.9VETERANS 86 0.1 0.L 0.4 0.5 0.5 0.5 0.3 0.1JUSTICE 87 1.1 I.4 1.5 1.3 1.3 1,2 1.1 0.7lINANCE 2/ 88 17,1 20,3 18.5 16.9 12.3 11.9 19.5 27.1NATIONAL ECONOMY 89 0.1 0.1 0.2 0.2 0.2 0.6 0.1 0.1OiRIENTATION (INFORMATION) 90 0.6 0.6 0.4 1.6 1,5 1.3 0.7 0 .4PERM COMiM PUBLIC ADMIN 91 0.2 0.2 i.4 1.0 0.9 0.8 0.8 0.2TERRITORIAL ORGANIZATION 92 - - 0.1 0.2 0.2 0.2. 0.1 0.fOMEHFR CE 93 0.1 0.0 0.0 0.2 0.1 0.2 0,1 0.0PLAN 94 - - -- 0.4 0.3 0.3PRIME MINISTER'S OFFICE 95 - - - - - 0.5 0.5 1.3

SOCIAL SERVICES 96 25.4 19 .0 24.2 27.3 28.6 29.6 27.9 28.1t

E.DUJCA'TION 97 21.5 15.7 22.1 20.7 22.1 23.8 22.7 23. 7PUBLIC HEALTH 98 3.2 2.7 1.6 5.5 5.7 4.9 4.0 3 0

.. ULTUR. ANr~0 ART ° ° ̂ .1 0f 0- 0.1 0.1 0.102 2LABOR 100 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0 .SPORTS 101 0.2 0.3 0.1 0.3 0.3 0.3 0.4 0.3ENVIRONMENI 102 .0.4 0.3 0. 4 0.50SOCIAL AFFAIRS 103 0.1 - - - - - - 0 .

ECONOMIC SERVICES 104 8.1 7.6 8.2 9.9 8.3 9.0 7.6 7.3

AGRICULTURE 105 1.6 1.8 0.9 3.1 2.8 2.9 1.7 1.4RURAL DEVELOPMENT 106 - - - -. - 0.4 0.5 0.5FUBLIC WORKS 107 4.9 4,4 5.0 5.0 4.5 4.0 4.3 3,7MINING 108 0.2 0.1 0.2 0.1 0.1 0.1 0.1 0.0TRANSP & COMM 109 1.2 1.1 2.1 1i3 0.8 1 .4 0.7 O/SiPOST, TELECOMM 110 0.0 0.0 0.0 0.0 - 0,1 0.0 0.1ENERGY 111 0.2 0.1 0.1 0.4 0.1 0.1 0.2 0.rPORTFOLIO 112 - - - 0.0 - - 0.0 0.5

TOTAL ALLOCATED EXPENDITURE 113 65.1 64.7 70.8 74.1 71.0 76.3 79.4 81.8

9:06 AM 06/09/82F'AGE 2

TABLE 5.6 ZAIRE: BUDGETARY CURRENT EXPENDTTURE FUNCTIONAL CLASSIFICATION', i973-hO

(PERCENTAGES)

ITEK 1973 1974 1975 1976 1977 1978 1979 1980

UNCLASSIFIED EXPENDITURES 114 34.9 35.3 29.2 25.9 29.0 23.7 20.6 18.2

PRESIDENCY & RFL SERVICES 115 9.5 il.7 13.6 12.6 i0.4 8.1 6.3 7.6TOWNS & REGIONS 116 5.2 3.6 4.2 2.8 2.6 3.4 2.7 1.7OTHER 117 20.1 20.0 1L.3 10.4 16.1 12.2 11.5 8.9

TOTAL CURRENT EXFENDITURE 118 100.0 i.0 100.0 i00.0 i0 100.0 .100.0 .1.00.0

SOURCE; BANK OF ZAIRE

I/ 1980 FIGURES ARE PROVISIONAL.

2/ INCLUDES PUBLIC DEBT PAYMENTS.

DATA DERIVED FROM: ZAI/5B

9:16 Ari 06/09/92P :4 &F i.

TABLE 5.7ZAIRE: BUDGETARY CAF'ITAL EXPENDiITURF, FUNCTIOtNAL CLASSTFICATTONW 1973-8Wi/

(MILLIONS ZAIRES)

ITEM 1973 1974 1?75 1976 1977 1978 1979 1980

DIRECT INVESTMENTS 144 96.7 203.7 i01;,7 :i48.3 iO2.3 iI19.7 129.3 246.4

GENERAL SERVICES 119 27.0 44.5 27.3 36.4 i3.6 14-2 9.i i7.2.FINANCE 121 6.0 10.2 4.4 7.8 5.5 7.4 7.4 5.7ORIENTATION (INFORMATION) 122 5.0 6.4 4.4 6-8 2.6 0.8 - 5.8NATIONAL DEFENSE 123 16.0 27.9 18.5 17.9 5.5 6.0 1.7 5.7COMMERCE 125 - - - 3.9 - - - -

SOCIAL SERVICES 126 1.5 3.5 0.7 6.3 7.2 14.3 8.7 36.2EDUCATION 127 1.4 2.9 0.4 5.0 5.2 5.2 5.7 20.8PUBLIC HEALTH 128 0.1 0.2 - 0.7 - 3.0 - 8.8SPORTS 129 - - - 0.1 - - - 0.2CULTURE AND ARTS 130 - 0.4 0.3 - - - - 3.3ENVIRONMENT 131 - - - 0.5 2.0 6.1 3.0 3.1

ECONOMIC SERVICES 132 28.1 94.6 48.6 99.0 70.9 83.6 i1O.9 175.0AGRICULTURE 133 1.7 6.2 2.9 11.3 2.5 18.5 11.9 32.4PUBLIC WORKS 134 3.8 8.3 13.6 22.3 15.4 12.8 18.5 21.9MINING 135 0.8 0.6 0-2 0.7 0.3 0.3 1.5 1.4TRANSP & COMM 136 3.2 56.8 5.8 12.1 9.9 6.2 16.6 34.6POST, TELECOMM 137 0.3 0.1 0.2 - 0.1 - 3.0 0.8ENERGY 138 18.3 22.6 25.9 42.7 37.9 45.5 52.5 75.2PORTFOLIO 139 - -- - 9.9 4.8 0.3 1.7 2.5PLAN i40 - - - - - 1.2 4.1RURAL DEVELOPMENT 141 - - - - - - 4.0 2.1

TOTAL ALLOC DIRECT INVEST 142 56.6 4 42.6 76.6 141.7 91.7 112.1 128.7 228.4

UNCLASS INV (PRESIVENCY) 143 40.1 61.1 25.1 6.6 10.6 7.6 0.6 16,0

INDIRECT INVESTMENTS 2/ 145 4.4 4.3 1.0 2.9 8S0 - - -

TOTAL CAPITAL EXPENDITURE 146 101.1 208.0 02.7 151.2 i10.3 119.7 129.3 246.4

SOURCE: BANK OF ZAIRE

1/ 1980 FIGURES ARE PROVISIONAL.

2/ MANAGED BY THE PRESIDENCY AND THE MINISTRY OF FINANCE.

