News Brief: IMF Completes In Principle Review Under Burkina Faso's PRGF Arrangement and Approves US$7 Million Disbursement
November 30, 2001
IMF Completes In Principle Review Under Burkina Faso's PRGF Arrangement and Approves US$7 Million Disbursement
The Executive Board of the International Monetary Fund (IMF) today completed in principle the fourth review of Burkina Faso's performance under the program supported by the Poverty Reduction and Growth Facility (PRGF)1 Arrangement. As a result, Burkina Faso will in principle be able to draw up to SDR 5.59 million (about US$7 million).
A final decision by the IMF Executive Board is pending discussion of Burkina Faso's Poverty Reduction Strategy Paper progress report by the World Bank Executive Board, which is scheduled for December 6, 2001.
Burkina Faso's program was originally supported by a three-year arrangement under the Enhanced Structural Adjustment Facility (ESAF) approved on September 10, 1999 (see Press Release 99/42), for SDR 39.12 million (about US$50 million). So far, Burkina Faso has drawn SDR 22.36 million (about US$28 million) under the arrangement.
After the Executive Board's discussion on Burkina Faso, Anne Krueger, First Deputy Managing Director and Acting Chairman, stated:
"The PRGF-supported program remains on track despite an economic downturn in 2000, which trailed into the first half of 2001. All end-June and end-September 2001 performance criteria and benchmarks were observed. The authorities have maintained a prudent fiscal policy in the face of a revenue shortfall. To achieve the programmed year-end revenue and budget deficit targets, they have reduced expenditure while protecting social outlays, and have raised taxes on petroleum products. Structural reforms focus on improving the performance of the cotton sector, pushing ahead with the privatization program, and strengthening public finance management, the judicial system, and governance.
"An expected bumper cotton crop should boost growth this year and next, and help alleviate rural poverty. The authorities remain committed to fiscal consolidation, structural reform, and the fight against poverty. Ongoing efforts to broaden the tax base, improve tax administration, and limit low-priority spending remain critical to mobilize resources for urgent social purposes. Furthermore, the authorities need to adopt a cautious cotton pricing policy in 2002 in the face of a decline in international cotton prices.
"The authorities have vigorously pursued the poverty reduction objectives set out in the PRSP. They have prepared a progress report on the first-year implementation of the PRSP on the basis of extensive consultations with civil society and development partners. The Fund's Executive Board has deemed the report to be an adequate basis for continuing Fund concessional assistance to Burkina Faso. Progress in social outcomes has been satisfactory, and the authorities intend to steadfastly pursue their ambitious objectives. In particular, they intend to improve the planning, execution, and tracking of the poverty reduction strategy, notably by accelerating the commitment of available resources and energizing the monitoring unit in charge of tracking poverty-related outcomes.
"The authorities have met all the policy reform measures of the floating completion point conditions under the enhanced HIPC Initiative. However, in view of a substantial drop in Burkina Faso's exports and the possible case for additional assistance at completion point, Directors supported Burkina Faso's decision to postpone its request for consideration of the completion point document under the enhanced HIPC Initiative to March 2002," Ms. Krueger said.
1 On November 22, 1999, the IMF's concessional facility for low income countries, the Enhanced Structural Adjustment Facility (ESAF), was renamed Poverty Reduction and Growth Facility (PRGF), 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 (PRSP). 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. Burkina Faso completed its Poverty Reduction Strategy Paper in Spring 2000. This resulted from a broad participatory process, which led to the elaboration of a comprehensive long-term strategy with prioritized action plan for the period 2001-03. PRGF loans carry an annual interest of 0.5 percent, and are repayable over 10 years with a 5 ½ year grace period on principal payments.