The hyperinflation in Zaire (now the Democratic Republic of the Congo) from the late 1980's through the 1990's was very serious but by no means was in the class of the most extreme hyperinflations such as that in Yugoslavia in the 1990's or in Hungary after World War II. Zaire's inflation was more like the chronic inflations which used to occur in Latin America where the rate of inflation was a few hundreds of percent year after year for decades. In Zaire's case the rate of inflation was a few thousands of percent during the early 1990's then peaked at about 24 thousand percent in 1993-1994. Thereafter the rate dropped to a level of a few hundreds of percent. In Zaire's case a factor limiting the inflation of the money supply was the fact that it finally could not come up with hard currency payments to the company printing up the bank notes.

Here is the statistical record of inflation in Zaire from the International Monetary Fund financial statistics reports:

From 1987 when the IMF price level series began to 1997 the price level increased by a factor of 4.25 billion. That which cost 1.0 New Zaire in 1987 cost 4.25 billion New Zaires in 1997.

Up until 1980 the income velocity of money in Zaire was in the range of 3 to 5 times per year. In 1980 the velocity jumped to 13 times per year and stayed in the range of 9 to 15 times per year during the 1980's. However during the accelerated inflation of the early 1990's the velocity actually dropped back to 6 to 7 times per year.

The devastating statistics for Zaire during the period 1970 to 1995 were the levels of real GDP and real percapita GDP. In 1974 the value of Zaire's GDP in 1990 prices peaked at 2.954 billion New Zaires. Thereafter it fell to a level of 1.485 billion 1990 value New Zaires. There were some years in which the level increased but the trend was definitely and inexorably downward. In percapita terms the record was even worse. In 1974 the percapita GDP in 1990 level prices was 123.5 New Zaires; in 1997 it was 32.7 New Zaires. The most precipitous decline came during the accelerated inflation of the early 1990's. However the situation reflected a collapse of the formal economy. The growth of the informal, underground, back-market economy sustained the population and grew to be several times larger than the formal economy reflected in the GDP statistics.

(To be continued.)