DATA SET: ZAI/5B

- 126 -

Table 5.8 ZAIRE: Public Enterprises Dividends Credited by Sector 1976-80(Million zaires)

1976 1977 1978 1979 1980 Total

Public 0.2 0.7 4.3 2.7 7.8 15.7

Agro-industrial - - 1.0 - 0.6 1.6CSCo - - - - 0.6 0.6SOSIDER - - 1.0 - - 1.0

Mining and energy - - 3.3 1.7 6.0 11.0KILO-MOTO - - - - 6.0 6.0REGIDESO - - 3.3 1.7 - 5.0

Transport & Comm. 0.2 - - - - 0.2CMZ 0.2 - - - -- 0.2

Commerce & Services - 0.7 - 1.0 - 1.7SOZACOM - 0.7 - 1.0 - 1.7

Finance - - 1.2 1.2Banque du Peuple - - - - 1.2 1.2

Mixed 0.5 1.3 6.3 5.9 44.4 58.4

Agro-industrial - 0.4 0.8 1.6 2.8 5.6I.PLZ - - - 0.3 0.3Kwilu-Ngongo Sugar Ref. - - - - 0.2 0.2Zaire-SOZATOLE - - - 0.5 0.5SOTEXKI - 0.4 0.6 0.6 0.8 2.4MIDEMA - - 0.2 1.0 1.0 2.2

Mining and energy - 0.2 1.5 - 22.8 24.5SOZIR - - 1.3 - 1.4 2.8SOMINKI - 0.2 0.2 - 0.8 1.:Gulf-Oil Zaire - - - - 10.9 10.9ZAIREP - - - - 6.4 6.4MUANDA OIL - - 3.3 3.3

Commerce & Services 0.3 0.2 3.5 3.3 16.7 24.CLi4ZAIRE-SHELL - - - 0.7 8.3 9.CGrand H6tels du Zaire 0.3 0.2 0.2 0.2 0.2 1.1ZAIRE-TEXACO - - 0.3 0.2 1.9 2.4ZAIRE-MOBIL - - 0.9 1.7 1.3 3.9ZAIRE FINA - - 2.0 0.5 5.0 7_,

Finance 0.2 0.5 0.5 1.0 2.1 4.32.3UZB - 0.3 0.2 0.1 0.3 0.9BCZ 0.2 0.2 0.3 0.4 0.5 1.6SOFIDE - - - 0.1 0.1 0.2CHANIC S.A. - - - 1.0 1.0GEOMINES - - - 0.4 - 0.4

Total public enterprises 0.7 2.0 10.6 8.6 52.2 74.1Z ot total TTU 77 T143 TT7 7/U.T TUU.U

1/ Includes dividends from NEZA of Z 21,022 during 1976-80 and from MAZAL ofZ 4,012 in 1978.

2/ Includes dividends from INZAL of Z 128,480 for the period 1976-80; from IPS-ZAIREof Z 23,600 during 1978-80; and from AMIZA of Z 180 in 1979.

3/ Includes dividends from SOBAKI of Z 140,320 during 1976-80; from COMETRAOIL ofZ 103,099 during 1977-80; from COFIBEL of Z 14,838 in 1980; from Groupe BruxellesLambert of Z 6,686 from 1977-80; from IPS/SUISSE of Z 4,929 in 1980; fromELVACULTUR of Z 3,201 in 1980; and from COMETAUX S.A./Bruxelles of Z 180 in 1976.

Source: Department of Portfolio.

Table 5.9: ZAIRE: Parastatals By Sector and Ownership, 1981

1/State-Managed Foreign-Managed=

Sector/Ownership Total 100% 50-99% 1-49% Belgium Swiss U.K. Int'l-Manage -'

Mining 16 3 3 8 2 - -

Energy 17 3 2 11 1 - -

Agro-industrial 31 8 2 17 4 - -

Industry 7 - 2 4 1 - -

Construction 2 2 - -Transport 12 11 - 1 Telecommunications 2 2 -- - -

Commerce 3 3 - - -

Tourism 5 3 1 1 Social 1 1 - - - -Business services 4 2 - 1 1 Food 1 1 - - - - -Car 6 1 - 5 - - --Finance & real estate ins. 17 6 1 5 2 1 2Customs 1 1 - - - - - -Scientific, cultural 7 7 - - - - -

Tot'al 138 54 11 53 16 __ 1 2

1/ State participation is less than 15 percent.

NOTE: Another 19 enterprises are in process of being liquidated.

Source: Department of Portfolio.

- 128 -

Table 5.10 ZAIRE: Public Enterprises to be qPrivatized)?

as of February 1962

Type of

Sector/Enterprise Privatization

Agriculture and Agro-industry

1. Cacaoyer du Zaire (CACAOZA) Management

2. Palmeraie du Zaire (PALIEZA) Management

3. Usine et Plantation de Butuke (tea) Management

4. Usine et Plantation de Ngweshe Management

5. Fermes des Bolumbuloko (Equateur) Capital

6. Fermes de Kabuluku (Kasai Occidental) Capital

7. Fermes de Wetshi-Ndjadi (Kasai Oriental Capital

8. Fermes Musoka-Tanda (Shaba) Capital

9. Fermes Mwene-Djamba (Shaba) Capital

10. Fermes Kayembe-Mukulu (Shaba) Capital

11. Fermes Majilajila (Bandundu) Capital12. Fermnes Ngungu-Katuka (livestock, Bandundu) Capital

13. Fermes ex-Materne (Bas-Zaire) Capital

14. Coton Zaire (Equateur) Capital

15. Ferme Agricole de N'Djili Capital

16. FORESCOM (Bandundu) Capital

17. Office Nationale de P^eche Capital

18. Ferme de Boma (Bas-Zaire) Capital

19. Plantations et Usine de Tshimbane (Bandundu) Capital

20. Plantations et Usine de Bilili et de Ndudi(Bandundu) Capital

21. Scierie de Ndana (Bandundu) Capital

Industry

22. SOLIDUS Capital

23. Siderurgie de Maluku Capital

24. Imprimerie du Boma (Bas-Zaire) Capital

25. Imprimerie du Plateau (Kinshasa) Capital

26. Boulangerie et Patisserie Nicaise (Kinshasa) Capital

Transport and Communications

27. Societe de Transports Kinois (STK) Capital and/orManagement

28. Office de Transport en Commun du Zaire Capital and/orManagement

Services

29. Economat du Peuple Capital

30. Agence Commerciale Automobile (ACA) Capital

31. Hatel de Boma (Bas-Zaire) Capital32. Ecole Pigier Capital

33. SONECA (cultural society, Kinshasa) Capital

34. Edition Lokole (culture, Kinshasa) Capital

35. HPK Fumuputu Capital

36. BERGERTO-POFUKIN (Kinshasa) Capital37. Les Ceintures Vertes (gardening services) Capital

- 129 -

Table 5.11: ZAIRE: PUBLIC INVESTMENT PROGRAM FOR 1981-83

BY MAJOR PROGRAAS

(millions Zaires)

Amount Percentage

Agricul:ure 260.;7 3.8

Crops 177.5 2.8

Livestock 160.2 0.9

Forestry 23.0 0.1

Mining 2,365.7 34.5

Gecamines 1,956.0 28.5

Miba 172.2 :2.5

Others 237.5 3.5

Transport 2,072.9 30.2

Roads 690.9 10.1

Railways 778.6 11.3

River 455.0 6.7

Air 133.1 1.9

Urban 15.3 0.2

Energy 1,C93.8 15.9

Electricity 170.9 11.2

Water 322.9 4.7

Education ;221.5 3.2

Health 83.8 1.2

Others 697.8 10.1

Telecommunications 398.5 5.8

Finance 75.8 1.1

Plan :139.1 2.0

Others 81.4 1.2

Unforeseen 73.9 1.1

TOTAL 6,867.1 100.0

1/ Direct investments only.

