## 1bfaea2019001

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---

### Executive summary — context, outlook, and risks
- Context
  - Government resigned in January 2019; new government mission: combat security crisis.
  - State of emergency in place in 7 out of 13 regions.
  - Internally displaced: about 40,000 end-December 2018; 170,000 in May 2019; expected to exceed 200,000 by year end.
  - Security disruptions closed 18 health centers and over 1000 schools, affecting almost 146,000 pupils.
  - Heightened security needs increased spending pressures by 0.6 percent of GDP in 2018 and projected 0.6 percent of GDP in 2019.
- Outlook and risks
  - Real GDP growth: 6.8 percent in 2018; projected to moderate to 6 percent in 2019 and in the medium term.
  - Sectoral growth 2018:
    - Primary sector: 9.9 percent.
    - Agriculture: 17.2 percent (after -9.7 percent in 2017).
    - Non-agriculture: 5.7 percent (from 8.4 percent in 2017).
  - Inflation:
    - 0.3 percent y/y in December 2018 (2 percent on average in 2018).
    - April 2019: annual y/y -2.5 percent; average 0.6 percent.
    - Average inflation projected to remain within WAEMU convergence criterion of 3 percent.
  - External sector:
    - Current account deficit: 5.8 percent of GDP in 2018 (from 7.3 percent in 2017); projected to widen to 6.1 percent of GDP in 2019 with medium-term narrowing.
    - Regional reserves: 4.4 months of imports in 2018.
  - Main risks: heightened security risks, further labor disputes; balance of risks tilted to the downside. External risks: intensified protectionism and downside risks to global growth.

### Program performance under the ECF arrangement
- Overall assessment
  - Performance broadly satisfactory under the ECF-supported program approved March 2018.
  - All but one performance criterion were met; all indicative targets at end-December 2018 were met.
  - 8 out of 13 structural benchmarks through mid-June 2019 were met.
- Specific nonobservance and corrective action
  - Ceiling on net domestic financing at end-December 2018 breached by CFAF 15 billion.
  - End-March 2019 indicative target for net domestic financing not met.
  - Breach attributed to cash adjustment reflecting pay down of short-term outstanding commitments from 2017 (stock declined from CFAF 110.8 billion at end-December 2017 to CFAF 20.6 billion at end-December 2018).
  - Authorities request a waiver and propose corrective measures: enhance monitoring of investment programming and improve intra-year planning and spreading of commitments.
- Structural measures in progress
  - Delay in establishing the Treasury Single Account (TSA) due to accounting system weaknesses and procurement of software interface with central bank.
  - Tender launched for IT platform and acquisition of storage servers for online asset declarations.
  - Rebasing of national accounts: nominal estimates published for year 2015 (new base year); work underway to finalize series from 1999 to 2014 and from 2016 onward.
  - Publication of number of civil servants by grades, regions and ministry moved from an April 2019 structural benchmark to a prior action.

### Recent economic developments and key statistics
- Output and sectors (2018)
  - Real GDP growth: 6.8 percent (2017: 6.3 percent).
  - Agriculture growth: 17.2 percent (2017: -9.7 percent).
  - Primary sector growth: 9.9 percent.
  - Cotton production: 29 percent decline in 2018.
  - Cereals production: 27.5 percent increase in 2018.
- Inflation and prices
  - 0.3 percent y/y in December 2018; 2 percent average in 2018.
  - April 2019: annual y/y inflation -2.5 percent; average inflation 0.6 percent; monthly food inflation 0.7 percent since March 2019.
- Fiscal outcomes (2018)
  - Overall fiscal deficit: 4.9 percent of GDP (2017: 7.8 percent).
  - Total revenue excluding grants: 19.5 percent of GDP (2017: 19.4 percent); program target: 18.8 percent.
  - Wage bill: 9.0 percent of GDP (2017: 8.6 percent).
  - Consolidation achieved mainly via reduction in investment (2 percent of GDP lower than in 2017) and current transfers (1.5 percent of GDP lower than in 2017).
- Credit and financial system (2018)
  - Total credit growth to economy: 12.4 percent (2017: 10.5 percent).
  - Credit to public corporations grew 181 percent in 2018 (including CFAF 60 billion securitization to SONABHY).
  - Private sector credit growth: 6.7 percent in 2018 (2017: 14.4 percent); 5.4 percent at end-March 2019.
  - Banking aggregate capital above prudential requirements; non-performing loans at 8.7 percent (end-2017 level).
- External receipts and reserves
  - Trade balance surplus: 0.7 percent of GDP in 2018.
  - Exports: gold +8.5 percent; agricultural products except cotton +28.2 percent.
  - Official transfers: 10.2 percent of GDP in 2018.
  - Regional reserves: 4.4 months of imports in 2018.

