News Brief: IMF Completes First Review of Burkina Faso Under PRGF-Supported Program And Approves US$7.4 Million Disbursement
July 11, 2000
The Executive Board of the International Monetary Fund (IMF) completed its first review of Burkina Faso's economic performance under a program supported by a three-year SDR 39.12 million (about US$52 million) Poverty Reduction and Growth Facility (PRGF)1 credit (see Press Release No. 99/42). The completion of this review enables the release of a further SDR 5.59 million (about US$7.4 million) disbursement, which brings total disbursements under the current program to SDR 11.18 million (about US$14.9 million).
After the Executive Board's discussion, Shigemitsu Sugisaki, Deputy Managing Director, made the following statement:
"The authorities of Burkina Faso have been successful in achieving a satisfactory economic performance of the Burkinabè economy during 1999: real GDP growth has been sustained, inflation declined further, and most of the budgetary targets, especially with regard to revenue, were met. Progress was made in the area of structural reform, although the reform of the electricity sector has been taking longer than expected.
"In the fiscal area, the main effort has been to widen the tax base through improved taxation of the informal sector and a curtailment of exemptions, with a view to offsetting the expected revenue loss from the full implementation of the Common External Tariff of the WAEMU in the year 2000. On the expenditure side, following the introduction in 1999 of the merit-based promotion system and less compressed wage scale, the authorities are committed to pursue more prudent wage policies, with emphasis on necessary recruitment in the health and education sectors.
"Despite the continuous improvement in economic conditions in recent years, the incidence of poverty remains high and social indicators are low, even in a regional context. To address these issues in a systematic fashion, and in coordination with the donor community, the authorities have finalized a full Poverty Reduction Strategy Paper (PRSP) that has been widely discussed within the Burkinabè society and with donors. A key objective of the authorities' poverty reduction strategy is to improve social indicators and to reinforce income-generating activities of the more vulnerable groups. The PRSP contains a detailed costing of the priority action programs. Directors considered that the PRSP provides a sound basis for support under the HIPC Initiative, and for Bank and Fund concessional assistance.
"The authorities intend to use the resources that will be freed from the HIPC Initiative to improve the provision of services in health and education and for rural development. The authorities are committed to complete rapidly the allocation of these resources and to incorporate them in the supplementary budget for the year 2000, and in the budget for 2001.
"The authorities are determined to complete rapidly the ongoing structural reforms, in particular the privatization of the telecommunications sector, the opening up of the electricity sector to private operators, and the improvement of the environment for private sector development," Sugisaki said.
1 On November 22, 1999, the IMF's concessional facility for low-income countries, the Enhanced Structural Adjustment Facility, was renamed the Poverty Reduction and Growth Facility, and its purposes were redefined. It is intended that PRGF-supported programs will in time be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a poverty reduction strategy paper. This is intended to ensure that each PRGF-supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5%, and are repayable over 10 years with a 5 ½-year grace period on principal payments.