Source: Ministry of Planning$ Mobutu Plan, 1981-83.

10:30 AM 12/10/82PAGE 1

TABLE 6.1ZAIRE: MONETARY SURVEY, 1976-81 I/(MILLIONS ZAIRES; END OF PERIOD)

------------------------------- __---------------------------------__---------__--------

ITEM 1976 1977 1978 1979 1980 1981

NET FOREIGN ASSETS (BROAD) 1 -307.3 -372.4 -954.4 -1,046.4 -1,272.4 -3,027.8

NET FOREIGN ASSETS (NARROW) 2 -89.4 -28.1 64.4 259.8 464.6 -416,1

FOREIGN ASSETS 3 149.2 244.5 532.0 872.0 1,578.7 2,230.7

FOREIGN LIABILITIES 4 238.6 272.6 467.6 612.2 1,114.1 2,646,8

FOREIGN CURRENCY DEPOSITS 5 -19.3 -28.0 -45.2 -60.3 -146.5 -180.0

PROVISIONS FOR EXTERNALARREARS OTHER THAN SERVICEPAYMENTS ON EXT F'UB DEBT 6 -198.6 -316.3 -973.6 -1,245.9 -1,590.5 -2,431.7

NET DOMESTIC ASSETS 7 1.040.0 1,498.6 2,204.6 2,330.3 3,380.5 5,219.0

NET CLAIMS ON GOVERNMENT 8 831.6 1,054.8 1,578.3 2,062.2 2,329.4 3,783.6

CREDIT TO ENTERPR AND HOUSEH Y 385.7 537.0 641.0 878.7 1,014.3 1,342.4

OTHER NET DOMESTIC ASSETS (B 10 -177.3 -93.2 -14.7 -610.6 36.8 93.0

MONEY SUPPLY 2/ 11 738.1 1,153.9 1,854.5 2,084.9 3,367.3 4,644.9

U,1

REVALUATION GAINS AND LOSSES 12 -44.6 -66.9 -682.7 -947.7 -1,528.9 -3,001.7

SDR ALLOCATION COUNTERPART 13 39.2 39.2 78.4 146.7 269.7 548.0

SOURCE: IMF

1/ EXCLUDING DEPOSITS OF ENTERPRISES AND HOUSEHOLDS WITH THE POSTALCHECKING SYSTEM AND THEIR COUNTERPART.

2/ SUM OF CURRENCY IN CIRCULATION, DEMAND AND TIME DEPOSITS.INCLUDES DEPOSITS OF SUBORDINATE PUBLIC AUTHORITIES WITH COMMERCIALBANKS.

DATA SET: ZAI/6M

10:32 AM 12/10/82PAGE 1

TABLE 6.2ZAIRE: FACTORS AFFECTING MONETARY EXPANSION, 1977-81 1i/

(MILLIONS ZAIRES; END OF PERIOD)

------------------------ _.----------------------------------------__---------__

ITEM 1977 1978 1979 1980 1981

NET FOREIGN ASSETS (BROAD) 1 -372.4 -582.0 -92.0 -226.0 -1,755.4

NET FOREIGN ASSETS (NARROW) 2 -28.1 92.5 195.4 204.8 -880.7FOREIGN ASSETS 3 244.5 287.5 340.0 706.7 652.0FOREIGN LIABILITIES 4 272.6 195.0 144.6 501.9 1,532.7

FOREIGN CURRENCY DEPOSITS 5 -28.0 -17.2 -15.1 -86.2 -33.5PROVISIONS FOR EXTERNAL

ARREARS OTHER THAN SERVICEPAYMENTS ON EXT PUB DEBT 6 -316.3 -657.3 -272.3 -344.6 -841.2

NET DOMESTIC ASSETS 7 1,498.6 706.0 125,7 i1050.2 1,838.5

NET CLAIMS ON GOVERNMENT 8 1,054.8 523.5 483.9 267.2 1,454.2CREDIT TO ENTERPR AND' HOUSEH 9 537.0 104.0 237.7 135.6 328.1OTHER NET DOMESTIC ASSETS (B 10 -93.2 78.5 -595.9 647.4 56.2

MONEY SUFFLY 2/ 11 i1153.9 700.6 230.4 1 282.4 1v277.6________ -------- -------- ----- 7--- -------- 1

REVALUATION GAINS AND LOSSES 12 -66.9 -615.8 -265,0 -581.2 -1472.8

SDR ALLOCATION COUNTERPART 13 39.2 39.2 68.3 123.0 278.3

SOURCE: IMF

1/ EXCLUDING DEPOSITS OF ENTERPRISES tiND HOUSEHOLDS WITH THE POSTALCHECKING SYSTEM AND THEIR COUNTERPART,

2/ SUM OF CURRENCY IN CIRCULATION, DEMAND AND TIME DEPOSITS.INCLUDES DEPOSITS OF SUBORDINATE PUBLIC AUTHORITIES WITH COMMERCIALBANKS.

DATA DERIVED FROM: ZAI/6M

10:34 AM 12/10/82PAGE 1

TABLE 6.3ZAIRE: COMMERCIAL BANK LOANS OUTSTANDING BY SECTOR, 1973-81

(MILLIONS ZAIRES; END OF PERIOb)

ITEM 1973 1974 1975 1976 1977 1978 1979 1980 1981

AGRICULTURE 2/ 15 41.7 51.9 58.6 90.1 148.5 194.6 275.7 393.6 475.9

MINING 16 1.1 0.9 2.9 7.8 30.3 26.7 30.9 35.8 54.8

MANUFACTURING 17 33.4 51.7 78.5 78.4 97,1 104.9 163.8 165.2 251.3

CONSTRUCTION 18 1.4 3.0 5.1 5.3 4.8 9.6 18.2 22.7 24.5

PUBLIC UTILITIES 19 - - 0.1 0.8 0.8 3.4 7.3 1.7 7.8

TRANSP & TELECOMM 20 13.6 19.9 24.0 25.2 22.4 36.6 50.5 29.5 30.7

COMMERCE 21 24.7 53.1 83.7 128.4 165.1 202.7 261.0 283.2 312.9

SERVICES 22 7.0 9.2 15.3 16.9 18.3 24.8 25.5 30.1 47,2

OTHER 1/ 23 6.1 22.0 51.2 32.8 49.7 37.7 45.8 48.7 54,2

TOTAL 24 129.0 211,7 319,4 385.7 537.0 641.0 878.7 1,010.5 1,259.3

SOURCE BANK OF ZAIRE AND IMF

1/ INCLUDES HOUSEHOLDS.

2/INCLUDES ANIMAL HUSBANDRY, FISHING, AND FORESTRY.