### Revenue windfall from telecommunication licenses and fiscal impact
- Windfall telecommunication license payments:
  - CFAF 40 billion in Q1 2019.
  - CFAF 80 billion in Q2 2019.
  - Total windfall equals 1.4 percent of GDP.
- First-quarter revenue
  - Total revenue Q1 2019: CFAF 396.4 billion (18.7 percent higher year-on-year).
- Authorities' intended allocation of windfall
  - 0.6 percent of GDP to finance higher security spending.
  - Remaining to be allocated to investment.
- IMF staff estimate and timing
  - Investment could be around 5 percent of GDP compared to 3.6 percent of GDP in the 2019 budget.
  - Total windfall untouched thus far; allocation to be decided at adoption of the updated 2019 budget (Loi de finance rectificative) by September 2019.
- Baseline 2020 projection absent similar windfall
  - Total revenue and grants would decline to 23.1 percent of GDP (from 24.4 percent of GDP in 2019).
  - Tax revenue expected to continue to grow by 0.5 percent of GDP reflecting full-year effect of 2019 revenue measures.

### Consolidated operations — selected percent of GDP (Text Table 1)
- Total revenue and grants: 2017: 22.1; 2018: 22.2; 2019 (Prel.): 24.4; 2020 (Proj.): 23.1
- Total revenue: 2017: 19.4; 2018: 19.5; 2019: 21.3; 2020: 20.4
- Tax: 2017: 17.3; 2018: 17.3; 2019: 17.8; 2020: 18.3
- Nontax: 2017: 2.1; 2018: 2.2; 2019: 3.5; 2020: 2.1
- Grants: 2017: 2.7; 2018: 2.7; 2019: 3.0; 2020: 2.7
- Total expenditure: 2017: 29.9; 2018: 27.1; 2019: 27.4; 2020: 26.1
- Current spending: 2017: 18.4; 2018: 17.6; 2019: 18.9; 2020: 18.0
- Wages and salaries: 2017: 8.6; 2018: 9.0; 2019: 9.9; 2020: 9.6
- Goods and services: 2017: 2.4; 2018: 2.5; 2019: 2.3; 2020: 2.1
- Interest payments: 2017: 1.0; 2018: 1.2; 2019: 1.3; 2020: 1.4
- Current transfers: 2017: 6.4; 2018: 4.9; 2019: 5.5; 2020: 4.9
- Investment expenditure: 2017: 11.6; 2018: 9.6; 2019: 8.5; 2020: 8.1
- Overall balance: 2017: -7.8; 2018: -4.9; 2019: -3.0; 2020: -3.0
- Memo: security expenditure: 2017: 2.5; 2018: 3.2; 2019: 3.7

### Fiscal consolidation, public debt, and policy priorities
- Public debt
  - Increased from 38.4 percent of GDP in 2017 to 42.9 percent of GDP in 2018; assessed as manageable but rising.
- Authorities advised multi-pronged approach:
  - (i) enhance revenue mobilization;
  - (ii) contain recurrent spending, particularly the wage bill;
  - (iii) improve spending efficiency;
  - (iv) eliminate energy subsidies and channel resources toward social spending.

### Enhancing revenue mobilization (tax policy and administration)
- Objectives and constraints
  - Higher domestic revenue mobilization necessary to finance priority investment, social spending, and security spending.
  - Work stoppages in the Ministry of Finance in 2018 and Q1 2019 constrained revenue mobilization and led to accumulation of tax arrears and deferral of some tax reforms.
- IT and procedural modernization
  - Continue simplification and computerization of tax declaration and payment procedures.
  - Remote filing and payment for large enterprises introduced.
  - Further modernization of tax directorate IT systems (e-syntax) foreseen for late 2019 to enable mobile payments, cash-payments at banks, online issuance of documents, remote VAT re-imbursement requests.
  - Extend dematerialization to all government taxes and taxpayer categories.
- Authorities' committed measures (MEFP references)
  - Enhance implementation of new revenue measures in the 2019 Budget.
  - Improve collection of arrears: assess tax arrears, analyze seniority and collectability, establish clearance strategy for 2018–2019 arrears; finalize instruction on conditions/procedures for accepting bad debts as accounting write-offs.
  - Simplify and improve VAT credit refund procedures:
    - Limit supporting documents to enterprises that generate risk.
    - Conduct off-site or on-site audits for enterprises presenting obvious risk.
    - Enable online VAT refund claims.
    - Replenish the escrow account through a levy on the customs VAT and domestic VAT.
    - Establish a special account for VAT credit refunds funded with a portion of VAT revenues and produce quarterly operational reports (structural benchmark).

