ZAIRE: DETERIORATING FINANCIAL POSITION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000600060006-5
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 5
• Document Creation Date: December 19, 2016
• Document Release Date: May 24, 2005
• Sequence Number: 6
• Publication Date: July 18, 1975
• Content Type: REPORT

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U-11FIDENTIN MEMORANDUM FOR: mc''.~. yW
or c:l
Spec. Asst. Lo the Sc c,.
for. National. Security
De,parLment of the Truzu-;ui::'
The aLtachcd discu_,5.on of Zaire's
current financial situation, prci~arcrl
by is in r. us pone
to your reques
Chi-of
Near East/Africa Branch
Developing Nations Division
18 qu y 1975
( DATE)
'd 10.101
LS ED
Attachment:
As stated above
Distribution: (S-Project 08342)
Orig. & 1 - Addressee
1 - D/OER, DD/OER, SA/ER
1 - Ch/D/D, Dep. Ch/D/D
3 - St/P/C (1-CRS, 1-Treasury)
2 - D/NE
25X1 OER/D/NE:
(18 July 1975)
-~ i NTIAL
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Zaire: Deteriorating Financial Position
Low copper prices and improvident economic policies
have created a severe foreign exchange crunch in Zaire which
affects its ability to import basic consumer and industrial
goods. Zaire is the world's fourth largest exporter of cop-
per and depends on it for three-fourths of its foreign ex-
cha;ige earnings. The fall in copper prices -- from more than
$1.50 a pound in April 1974 to about 550 now -- coupled with
spiralling import demand has almost depleted Zaire's foreign
assets and left it unable to meet current foreign exchange
obligati - ns. (See below)
.Zaire: Foreign Assets 1/
(Million U.S. Dollars)
1973
1974
1975
1st Qtr.
Foreign Exchange Receipts
1195
1888
241
Foreign Exchange Expenditures
1231
1956
367
Net Foreign Assets
220
1 30
2
a. Since data are on a settlement basis, actual expendi-
tures are considerably understated. Imports financed through
short-term trade credits, for example, are registered only
when payments are made. Short term credits outstanding
doubled from $300 million at the end of 1973 to $600 million
at the end of 1974.
GONEIDENTIAL
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Since independuncc, Zaire's economy has followed a
"boom or bust" pattern depending on the price of copper.
In the past it has been able to wait out economic slumps
with the knowledge that eventually copper prices would rise.
Now, however, with government economic policies responsible
for a soaring import bill, even optimistic projections in-
dicate that copper prices will not rise enough over the next
few years to finance Kinshasa's recent level of imports.
As there is little possibility of quickly expanding
other exports and anticipated foreign credits have not ma-
terialized, the goveinment's only option has been to cut
imports. Import controls were introduced in early 19 75 .
Only imports of specified goods -- foods, pharmaceu.:icals,
and raw materials for domestic processing -- may be imported
'freely. All other imports are subjebt to individual li-
censes which are issued rarely. In practice, even orders
for many authorized imports have been cancelled -- creating
industrial shortages and disrupting output -- because foreign
suppliers have been unable to obtain advance payment for
shipments to Zaire.
Zaire's financial troubles combined with management
and personnel problems are starting to take a toll on copper
production. A shortage of foreign exchange has forced the
state-owned company GECAMINES, which is responsible for al-
most all copper production, to restrict, imports of raw materials
CONFIDE 1T!Al
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CUNfIDENTIAI.
and spare parts. This, combined with an exodus, of expatri-
ate technical staff, is causing rapid deterioration of the
physical plant. Recent equipment breakdowns will cause a
shortfall of at least 20 , 000 tons from planned 1975 production
of 482,000 tons. Production could fall well below 400,000
tons if the deterioration continues.
CIA/OER
18 July 1975
COt, IftRTIAI
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