DATA SET: ZAI/6M

-133-

'Table 6.4: ZAIRE - Interest Rate Structure, 1979-81(Percentages; end of period)

January 1, 1979 March 10, 1980 April 1, 1981

Commercial bank deposit ratesSavings deposits 3.25 3.25 5.0T'ime deposits0-3 months3-6 months 5.0 5.0 8.06-12 months 10.0 15.0 20.012-24 months 15.0 25.0 30.0over 24 months 18.0 negotiable negotiable

Cotmmercial bank loan ratesRtediscountable creditShort-term

Loans for production & equipment 7.5 7.5 11.0Other 12.0 12.0 negotiable

Medium- and Long-termLoans for equipment in agricultural

and agro-industrial activities 9.0 9.0 12.5Other 15.0 15.0 negotiable

Nonrediscountable creditShort-term 18.0 18.0 22.0Medium- and long-term 20.0 20.0 negotiable

Re:Einancing ratesKediscount ratesBasic rate 12.0 12.0 15.0Short-term production & equipment 5.0 5.0 9.0Medium- and long-term 7.0 7.0 10.0Treasury bonds bond yield bond yield bond,yield

Advances to banks-! 12.0 12.0 15.0Advances with collateralGovernment securities as collateral 6.0 6.0 10.0Commercial paper as collateral

Short-term 7.0 7.0 12.0Medium-term 8.0 8.0 13.0

1/ Advances made in. connection with interbank clearing at the Bank of Zaire.

Source: Bank of Zaire.

3:28 PM 06/18/82PAGE 1

TABLE 7.1ZAIRE: AGRICULTURAL AND EXPORT CROP PRODUCTION, 1973-81

(THOUSANDS METRIC TONS)

…-----------------------------------------------------------------------------------------------------------------ITEM 1973 1974 1975 1976 1977 1978 1979 1980 1981

------------------------------------------------------------------- __--------__-----------------------------------

PALM OIL 1 152.6 145.6 145.0 128.6 104.9 98.6 98.5 93.2 92.2

PALM KERNEL OIL 2 33.4 34.6 29.0 23.1 22.2 20.2 18.4 22.6 22.8PALM HUSKS 3 31.1 40.2 31.0 32.3 29.7 26.2 25.5 27.7 28.0

COFFEE 4 67.5 78.3 59.4 109.5 64.7 87.0 67.8 80.3 73.2ROBUSTA 5 56.8 69.3 51,4 88.7 56.5 76.8 60.0 73.9 65.0ARABICA 1/ 6 10.7 9.0 8.0 20.8 8.2 10.2 7.8 6.4 8.2

COTTON (FIBER) 7 19.9 16.5 16.3 11.4 10.0 5.0 6.0 9.7 10.6COTTON OIL 8 1.1 1.0 1.3 0.9 0.2 0.3 0.1 - 0.1

RUBBER 9 44.7 30.9 28.7 23.8 30.0 28.4 19.9 21.3 20.2

MAIZE 2/ 10 - 160.0 125.0 128.0 130.0 125.0 128.0 130.3 132.1MANIOC 2/ 11 - 750.0 800.0 819.0 809.0 785.0 808.5 822.0 835.5RICE 2/ 12 - 150.0 135.0 137.0 127.0 127.0 130.8 147.3 146.4

COCOA 13 5.0 4.8 5.4 4.4 3.9 4.3 3.5 4.2 4.5TEA 14 7.7 6.9 5.7 6.4 5.2 4.8 3.7 2.5 3.5

SUGARCANE 15 548.8 577.7 614.4 468.3 553.9 475.3 491.8 482.9 482.9

TOBACCO 16 - 1.1 1.1 1.0 0.9 1.4 1.6 1.9 2.6

TIMBER LOGS (THS. CUBIC MTRS) 17 323.0 294.0 217.5 265.2 321.7 331.7 350.0 325.0 330.0TIMBER SAWN (THS. CUBIC MTRS) 18 162.7 130.0 79.0 71.1 95.8 101.5 88.0 68.1 61.3

CINCHONA BARK 1/ 19 - 1.5 1.9 2.9 2.0 5.2 0.9 1.7 2.2

…__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _SOURCE: BANK OF ZAIRE AND MISSION ESTIMATES

1/ EXPORTS ONLY

2/ COMMERCIALIZED PRODUCTION ONLY.

NOTE: 1981 FIGURES ARE PRELIMINARY.

DATA SET: ZAI/7A

5:18 FPM 07/08/82

PAGE 1TABLE 7.2

ZAIRE: MINERAL PRODUCTION, 1973-81(THOUSANDS METRIC TONS; UNLESS INDlICATED)

ITEM 1973 1974 1975 1976 1977 1978 1979 1980 1981

COPPER 1 488.6 499.7 495,9 444.1 479.7 423.9 399.4 459.3 504.8O.W. GECAMINES 17 460.7 471.1 463.4 407.7 452.4 391,0 370.0 425.7 469.6

ZINC CONCENTRATES 2 156.4 160.1 141.6 125.0 131.5 158.1 138.7 122.8 121.3ZINC METAL 3 87.6 89.7 79.3 67. 8 72.3 85.5 76.3 67.5 66.7

ELECTROLYTIC ZINC (GEC) 4 66.0 68.7 65.6 60.6 51.0 43.5 43.7 43.9 57,6

COBALT - 5 15.1 17.5 13.6 10.7 10.2 13.1 14.0 14.5 11.2

CADMIUM 6 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2

SILVER (THS KG6S) 7 62.1 51.3 71.3 60.7 85.0 89.1 91.9 78.8 85.7

MANGANESE ORE 1/ 8 334.0 308.8 308.5 182.2 41.0 - 24.8 6.6 18.3

CASSITERITE 9 7.5 6.5 6.4 5.3 5.1 4 .4 3.5 3.2 3.1.ORES CONTAINING TIN 10 5.4 4.7 4.6 3.8 3.7 3.2 2.5 2.3 2.2FOUNDRY TIN 11 1.0 0.7 0.6 0.5 0.7 0.5 0.5 0.3 0.4

GOLD (THS KGS8) 12 4.2 4.1 3.2 2.8 2.5 2.4 2..3 1.1 1.7

DIAMONDS, LUBILASH(THS CARATS) 13 12.0 13.0 12.4 11.5 10.8 10.6 8.1 8.0 5.3

DIAMONDS, KASAI (THS CARATS) 14 0.9 0.6 0.4 0.3 0.4 0.6 0.7 2.2 0.9

COAL 15 115.2 95.5 89.0 109.1 127.9 106.6 109.2 139.5 123.8

CRUDE OIL (THS BARRELS) 2/ 16 - - 25.5 9,0 7 5 .1 8 254 .5 6,p6 04 .1 7,613.8 6,640.9 7,668.5

SOURCE BANK~ OF- ZAIRE

I/ FROM 1975-79 THE DECLINE IN P'RODUCTION REFLECTS THECLOSURE OF THE BENGUELA RAILWAY.

2/ SOURCE: ZAIRE GULF AND ZAIREP

NOTE: 1981 FIGURES ARE PRELIMINARY.

