Press Release: IMF Executive Board Completes Fifth Review Under Burundi's Poverty Reduction and Growth Facility and Approves US$10.7 Million Disbursement
March 9, 2007Press Release No. 07/43
The Executive Board of the International Monetary Fund (IMF) today completed the fifth review of Burundi's economic performance under a SDR 69.30 million (about US$104.1 million) Poverty Reduction and Growth Facility (PRGF) arrangement (see Press Release No. 04/13), and approved the disbursement of SDR 7.15 million (about US$10.7 million), which will bring total disbursements under the PRGF arrangement to SDR 62.15 million (about US$93.4 million).
The Board also granted Burundi a waiver for nonobservance of the end-September 2006 structural performance criterion pertaining to the tendering of negotiable treasury securities managed by Burundi's Central Bank.
Following the Executive Board's discussion on Burundi's economic performance, Mr. Murilo Portugal, Deputy Managing Director and acting Chair, stated:
"Burundi made steady progress in implementing its PRGF-supported program in 2006, notwithstanding a difficult post-conflict environment. The macroeconomic program remained on track with a recovery in real growth and lower inflation and the authorities are to be commended in particular for the strong fiscal performance in 2006, in the face of delayed disbursements of external support.
"The authorities are committed to sound macroeconomic policies and accelerated structural reforms. In this context, reinforced governance and transparency practices, particularly the strengthening of public financial management, the reform of public procurement, and the progressive withdrawal of state intervention in the economy will be central to program implementation.
"The authorities are strengthening monetary policy. The clearing of domestic arrears and the introduction of standardized negotiable treasury securities will help enhance the efficiency and soundness of the financial system. It is important to continue efforts to strengthen banking supervision and revise the central bank charter to grant it de jure independence.
"The managed-float exchange rate regime has served Burundi well so far. Progress in liberalizing the exchange regime is commendable and the authorities are encouraged to complete the liberalization of international current transactions.
"Delays in the disbursement of external support rendered fiscal management more difficult in 2006. In this context, recent efforts at better coordination with donors to ensure cohesive technical assistance and financial support are welcome, as timely and predictable receipt of external financial support is key for macroeconomic stability and program implementation.
"The authorities have made a sound start on their poverty reduction strategy outlined in their first Poverty Reduction Strategy Paper. They are encouraged to further define priority programs and targets to enable the monitoring of its implementation," Mr. Portugal said.
The PRGF is the IMF's concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in a PRSP. This is intended to ensure that PRGF-supported programs are consistent with a comprehensive framework to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5 ½-year grace period on principal payments.