### Customs administration reforms
- Actions taken and planned
  - Creation of a Unit to manage and monitor application of transaction value.
  - Development of IT tools to make visit certificate mandatory.
  - Establishment of products-at-risk list for control.
- Committed reforms (MEFP ¶58-59)
  - Increase by 28 the number of imported products at higher risk of fraud subjected to value control.
  - Outsource evaluation of used vehicles under ten years old and public works machinery to CCVA.
  - Finalize interconnection of Burkina Faso's customs IT systems with those of Togo and Côte d'Ivoire.
  - Complete splitting of Bobo Station Customs Office (Bobo Inter) in three offices (road, railway station and hydrocarbon).
  - Ensure customs equipped and staffed to control value of imports in line with WTO standards after end of COTECNA’s support.
  - Strengthen post-clearance audit for transaction value.

### Managing energy subsidies and the fuel price mechanism
- Unpaid subsidies and debt restructuring
  - Unpaid subsidies at end-June 2018: CFAF 176.9 billion (or 2.3 percent of GDP).
  - December 2018 agreement with SONABHY: payment of CFAF 20 billion direct transfers and securitization of remaining amount in two government bond notes of CFAF 60 billion and CFAF 96.9 billion.
  - New debt in H2 2018 put stock of debt at CFAF 64.6 billion at end-2018.
  - 2019 budget provisioned CFAF 116 billion for energy subsidy: CFAF 50 billion for 2019 subsidies and CFAF 66 billion to clear arrears from H2 2018.
- Fuel price adjustment mechanism (adopted November 2018)
  - Upward adjustment November 2018; downward adjustment January 2019.
  - SONABHY recorded CFAF 4.8 billion profits in Q1 2019 despite March losses.
  - Mechanism not consistently implemented; April adjustment did not take place due to discretion.
  - Government commits to cover any difference between cost-recovery price and retail price imposed on SONABHY; process requires Prime Minister signoff each time.
- Commitments to strengthen implementation (MEFP ¶80)
  - (i) Delegate enforcement from Prime Minister to a technical team or ministry (retain Prime Minister discretion for exceptional circumstances).
  - (ii) Improve government communication by publishing amounts of subsidy paid per unit of each fuel type and conducting outreach campaigns on budgetary trade-offs of high subsidies.
- Staff recommendation: use discretionary power judiciously and sparingly.

### Containing the medium-term growth in the wage bill
- Recent metrics and projections
  - Wage bill: CFAF 705 billion (9.0 percent of GDP) in 2018; projected CFAF 836 billion (9.9 percent of GDP) in 2019.
  - Wage bill exceeded 50 percent of tax revenue in 2018 (WAEMU convergence criterion: 35 percent of tax revenue).
- Structural reform approach
  - Draft organic law to consolidate civil service compensation with unified pay and allowance scales; first draft examined by Cabinet.
  - Adoption of the organic law requires constitutional amendment (referendum or Parliament super majority of 80 percent which government lacks).
- Interim two-stage strategy
  - Stage 1: explore politically feasible adoption routes for reform package.
  - Stage 2: near term, keep wage bill in line with understandings reached at first review; second conference planned to seek stakeholder support.
  - Caution: migrating to harmonized system may risk introducing burdening increases undermining reduction objectives.
- Immediate measures and administrative actions
  - Enact organic law as soon as possible.
  - Public statement committing to contain wage bill to tax revenue ratio and ensure reduction starting in 2020 (prior action).
  - Prepare strategic document by end-September 2019 setting medium-term perspectives for pay, allowances, and recruitment planning consistent with WAEMU convergence criterion (MEFP ¶79).
  - Commit to sign no new agreements that could increase the wage bill until comprehensive reform is in place (MEFP ¶79).
  - New hires reduced by 33 percent in 2018 and 44 percent in 2019 relative to initial projections of 10,868 and 10,615 respectively.
  - Decree defining job descriptions for 14 ministries adopted; administrative census carried out; civil service census being prepared with World Bank support.
  - Bonuses to Ministry of Finance staff: 2019 budget limited “Prime de Motivation” bonuses to 25 percent of base salary; agreement replaced bonuses with prime de motivation annual fiscal cost estimated at CFAF 23 billion to be included in budget from 2020 onward (MEFP Table 4).