DATA SET: ZAI/8M

11:29 AM 07/26/82PAGE 1'

TABLE 7.3ZAIRE: SELECTED PETROLEUM STATISTICS, 1974-81

(THOUSANDS METRIC TONS, UNLESS INDICATED)

ITEM 1974 1975 1976 1977 1978 1979 1980 1981

CRUDE OIL PRODUCTION 20 - 3.0 1,238.0 1,126.0 901.0 1,020.0 907.5 1,006.0

IMPORTS 21 - 945.6 699.5 570.6 744.0 783.9 811.0 742.2

CRUDE OIL 22 - 586.2 385.8 142.1 202.4 383.4 366.1 275.0REFINED PRODUCTS 23 - 359.4 313.7 428.6 541.6 400.5 444.9 467.2

REFINERY OPERATIONS

CRUDE OIL REFINED 1/ 24 697.5 614.7 364.2 168.3 200.3 406.6 420.5 0.0REFINERY OUTPUT 25 692.1 565.0 334.4 147.7 180.8 379.3 393.4 332.9REFINERY CONSUMPTION/LOSSES 26 33.4 49.6 29-8 20.6 19.4 27.3 27.1 0.0DOMESTIC SALES 27 432.6 438.6 264.3 168.6 147.9 232.0 273.8 -EXPORTS 28 226.9 106.8 84.6 9.4 10.1 138.4 137.2 -

CONSUMPTION (THS CUBIC METERS) 56 942.0 976.0 930.0 837.0 797.0 765.0 857.0 901.0

GASOLINE 29 233.0 251.0 242.0 196.0 168.0 162.0 149.0 156.0AVIATION FUEL 30 17.0 14.0 13.0 10.0 10.0 8.0 9.0 8.0KEROSENE 31 234.0 245.0 241.0 212.0 215.0 221.0 237.0 237.0DIESEL OIL 32 370.0 376.0 362.0 343.0 339.0 309.0 367.0 410.0FUEL OIL 33 88.0 90.0 72.0 76.0 65.0 65.0 95.0 90.0

8oo

SOURCE: ZAIRE GULF, PETRO-ZAIRE, SOZIR, MINISTRY OF NATIONAL ECONOMY ANDINDUSTRY AND IMF

1/ PART OF REFINED CRUDE IS OBTAINED THROUGH THE EXCHANGE OF ZAIRIANCRUDE FOR ARABIAN LIGHT.

O.0=NOT AVAILABLE

NOTE: 1981 FIGURES ARE PRELIMINARY.

DATA SET: ZAI/8M

12:43 PM 06/25/82PAGE I

TABLE 7 .4ZAIRE: CEMENT STATISTICS, 1973-80

(THS METRIC TONS)

---------------------------------------------------------------- __-----------__--------------------------

ITEM 1973 1974 1975 1976 1977 1978 1979 1980---------------------------------------------------------------------------------------------------------

PRODUCTION 57 545.2 656.6 649.4 525.2 466.8 462.1 405.5 432.1

EXPORTS 58 39.3 64.8 74.9 47.8 52.0 25.8 31.0 62.6

CONSUMPTION 1/ 59 505.9 587.8 574.0 477.4 414.8 424.2 370.2 369.6

SOURCE: BANK OF ZAIRE

1/ MAY INCLUDE STOCKS.

DATA SET: ZAI/8M

l-

12:00 PM 06/25/82PAGE 1

TABLE 7.5ZAIRE: ACTIVITIES OF MAJOR TRANSPORTATION CARRIERS, 1973-80

ITEM 1973 1974 1975 1976 1977 1978 1979 1980

MERCHANDISE (MILL TON/KM)

ONATRA 60 1,107.8 1,151.6 1.110.6 972.6 889.4 833.8 688.2 723.9

S.N.C.Z. 1/ 61 3,310.8 3,491.9 2,937.8 2,318.5 2,258.9 2.085.9 1,921.0 2,182.7

AIR ZAIRE 62 99.0 128.1 108.1 127.7 161.0 158.7 151.4 190.4

PASSENGERS (PERSONS/KM)

ONATRA 63 113.5 152.1 198.3 194.2 194.0 258.2 126.2 94.9

S.N.C.Z. 1/ 64 537.6 617.7 772.9 862.8 491.2 654.3 665.6 487.2

AIR ZAIRE 65 656.5 715.5 639.7 687.1 783.0 830.7 798.2 821.6

SOURCE: BANK OF ZAIRE. H

1/ THIS COMPANY REPRESENTS THE FORMER KDL, CFL, CFMK, CFM AND CVZ.

DATA SET! ZAI/8M

10:36 AM 12/10/82PAGE 1

TABLE 8.1ZAIRE: CONSUMER PRICE INDEX FOR KINSHASA (INS ESTIMATES), 1976-82

(1975=100; PERIOD AVERAGES)

ITEM 1976 1977 1978 1979 1980 1981

FOOD (60.6%) 1 198.1 350.5 550.2 1,082.9 1,313.3 1,828.2

I QUARTER 2 163.2 297.0 452.5 947.6 1,229.6 1,473.7II QUARTER 3 190.1 353.3 483.6 1,064.5 1,325.2 1,718.7

III QUARTER 4 212.1 366.8 533.4 1,109.2 1,346.7 1,898.4IV QUARTER 5 226.9 384.9 731.5 1,187.2 1,351.7 2,221.7

HOUSING (17.1%) 6 157.2 216.8 289.2 731.8 1,544.5 1,861.5

I QUARTER 7 121.5 205.2 239.0 586.0 963.3 1,63S.1II QUARTER 8 144.2 214.4 264.0 630.0 1,557.2 1,754,9

III QUARTER 9 172.0 224.5 308.4 768.4 1,614.1 1,962.8IV QUARTER 10 191.1 223.2 345-5 943.3 1,642.5 2,090.1

CLOTHING (9.5%) 11 142.7 229.7 371.7 769.5 1,271.5 1,843.8

I QUARTER 12 106.S 194.3 292.1 545.4 1,058.7 1,684.5II QUARTER 13 126.1 211.5 340.1 706.5 1,074.3 1,773.5III QUARTER 14 159.5 233.0 396.6 793.7 1,412.1 1,983.0

TVJ QUARTER 15 211.7 280.1 457.9 1,015.7 1,584.0 1,934,5

MISCELLANEOUS (12.8%) 16 157.2 272.9 296.9 665.7 1,268.3 1,646.9

I QUARTER 17 114.3 275.5 265.6 499.9 1,027.8 1,412.7II QUARTER 18 155.6 273.0 279.9 599.3 1,296.7 1,461.5III QUARTER 19 173.3 275.1 312.6 761.8 1,348.6 1,759.6

IV QUARTER 20 185.6 268.3 330.3 968.6 1,386.1 1,953.8

CONSUMER PRICE INDEX (100.0%) 21 180.7 305.4 453.9 912.7 1,313.3 1,813.1

I QUARTER 22 145.6 266.8 358.9 791.2 1,134.3 1,1SS.3II QUARTER 23 17109 303-4 407.0 910.5 1,339.8 1,697.2

III QUARTER 24 195.2 318.5 457.5 979.4 1,399.9 1,899.6IV QUARTER 25 210.1 338.1 590.2 1.102.8 1,427.9 2,137.4

SOURCE : NATIONAL INSTITUTE OF STATISTICS (INS)

DATA SET.' ZAI/9P

10:38 AM 12/10/82PAGE 1

TABLE 8.2ZAIRE: INFLATION RATES FOR KINSHASA (INS ESTIMATES), 1977-82

(1975=100; PERCENTAGES)

