Press Release: IMF Completes Sixth and Final Review Under the PRGF Arrangement with Burundi
January 16, 2008
The Executive Board of the International Monetary Fund (IMF) today completed the sixth and final review of Burundi's economic performance under the SDR 69.30 million (about US$110.3 million) Poverty Reduction and Growth Facility (PRGF) arrangement. The completion of the review will enable the release of an amount equivalent to SDR 7.15 million (about US$11.4 million), which will fully disburse the total amount available under the arrangement.
In completing the review, the Board also granted Burundi a waiver for the nonobservance of a quantitative performance criterion pertaining to a temporary accumulation of external payments arrears and a structural performance criterion on the establishment of a unified data file for computerized payroll management.
The PRGF arrangement was originally approved on January 23, 2004 in an amount equivalent to SDR 69.30 (about US$110.3 million) (see Press Release No. 04/13). In July 2006, the arrangement was extended to September 30, 2007, and then again to January 22, 2008.
The PRGF is the IMF's concessional facility for low-income countries. It is intended that 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 Poverty Reduction Strategy Paper (PRSP). This is intended to ensure that PRGF-supported programs are 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 percent and are repayable over 10 years with a 5½-year grace period on principal payments.
Following the Executive Board's discussion on Burundi's economic performance, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated:
"The authorities' commitment to sound macroeconomic policies, and the outlook for stronger economic growth and reduced inflation in 2008 are encouraging. Since mid-2007, the Burundian authorities have taken steps to address governance issues, shore up fiscal balances, and improve economic and monetary policy performance. Maintaining steadfast policy implementation will be needed to raise investment, sustain higher economic growth and reduce poverty substantially.
"Improved revenue performance coupled with careful management of expectations for a peace dividend in the public sector will contribute to strengthening Burundi's fiscal position. Enhanced public financial management, incorporating effective financial controls, will help to ensure fiscal integrity.
"Improvements in the governance and efficiency of the central bank, including measures to enhance its independence and accountability, are encouraging. The progressive strengthening of operations and the pursuit of a proactive approach, along with reinforced cooperation between the Ministry of Finance and the central bank, will help to improve liquidity forecasting and add to the effectiveness of monetary policy. Work is ongoing to bolster the banking system, by improving supervision and raising bank capitalization norms.
"It is important that structural reform efforts, including preparations to privatize the productive sectors of the economy, especially the coffee sector, be accelerated. Improving the investment climate will be vital to attracting private investment and spurring economic growth.
"Burundi is in debt distress. Progress toward the completion point under the Heavily Indebted Poor Countries (HIPC) Initiative has been slower than envisaged. Efforts towards this end need to be accelerated, debt-service payment procedures improved and recourse to external borrowing on non-concessional terms should be avoided," Mr. Portugal said.