### Enhancing public spending efficiency and public financial management (PFM) reforms
- Program budgeting and PFM
  - Transition to program budgeting started in 2017 with annual performance plans.
  - Need to publish budget on a functional basis and strengthen legal and institutional framework for public investment management and PPPs.
- Treasury Single Account (TSA)
  - TSA expected to optimize cash management and reduce borrowing needs.
  - Authorities conducting stock taking of all accounts in commercial banks to close inactive accounts and consolidate balances in TSA.
  - Decree being elaborated to delimit TSA scope and modalities.
  - Technical support for TSA (connection to STAR and SICA through SWIFT) being acquired with World Bank support.
- Accounting reforms
  - Need for timely and reliable financial accounts; current general ledger produced only at year end; move toward monthly accounts in progress.
  - Shift toward full accruals accounting due to be completed by end of 2019.
- Coordination and governance
  - Recommend establishing a unit within the Treasury directorate to oversee TSA implementation.
  - For program budgeting: appoint program managers and move toward an integrated, non-modular information system across revenue directorates.

### Social sector spending, safety nets, and governance
- Social safety nets
  - Programs cover less than 3 percent of the population; only about one third based on cash transfers.
  - Targeting not well aligned with poverty indicators.
  - Authorities investigating compensation mechanisms for vulnerable groups for fuel price rises; approach not yet identified.
  - Staff urged protection of social spending in line with program indicative floor on poverty-reducing current social expenditure.
  - Authorities’ immediate objectives: promote health insurance for all; ensure effective implementation of free healthcare for pregnant women and children under five.
- Governance and anti-corruption
  - Government committed to strengthen ASCE-LC legal and institutional framework; implementing regulations of Law No. 004-2015/CNT of March 3, 2015 in cabinet.
  - 2017 audit report published; 2018 report in preparation.
  - Dematerialization of asset declarations (DIP) progressing with procedures manual completed; DIP platform expected operational by March 2020 (structural benchmark).
  - ASCE-LC website created; DIP platform not yet operational.

### Program monitoring, financing, safeguards, and IMF support
- Waiver and reviews
  - Staff supports authorities’ waiver request for non-observance of ceiling on net domestic financing driven by cash adjustment.
  - Completion of the second review will release SDR 18.06 million (third disbursement under ECF).
- Program financing
  - Program fully financed; financing assurances in place for next 12 months with good prospects thereafter.
  - External financing requirement met through budget support and project loans from IFIs and bilateral donors totaling CFAF 412 billion, and limited non-concessional borrowing.
  - Project support (grants and loans) projected robust; direct budget support projected to trend downward.
- Capacity to repay Fund
  - Obligations to the Fund would peak in 2019 at 1.1 percent of government revenue or 0.2 percent of GDP.
- Safeguards
  - BCEAO safeguards assessment completed 2018: strong control environment, audit arrangements broadly conform with international standards, financial statements prepared in accordance with IFRS; oversight role of audit committee enhanced.
- Capacity development
  - Ongoing technical assistance priorities: mobilization of domestic revenues (customs and taxation), fiscal risk management, control of recurrent spending (wages and salaries), spending efficiency (public investment, PFM, debt management).