ITEM 1977 1978 1979 1980 19S1 1982

FOOD (60.6X) 1 76.9 57.0 96.8 21.3 39.2 -

I QUARTER 2 82.0 52.4 109.4 29.8 19.9 53.6II QUARTER 3 85.8 36.9 120.1 24.5 29.7 33.2

III QUARTER 4 72.9 45.4 107.9 21.4 41,0 33.8

IV QUARTER 5 69.6 90.0 62.3 13.9 64.4 -

HOUSING (17.1%) 6 37.9 33.4 153.0 111.1 20.5 -

I QUARTER 7 68.9 16.5 145.2 64.4 70.1 32.8

II QUARTER 8 48.7 23.1 138.6 147.2 12.7 44.4III QUARTER 9 30.5 37.4 149.2 110.1 21.6 53.0

IV QUARTER 10 16.8 54.8 173.0 74.1 27.3 -

CLOTHING (9.5%) 11 61.0 61.8 107.0 65.2 45.0 -

I QUARTER 12 81.9 50.3 86.7 94.1 59.1 25.0

II QUARTER 13 67.7 60.8 107.7 52.1 65.1 20.5

III QUARTER 14 46.1 70.2 100.1 77.9 40.4 25.0

IV QUARTER 15 32.3 63.5 121.8 56.0 22.1 -

MISCELLANEOUS (12.8%) 16 73.6 8.8 124.2 90.5 29.9 -

I QUARTER 17 141.0 -3.6 B8.2 105,6 37.4 46.4

II QUARTER 18 75.4 2.5 114.1 116.4 12.7 44.7

III QUARTER 19 58.7 13.6 143.7 77.0 30.5 27.2IV QUARTER 20 44.6 23.1 193.2 43.1 41.0 -

CONSUMER PRICE INDEX (100.0%) 21 69.0 48.6 101.1 43.9 38.1 -

I QUARTER 22 83.2 34.5 120.5 43.4 33.9 45.5

II QUARTER 23 76.5 34.1 123.7 47.1 26.7 35.2

III QUARTER 24 63.2 43.6 114.1 42.9 35.7 35.7IV QUARTER 25 60.9 74.6 86.9 29.5 49.7 -

SOURCE : NATIONAL INSTITUTE OF STATISTICS (INS)

DATA DERIVEI, FROM: ZAI/9P

11:44 AM 06/23/82PAGE 1

TABLE 8.3ZAIRE: MARKET PRICE INDEX OF CONSUMER GOODS - KINSHASA (IRES ESTIMATES), 1975-81 1/

(OCT-DEC 1964 = 100)WA'RNING: DATA HUAVE NOT BEEN EDITED

ITEM 1975 1976 1977 1978 1979 1980 1981

FOOD 34 1,012 1,651 2,749 4,436 6,939 11,545 15,996

I HALF 35 868 1,536 2,447 3,558 7,999 10,770 14,530II HALF 36 1,157 1,765 3,0S1 5,314 9,879 12,320 17,462

CLOTHING 37 588 1,321 2,255 3,354 7,564 13,685 19,536

I HALF 38 530 1,049 2,061 2,834 6,370 11,860 17,440II HALF 39 647 1,592 2,449 3,873 8,758 15,510 21,632

MISCELLANEOUS 40 645 1,174 1,643 2,428 5,430 8,234 12,055

I HALF 41 599 1,055 1,484 2,083 4,579 7,362 10,890II HALF 42 690 1,292 1,801 2,772 6,281 9,106 13,219

GENERAL INDEX 43 853 1,495 2,425 3,799 7,935 11,165 15,707===== ====… ======== ==== =22=.=== ====

i HALF 44 ,4° :;348 2:1'4 3!.12 A.942 10,220 14,210II HALF 45 958 1,641 29676 4,486 8,927 12,110 17,203

------------------------------------------------------------------------ __---__-----------------

SOURCE: INSTITUT DE RECERCHES ECONOMIGUES ET SOCIALES (IRES)

1/ INCLUDES 61 ITEMS,

DATA SET: ZAI/9P

Table 8.4: Ex-Factory and Market Prices of Selected Locally-Produced Goods in Kinshasa, 1979-81

(zaires)

Ex-Factory Prices Market Prices

Growth Rate (00) Growth Rate (%)

1979 1980 1981 1979-80 1980-81 1979 1980 1981 1979-80 1980-81

Wheat flour (45.4 kg sacks) 35.8 65.0 117.0 81 80 60.0 120.0 175.0 100 46

Beer (12 bottle cases-75 cl)Primus & Skol 8.4 16.0 32.5 90 102.6 36.0 60.0 60.0 67 -

Tembo 12.8 26.2 105 120.0 170.0 240.0 42 41

Sugar (50 kg sacks)l/ 44.6 148.6 289.7 233 95 60.0 300.0 450.0 400 50 i

Non-alcoholic beverages 6.0 15.5 22.0 158 42 16.8 28.8 36.0 71 25

Cement (50 kg sacks) 6.5 15.5 31.4 138 102 10.0 30.0 48.0 200 60

Palm Oil (200 Its barrels) 200.0 444.0 873.0 122 97 750.0 950.0 1100.0 27 16

Rice-local (60 kg) 55.3 55.3 146.5 - 165 170.0 387.0 450,0 128 16

CigarettesStrong 59.3 63.7 108.3 8 70 75.0 150.0 212.5 100 42

Light 64.7 72.1 122.7 11 70 100.0 200.0 275.0 100 38

Fancy 73.3 80.6 150.0 10 86 125.0 500.0 500.0 300 -

1/ Refer to inter-seasonal prices.

Source: Ministry of National Economy and Industry.

- 143 -

Table 8.5: Evolution of Water and Electricity Rates, 1976-82

Water Rates (zaires per m3 per mcnth)Small Large

Standpipe Users Users

1976 (July 1) 0.02 0.07 0.-39

1977 0.02 0.07 0.39

1978 0.02 0.37 0.39

1979 (October 20) 0.40 0.56 1.32

1981 (January 29) 0.40 0.6-1.2 2.21

1982 (Febrlary) 0.60 0.9-3.78 5.0)6

Electricity Rates (zaires per Kw'rTariff A Tariff B

1976 1.12 1.92

1977 1.12 1.92

1978 1.12 1.92

1979 (October 1)1/ 3.142/ 9.9131

1980 (January 1)-1/ 10.032/ 17.75 1

1/ Low voltage.

2/ Household use.

3/ Industrial and commercial use.

Sources: 'REGIDESO and SNEL.

WORLD TABLES

- 145 -

Table 9.1

COPPER: RESERVES, 1981(Million Metric Tons)

Amount %

Market economies 445 88.1Australia 16 3.2Canada 32 6.3United States 90 17.8

Chile 97 19.2Papua New Guinea 14 2.8Peru 32 6.3Philippines 18 3.6

South Africa 5 1.0Zaire 30 6.0Zambia 34 6.7Other 77 15.2

Centrally-planned economies 60 11.9Poland 13 2.6USSR 36 7.1China 31/t 0.6Other 8-± 1.6

Total 505 100.0

1/ Estimated.

Source: US Bureau of Mines, Mineral Commodity Summaries 1982.

Table 9.2

COPPER: MINE PRODUCTION AND EXPORTS BY MAIN COUNTRIES AND ECONOMIC REGIONS, 1970, 1975 AND 1980

(thou. Metric Tons)

Mine Production ExportsAnnual

Growth Rate 1/ Growth Rate 1/1970 1975 1980 1970-80 1970 1975 1980 1970-80

INDUSTRIAL 2536 2446 2262 -0.8 1358 1510 1653 0.7

North America 2170 2016 1877 -1.1 692 801 751 -0.7

United States (1560) (1282) (1168) (-1.6) (264) (167) (130) (_7.3)

Canada (610) (734) (708) (0.1) (428) (634) (621) (1.5)

EEC n.a. n.a. n.a. n.a. 477 436 464 -0.4

CENTRALLY-PLANNED 1098 1486 1650 4.0 168 323 163 3.0

USSR 925 1100 1150 2.0 n.a. n.a. n.a. n.a.

East Europe 159 368 484 11.5 n.a. n.a. n.a. n.a.

