| This study assessed the impact of the International Monetary Fund (IMF) and World Bank (WB) structural adjustment program (SAP) on the Zairian financial system. The debt crisis and the near-collapse of the Zairian economy can be attributed to a number of factors. This research sought to determine whether the IMF/WB program could be identified as one of these contributing factors.; The research model provides the rationale for relating the debt crisis and the poor performance of the banking sector to some macroeconomic variables. By analyzing data gathered from the Bank of Zaire, the World Bank, the RAF, the United Nations, statistical data from the government of Zaire, and academic literature, it was possible to test the three alternative hypotheses ( H1, H2, H3) advanced for this study.; The results of the empirical analysis indicate that the outcome of the six currency devaluations between 1976 and 1986 are inconsistent with theoretical regularities. It shows that currency devaluation played a significant role in the deteriorating rate of growth of Zaire's real gross national product (GNP). Specifically, the study found evidence of debt overhang, and of debt-induced capital flight in Zaire. The banking characteristics also showed sizeable degrees of deterioration during the period covered in the study.; A reexamination of theoretical issues revealed that by drawing support from empirical results, theoretical literature is gradually moving away from the concept of employing currency devaluation to achieve macroeconomic balances in Africa. The results of the empirical analysis also support this new theoretical trend.; Several recommendations are made to address these theoretical discrepancies, including the fact that the IMF should respect its Articles of Agreements concerning the implementation of stabilization measures. Other recommendations call for the development of homegrown adjustment programs, and the inclusion of a sizeable amount of domestic inputs in Western-style programs. |
