IMF Executive Board Concludes 2009 Article IV Consultation with Burkina Faso

Public Information Notice (PIN) No. 09/138
December 17, 2009

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.

On December 14, 2009, the Executive Board of the International Monetary Fund concluded the Article IV consultation with Burkina Faso.1 The Executive Board also completed the fifth review of Burkina Faso’s performance under its Poverty Reduction and Growth Facility (PRGF) supported program.


In 2008-09, economic activity was negatively affected by the increase in global food and fuel prices, the global economic and financial crisis, and heavy flooding in Ouagadougou in September 2009. These shocks are estimated to have contributed to a deterioration in poverty indicators. Following 5.2 percent real GDP growth in 2008, led by a rebound in agricultural production and an expansion in the mining sector, growth is projected to slow to 3.1 percent in 2009, reflecting the impact of the global downturn, particularly on the cotton sector and related activities. Inflation rose to close to 11 percent in 2008 because of high commodity prices, but is set to decline to about 3½ percent in 2009. The current account deficit, which widened to almost 12 percent of GDP in 2008 as imports surged and the terms of trade deteriorated, is projected to narrow to 9.1 percent of GDP in 2009, mostly on account of higher gold exports.

A generally expansionary fiscal policy in 2009 responded to the external shocks. Spending on emergency and humanitarian needs rose after the 2009 flooding, and fiscal stimulus measures were also adopted to support economic activity, and the cotton sector in particular. Increased financing in 2009 does not lead to a significant worsening of debt indicators.

For 2010, economic growth is projected at 4.2 percent, supported by robust agricultural and mining production, an anticipated rebound in the cotton sector, and public investment related to infrastructure and reconstruction needs. Notwithstanding the latter, the fiscal deficit is projected to narrow in 2010 as growth strengthens.

Over the medium-term, growth is forecast to return to historical trends of close to 6 percent, supported by investments in infrastructure, private sector reforms, and expansion of the mining sector. Inflation is expected to remain below 3 percent, thus complying with the West African Economic and Monetary Union (WAEMU) convergence criterion.

Progress has been made with regard to structural reforms in 2008-09. In the fiscal area, tax administration was modernized, helping to contain the impact of slower growth, and a tax reform strategy was adopted at end-2009. In the cotton sector, reforms covered the setting up of a price-smoothing fund for ginneries, the adoption of a producer-price setting mechanism, and an audit of SOFITEX, the main ginning company. In the financial sector, a comprehensive reform strategy building on the Financial Sector Assessment Program recommendations was also completed in 2009.

Key risks to the economic outlook include a slower recovery in the global economy that would undermine demand for cotton, reduced external budgetary support, and a possible revenue shortfall that would limit scope for fiscal support to economic growth.

Executive Board Assessment

Executive Directors commended the Burkinabè authorities for implementation of appropriate macroeconomic policies and structural reforms, despite a difficult environment marked by several adverse exogenous shocks. In particular, fiscal policy helped moderate the impact of the global economic downturn in 2009. Looking ahead, Directors called for fiscal consolidation, improved execution of the public investment program, and further structural reforms to support growth and poverty reduction objectives.

Directors welcomed the authorities’ resolve to enhance revenue performance and expenditure management, while unwinding exceptional expenditure generated by adverse exogenous shocks. They commended the authorities’ actions to mitigate the impact of the shocks, especially on the most vulnerable. As growth strengthens, Directors noted that emphasis should be placed on fiscal consolidation to restore debt sustainability. They encouraged the authorities to implement the tax reform and other revenue-enhancing measures scheduled for 2010, and highlighted the need to take additional expenditure measures should expected budgetary resources fall short. Directors noted that Burkina Faso is at a high risk of debt distress on account of the net present value of debt-to-exports ratio, although other debt indicators remain comfortably below their indicative thresholds. They emphasized the importance of a prudent borrowing policy, tapping highly concessional financing and grants, that would contribute to long-term debt sustainability.

Directors noted the staff’s assessment that although Burkina Faso’s real effective exchange rate is broadly in line with fundamentals, non-price factors continue to hamper competitiveness. They encouraged further progress on structural reforms, including financial sector reforms in line with the 2008 Financial Sector Assessment Program assessment, to support private sector development and diversification. Directors also encouraged the authorities to press forward with cotton sector reforms with the aim of putting ginning companies on a solid financial footing. They observed that a successful restructuring of the cotton sector would help support economic recovery and reduce vulnerabilities in the financial sector.

Burkina Faso: Selected Economic Indicators, 2007-11



2007 2008 2009 2010 2011



Est. Proj. Proj. Proj.
  (Annual percentage change; unless otherwise indicated)

GDP and prices


GDP at constant prices

3.6 5.2 3.1 4.2 5.3

Consumer prices (annual average)

-0.2 10.7 3.4 2.3 2.0

Money and credit


Credit to the economy ˡ

0.6 14.0 3.2 5.1 6.3

Broad money (M2)

22.9 12.2 8.3 6.2 10.7

External sector


Terms of trade

1.2 -3.2 12.1 -6.6 0.3

Real effective exchange rate (– = depreciation)

-0.6 7.0 ... ... ...
  (Percent of GDP; unless otherwise indicated)

Central government finances


Domestic revenue

13.6 13.3 13.2 13.6 14.5

Total expenditure (commitment basis)

25.8 21.7 27.0 25.3 24.7

Overall fiscal balance, excl. grants (commitments)

-12.2 -8.4 -13.8 -11.7 -10.2

Overall fiscal balance, incl. grants (commitments)

-5.7 -4.4 -6.7 -5.4 -3.9

External sector and debt indicators


Exports of goods and services

10.6 10.0 11.7 12.3 15.2

Imports of goods and services

24.8 26.8 27.0 28.5 28.8

Current account balance (incl. current official transfers)

-8.3 -11.9 -9.1 -10.5 -9.7

Current account balance (excl. current official transfers)

-12.6 -15.3 -13.8 -14.9 -12.4

External debt

19.8 19.8 20.6 22.2 24.4

NPV of external debt

12.0 11.6 13.4 14.9 16.8

NPV of external debt as percent of exports

113.8 116.7 113.9 120.6 111.0

NPV of external debt as percent of revenues

88.5 87.7 101.2 109.4 116.3








Sources: Burkinabè authorities and IMF staff estimates and projections.


ˡ Percent of beginning-of-period broad money.


1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here:


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