DEVELOPING 2711 3416 3888 3.7 2384 2825 3237 3.4

Asia 281 466 577 7.3 155 279 387 9.3

Africa 1283 1464 1364 0.2 1244 1312 1268 -0.2

Zambia (684) (677) (596) (-1.4) (689) (635) (617) (-1.0)

Zaire (387) (495) (460) (0.5) (370) (493) (461) (0.6)

Latin America. 974 1100 1615 5.8 905 961 1323 5.5

Chile (686) (828) (1068) (5.4) (669) (788) (894) (4.9)Peru (206) (181) (365) (7.5) (217) (150) (352) (7.5)

WORLD 6345 7348 7800 2.2 3910 4658 5053 2.6

1/ Least squares growth rate.

Source: World Bureau of Metal Statistics.

Table 9. 3

COPPER: REFINED CONSUMPTION AND IMPORTS BY MAIN COUNTRIESAND ECONOMIC REGIONS, 1970, 1975 AND 1980

(THOU. METRIC TONS)

RID NEDT CONSL TIO1/ IMPORTS ltAnnual Growth Rate- Annual Growth Rate-

1970 1975 1980 1970-80 1970 1975 1980 1970-80

INDUSTRIAL 5290 4700 6110 1.7 3321 3709 4191 2.2North America 2089 1593 2074 0.5 367 308 549 3.1

United States (1860) (1397) (1866) (0.5) (354) (280) (534) (3.2)

EEC 2057 1985 2351 1.6 2084 2290 2355 1.4Germany, F.R. (698) (635) (759) (1.8) (582) (673) (649) (1.4)United Kingdom (554) (451) (409) (-1.8) (453) (452) (346) (-1.9)France (331) (365) (387) (-0.2) (332) (378) (431) (0.6)Italy (274) (299) (396) (3.4) (274) (284) (375) (3.2)Belgium-Luxem. n.a. n.a. n.a. n.a. (387) (414) (508) (3.9)

Japan 821 828 1326 4.9 697 938 1128 4.0

CENTRALLY-PLANNED 1278 1718 1892 4.4 183 255 239 1.1USSR 950 1220 1300 3.9 n.a. n.a. n.a. n.a.East Europe 316 483 576 5.5 179 239 208 -0.1

DEVELOPING 721 1055 1519 7.1 345 492 841 7.6Asia 290 410 604 (7.5) 135 151 377 8.0

China (208) (300) (331) (5.2) n.a. n.a. n.a. n.a.America 179 306 485 9.4 78 170 259 11.0South Europe n.a. n.a. n.a. n.a. 126 161 199 4.7

WORLD 7289 7473 9521 2.9 3849 4456 5271 2.7

1/ Least squares growth rate.

Source: World Bureau of Metal Statistics.

14R -

Table 9.4

COPPER: LME-/ AVERAGE ANNUAL PRICES, 1960-81(US$/lb)

Current 70-74 = 100

1960-64 32.4 48.21965-69 60.5 90.01970-74 67.2 100.0

1975 56.1 83.51976 63.5 94.51977 59.4 88.41978 62.0 92.31979 90.0 133.9

1980 99.0 147.31981 79.0 117.6

1/ London Metal Exchange.

Source: Engineering and Mining Journal.

- 149 -

Table 9.5

COPPER: LME- AVERAGE MONTHLY PRICES, 1980-82(Use/lb)

1 9 8 0 1 9 8 1 1 9 8 2US4/lb Jan 80=100 USO/lb Jan 80=100 USU/lb Jan 80=100

January 118.+0 100.0 84.8 71.9 73.1 61.9

F'ebruary 132.4 112.2 81.8 69.3 72.4 61.4

March 104.7 88.7 82.5 69.9 68.6 58.1

April 94.2 79.8 82.7 70.1 69.0 58.5

May 92.9 78.7 79.1 67.0 69.3 58.7

June 91.0 77.1 77.2 65.4 59.0 50.0

July 98.7 83.6 76.4 64.7 65.4 55.4

August 94.4 80.0 81.0 68.6 65.8 55.8

September 93.5 79.2 77.6 65.8 64.7 54.8

October 92.8 78.6 75.7 64.2 66.3 56.2

November 91.4 77.5 74.9 63.5

December 85.1 72.1 75.2 63.7

Year 99.0 83.9 79.0 66.9

1/ London Metal Exchange.

Source: Engineering and Mining Journal.

- 150 -

Table 9.6

COBALT: RESERVES AND RESOURCES, 1980(Thou. Metric Tons)

Estimated Reserves Other ResourcesAmount % Amount 7

Australia 45 1.9 249 8.2Botswana 27 1.1 5 0.2Canada 27 1.1 227 7.5Cuba 181 7.5 953 31.3Finland 18 0.7 5 0.2

Morocco 45 1.9 23 0.7Philippines 181 7.5 23 0.7South Africa 23 1.0 5 0.2USA - - 771 25.4

USSR 227 9.4 23 0.7

Zaire 1179 49.1 227 7.5Zambia 363 15.1 227 7.5Other 88 3.7 301 9.9

Total 2404 100.0 3039 100.0

Source: U.S. Bureau of Mines, Mineral Facts and Problems, 1980.

Table 9.7

COBALT: PRODUCTION OF METALLIC COBALT, 1972-1980(metric tons)

1972 1973 1974 1975 1976 1977 1978 1979J 198.1

Botswana - - 8 8 - - n.a. n.a.Canada 1,200 605 326 254 298 459 519 544 3,000Finland 803 1,010 812 820 892 985 922 1,167 1,400

France 774 835 769 769 725 742 871 721 1,500Germany, Fed. Rep. 457 370 356 340 250 349 299 331 650Japan - 11 10 48 515 1,093 1,864 2,600 2,600

Norway 320 912 1,238 773 576 705 522 681 ) 400UK - - - 463 689 780 508 454 )USA - - - 30 165 221 292 421 500

Ln

USSR 1,633 1,678 1,724 1,814 1,814 1,905 1,950'1/ 1,8141/ 3,300Zaire 13,043 15,062 17,565 13,638 10,686 10,208 13,125 14,515 14,600Zambia 2,053 2,664 1,964 1,843 2,175 1,704 1,566 2,812 3,750

Total 20,283 23,137 24,772 20,801 18,786 19,153 22,439 26,056 31,700

1/ Estimated.

2./ Preliminary (Engineering and Mining Journal).

NOTE: Totals may not add due to rounding.

Source: US Bureau of Mines,

-152 -

Table 9.8

COBALT: CONSUMPTION BY END USE UNITED STATES AND JAPAN, 1972 to 1979kNetrIC tons)

1972 1973 1974 1975 1976 1977 1978 1979

United StatesSteel

Carbon 1 1 2 0 0 0 - -Stainless and heat-resisting 18 15 18 17 19 34 61 62Full Alloy 98 103 113 84 107 163 113 103HSLA 3 20 4 1 n.a. n.a. 5 n.a.Electric n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.Tool and high speed 164 235 313 132 101 139 172 187

Superalloys, high temperature alloys 1,366 1,489 1,855 1,023 1,260 1,684 1,950 2,393

Alloy (excluding steels, superalloys)

Cutting, wear resistant alloys )577 1,139 1,169 636 719 648 833 963Cemented carbidesWelding and hard-facing rods 90 177 192 215 235 200 328 201Magnetic alloys 1,561 1,951 1,568 922 1,699 1,578 1,709 1,481Non-ferrous alloys 295 358 354 315 368 295 268 178Other alloys 307 342 290 179 297 124 171 124

Total metal 4,481 5,830 5,878 3,525 4,705 4,865 5,610 5,692

Chemicals and ceramics

Ground coal frit 65 75 60 38 41 35 44 251Pigments 75 98 87 58 94 85 90 90Catalysts 318 522 625 504 656 583 736 854Glass decolorizer 28 28 23 19 14 12 10 20Other 78 89 68 96 3 3 2 173

Total non-metal 565 813 864 716 807 718 882 1,388

Miscellaneous and unspecified- 143 239 165 257 156 222 126 814

Salts and driers 1,221 1,619 1,649 1,302 1,808 1,714 2,449 n.a.

