- The credit seeks to restore external sustainability, and strengthen debt management while creating fiscal space for accelerated and inclusive growth.
- The staff-level agreement is subject to IMF management approval and consideration by the Executive Board.
- Burundi’s reform program aims to support economic recovery from shocks.
The International Monetary Fund (IMF) has agreed to dispatch a $261.7 million loan to crisis-saddled Burundi, its first in nearly a decade, as the country moves to bolster economic recovery and reforms.
The IMF boost to the poverty-stricken nation follows “a staff-level agreement on economic policies and reforms” that was struck for a new 40-month arrangement under the Extended Credit Facility (ECF) after the lender’s Mission Chief for Burundi, Mame Astou Diouf, visited Bujumbura in February.
Burundi’s reform program aims to support economic recovery from shocks, restore external sustainability, and strengthen debt management while creating fiscal space for accelerated and inclusive growth.
Since 2015, Burundi has been wallowing in economic chaos following a political crisis that has left the country lacking foreign exchange amid acute shortage of basic goods. Last year, the US and the European Union resumed aid to the country citing an improving governance environment under President Evariste Ndayishimiye.
The country’s economy has also been hit by several shocks, halting its recovery from the negative effects of the Covid-19 pandemic and heightening its macroeconomic imbalances.
Discussions held with the Burundian authorities covered recent macro-developments, the impact of the various domestic and external shocks, macro-policy plans and structural reform agenda.
Delayed rainfall in the last quarter of 2022 and limited availability of fertilizer— driven by higher prices amid limited forex to secure imports— supply disruptions linked to the war in Ukraine, and insufficient domestic production to cover local farmers’ demand have significantly hampered agricultural production.
Equally, outbreaks of the rift valley and porcine fevers has negatively impacted Burundi’s livestock production.
Higher import prices triggered by the war in Ukraine have pushed up inflation, widened the fiscal deficit, and heightened current account pressures.
Meanwhile, real GDP growth is estimated to have slowed down to 1.8 per cent last year from 3.1 percent in 2021, but is projected to rebound to 3.3 percent this year.
Delayed harvest and lower crop of 2022 will impact agricultural production in 2023 owing to reduced land and the availability of seeds.
The country’s inflation averaged 18.9 percent in 2022 and has remained elevated, accelerating to 28.6 percent year-on-year in January 2023 on account of high food prices. “It is projected to remain at around 18 per cent in 2023,” the fund said.
“With the support of the ECF arrangement, the Burundian authorities have planned a broad-based near- and medium-term macroeconomic reform agenda aimed at tackling key challenges,” Diouf notes.
Fiscal consolidation
The fiscal position is, however, projected to weaken in FY2022/23 because of slow revenue collection from measures adopted in the last two budget cycles and spending overruns especially on large fertilizer subsidies.
A return to fiscal consolidation is planned starting in FY2023/24, building on strengthened revenue collection and current spending restraint while preserving social spending and efficient investment scaling up under the authorities’ Public Investment Plan. Public debt is expected to decline over the medium term under the program.
The central bank—Bank of the Republic of Burundi (BRB)—has committed to recalibrating monetary and external policies to address the below-adequacy forex reserves, 1.5 months of imports at December 2022, and large parallel forex market premium.
Read: AfDB surpasses Egypt’s climate change funding target by 64pc to $2.3Bn
Governance and structural reforms will be at the core of the authorities’ medium-term programme to ensure a business environment conducive to private-led diversified and inclusive growth and job creation.
The mission met with Prime Minister Gervais Ndirakobuca, Audace Niyonzima, Minister of Finance, Budget and Economic Planning (MFBPE) Dieudonné Murengerantwari, Governor BRB, Désiré Musharitse, First Vice-Governor of the BRB; and Francine Inarukundo, Permanent Secretary of the MFBPE.
The mission also met with other officials of the government and the BRB, as well as representatives of commercial banks, the private sector, non-governmental organizations, and the donor community.
Data dissemination system
Burundi has implemented a key recommendation of the IMF’s Enhanced General Data Dissemination System (e-GDDS) to publish essential macroeconomic and financial data.
The implementation of the e-GDDS recommendation and the launch of the data portal—the National Summary Data Page—are a testament to Burundi’s commitment to data transparency.
The e-GDDS is the first tier of the IMF Data Standards Initiatives that promote transparency as a global public good and encourage countries to voluntarily publish timely data that is essential for monitoring and analyzing economic performance.
The National Summary Data Page will serve as a one-stop publication for disseminating the data recommended under the e-GDDS, covering national accounts and prices, government operations and debt, the monetary and financial sector, and the external sector.
The National Summary Data Page will facilitate access for data users in Burundi and abroad, including policymakers, financial sector, private investors, think tanks, and the media.
More broadly, aligning data with the e-GDDS will make it accessible in a standardized way to facilitate analysis of economic trends across countries and to allow early detection of risks that could help avert economic crises, IMF notes.
This supports sustainable economic growth and development.
With the launch of National Summary Data Page, Burundi’s information has become easily accessible in both human and machine-readable formats for users, resulting in greater data transparency.
The page is hosted on Burundi’s National Open Data Platform (ODP), which is provided by the African Development Bank, and utilizes modern data publication technology.
The data is provided by the National Statistical Office, the Ministry of Finance, Budget and Economic Planning, and the Bank of the Republic of Burundi.
Bert Kroese, Chief Statistician and Data Officer, and Director of the IMF’s Statistics Department, has welcomed this major milestone in the country’s statistical development.
“I am confident that Burundi will benefit from using the e-GDDS as a framework for further development of its statistical system,” Kroese stated.
The benefits, including better sovereign financing conditions for countries participating in the e-GDDS, have recently been reviewed by the IMF Executive Board in the context of the Tenth Review of the IMF Data Standards Initiatives.
The launch of Burundi’s National Summary Data Page was supported by an IMF capacity development project financed by the Government of Japan.