Grand Total 6,409 8,501 8,555 5,800 7,476 7,519 9,069 7,894

jAPAN

High speed steels (and tool steels) 186 525 241 288 439 577) 422) 420)Heat resistant steels (superalloys) 363 527 627 455 390 ) ) )Ultra hard alloys (cutting, welding,hard-facing alloys) 108 171 154 86 122 112 113 146

Magnetic alloys 1,544 2,124 1,243 836 1,549 1,117 1,166 872Catalysts 183 148 88 88 107 107 115 155Other 174 427 428 225 389 562 573 633

Total 2,558 3,922 2,781 1,978 2,996 2,455 2,389 2,226

1/ Categories in which figures are withheld to avoid disclosing individual company data.

Source: U.S. Bureau of Mines.

Table 9..9

COBALT: World Trade Flows, 1978-801/(metric tons)

1 9 7 8 1 9 7 9 1 9 8 0Destination/Origin BT.EI/ Zaire Zambia Total BLEU2 / Zaire Zambia Total BLEUI/ Zaire Zambia Total

Total 3,888 5,460 1,474 15,873 3,089 5,494 3,114 17,686 1,906 3,725 2,115 13,108

'JSA 1,073 3,571 968 7,479 806 3,984 1,605 8,567 474 2,830 1,009 6,783Germany, F.R. 605 808 4 2,059 520 464 26 1,848 15 - - 85U.K. 824 - 493 2,267 563 21 1,418 3,111 259 70 1,062 2,189Japan 292 697 1 1,352 329 749 20 1,473 465 671 5 1,534France 469 179 6 994 325 82 27 897 230 82 38 1,138Sweden 198 205 2 484 205 194 1 509 231 57 1 488Netherlands 13 - - 78 23 - - 194 14 - - 180Italy 161 - - 369 126 - 17 338 77 5 - 258Brazil 225 - - 312 171 - - 237 134 - - 277Others 28 - - 479 21 - 512 7 10 - 176

(Percentages)

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

USA 27.6 65.4 65.7 47.1 26.1 72.5 51.5 48.4 24.9 76.0 47.7 51.7Germany, F.R. 15.6 14.8 0.3 13.0 16.8 8.4 0.8 10.4 0.8 - - 0.6U.K. 21.2 - 33.4 14.3 18.2 0.4 45.5 17.6 13.6 1.9 50.2 16.7Japan 7.5 12.8 0.1 8.5 10.7 13.6 0.6 8.3 24.4 18.0 0.2 11.7France 12.1 3.3 0.4 6.3 10.5 1.5 0.9 5.1 12.1 2.2 1.8 8.7

1/ As recorded by importing countries.

2/ Belgium and Luxembourg.

- 154 -

Table 9.10

COBALT: Average Annual Producer Prices, 1954-81(US$/lb)

Actual Price 1973 = 100

1954-58 2.36 78.71959-63 1.56 52.01964-68 1.69 56.31969-73 2.35 78.3

1974 3.46 115.31975 3.98 132.71976 4.44 148.01977 5.58 186.01978 11.53 384.31979 25.00 833.31980 25.00 833.31981 19.38 646.0

Source: US Bureau of Mines.

- 155 -

Table 9.11

COBALT: Average Monthly Spot and Producer Prices (Zaire), 1980-82(US~/ lb)

1 9 8 0 1 9 8 1 1 9 8 2Spot Producer Spot Producer Spot Producer

January 23.88 25.00 20.87 25.00 12.,63 17.50

February 24.50 25.00 20.88 20.00 11.20 12.50

March 24.00 25.00 22.37 20.00 10,90 12.50

April 22.38 25.00 17.78 20.00 9.85 12.50

May 22.42 25.00 18.13 20.00 9.26 12.50

June 22.17 25.00 16.50 20.00 9.09 12.50

July 20.19 25.00 15.64 20.00 8.21 12.50

August 19.30 25.00 13.18 17.50 7.63 12.50

September 19.63 25.00 11.50 17.50 6.39 12.50

October 21.58 25.00 9.98 17.50 4.37 12.50

November 21.31 25.00 9.15 17.50 4.34 12.50

December 21.35 25.00 10.45 17.50

Average 21.89 25.00 15.54 19.38

Source: Metal Bulletin.

- 156 -

Table 9.12

DIAMONDS: WORLD MINE RESERVE BASE-/(Million Carats)

Australia 100

Botswana 125

Ghana 15

South Africa 50

Zaire 250

Other market economies 30

USSR 50

Total 620

1/ Based on a judgmental appraisal of currentknowledge and assumptions (Minerals andCommodities Yearbook, 1982).

Source: U.S. Bureau of Mines.

- 157 -

Table 9.13

DIAMONDS: Production, 1970-79(Million Carats)

1970-79Average

Average % of_1970-74 1975 1976 1977 1978 1979 Total

Zaire 17.1 17.0 17.0 17.0 17.0 15.5 34.7

USSR 12.0 12.0 12.0 12.0 12.0 12.0 24.7

South Africa 7.8 7.8 7.3 7.9 8.0 8.6 16.2

Botswana 1.7 2.4 2.4 2.7 2.8 4.4 4.7

Nambia 1.7 1.7 1.7 2.0 1.9 1.7 3.7

Ghana 2.6 2.3 2.2 2.2 1.5 1.5 4.7

Others 6.9 4.8 4.3 4.1 4.1 4.3 11.3

Total 49.8 48.0 46.9 47.9 47.3 48.0 100.0

Source: Mining Annual Review.

- 158 -

Table 9.14

DIAMONDS: AVERAGE ANNUAL PRICES FOR INDUSTRIAL DIAMONDS, 1954-81(US$/carat)

Boart and powder Stones

1954-58 3.20 8.251959-63 3.12 7.211964-68 2.44 6.791969-73 2.16 5.86

1974 2.07 5.951975 2.10 6.541976 2.11 6.591977 2.08 6.201978 2.20 7.781979 2.04 10.391980 1.99 12.841981 1.91 13.93

Source: U.S. Bureau of Mines.

- 159 -

Table 9.15

COFFEE: WORLD PRICES, 1975-82(US/lib)

Arabical/ Robusta'/

1975 65 581976 143 961977 241 -

1978 166 1481979 174 166

1980 156 148

1981 128 103

January 130 122February 130 116

March 130 114April 128 112May 127 108June 117 85July 114 89August 122 91September 124 89October 129 98November 146 106December 144 105

1982January 143 106February 142 116March 142 113April 142 107May 142 103June 142 103

July 142 100

August 138 104

September 138 112October 133 118

1/ Refers to Guatemalan prime washed[.

2/ Refers to an average of Angola and Uganda prices.

Source: Journal of Commerce.

IBRD 356OR7

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