### Risk Assessment Matrix — summary guidance and selected macro findings
- Key risks and policy responses (selected)
  - Rising protectionism — Relative Likelihood: High; Impact if Realized: Medium; Response: implement measures to improve competitiveness and business environment.
  - Weaker-than-expected global growth — Relative Likelihood: Medium/High; Impact if Realized: High; Response: adhere to fiscal deficit targets to preserve reserves; improve competitiveness.
  - Lower gold and cotton prices, higher oil prices — Relative Likelihood: Medium; Impact if Realized: High; Response: adhere to fiscal deficit targets; allow more pump price flexibility.
  - Pressures for higher recurrent spending, particularly wages — Relative Likelihood: High; Impact if Realized: Medium/High; Response: contain recurrent spending; intensify revenue mobilization.
  - Further terrorist attacks — Relative Likelihood: Medium/High; Impact if Realized: Medium/High; Response: strengthen security services; adhere to fiscal deficit targets to create space for security spending.
- Selected macroeconomic and fiscal findings (end-2018 / end-March-2019)
  - Real GDP growth: 6.8 percent in 2018 (2017: 6.3 percent).
  - Inflation: annual average 2 percent in 2018; end-March 2019: 1 percent.
  - Program performance: all quantitative PCs and indicative objectives met except ceiling on net domestic financing at end-2018 and end-March 2019.
  - Overall deficit expected: 3.0 percent of GDP in 2019 (decline of 1.9 percentage points vs. 2018); to remain at this level in 2020.
  - Requested IMF disbursement: SDR 18.06 million.

### Selected quarterly and program monitoring datapoints (highlights)
- Q1 2019 fiscal execution
  - Total expenditures and net loans executed at end-March 2019: CFAF 399.11 billion (Q1 2018: CFAF 470.12 billion).
  - Current expenditure Q1 2019: CFAF 306.42 billion (Q1 2018: CFAF 364.43 billion).
  - Investment expenses Q1 2019: CFAF 93.20 billion (Q1 2018: CFAF 110.68 billion).
  - Overall commitment-basis deficit: CFAF 381.65 billion in 2018 vs. CFAF 562.90 billion in 2017 (4.86% of GDP in 2018 vs. 7.84% in 2017).
- Quantitative performance criteria (selected outturns and status)
  - Ceiling on net domestic financing (end-2018): program 258 / outturn 395 — Not met.
  - Ceiling on nonconcessional external debt contracted or guaranteed (end-2018): program 200 / outturn 56 — Met.
  - Floor on government revenue (cumulative): program 1,444 / outturn 1,531 — Met.
  - Floor on poverty-reducing current social expenditures (cumulative): program 176 / outturn 204 — Met.
  - Ceiling on stock of certified and unpaid VAT refunds older than 30 days (end-2018): ceiling 55 / outturn 27 — Met.

### Program conditionality, structural benchmarks, and reporting
- Structural benchmarks — status (2nd review and 2019–2020)
  - Met (examples): include costs-benefits annex for ten largest investment projects in 2019 Budget; increase rates for specified taxes (non-alcoholic beverages, airline tickets); publish implicit fuel subsidy on Ministry website monthly; make customs inspection certificate compulsory and scan documents in ASYCUDA World.
  - Not met / reset: establish limit on PPP contracting (April 2018) — Not met (met with delay); develop TSA framework and operationalize TSA — Not met (reset to September 2019); complete revision of national accounts to new base year — Not met (reset to September 2019); dematerialize asset declarations — Not met (reset to March 2020).
- Prior actions and near-term structural benchmarks (selected)
  - Public statement of government on commitment to gradually reduce ratio of wage bill to tax revenue starting 2020 — Prior action.
  - Publish number of public servants by grade, region and ministry — Prior action (data collection and processing in progress).
  - Establish special account for VAT credit refunds funded with portion of VAT revenues and produce quarterly reports — June 2019 (advanced stage).
  - Appoint independent external auditor for SONABHY — July 2019 (reset from April 2018).
  - Operationalize TSA — September 2019.

### Debt, external financing, and capacity to repay
- Debt stock and mobilization (end-2018 / end-March-2019)
  - Outstanding public debt at 31 December 2018: CFAF 3,365.95 billion (domestic CFAF 1,456.39 billion; external CFAF 1,909.56 billion).
  - Debt ratio at 31 December 2018: 42.9% (2017: 38.4%).
  - Provisional stock end-March 2019: CFAF 3,387.66 billion (domestic CFAF 1,424.92 billion; external CFAF 1,962.73 billion).
  - External debt mobilized at 31 December 2018: CFAF 146.50 billion.
  - Domestic debt mobilized on financial market: CFAF 704.7 billion (bonds CFAF 347.2 billion; Treasury bills CFAF 357.5 billion).
- External financing requirements and projections (selected)
  - Financing need (CFAF billions): 2017 -229; 2018 -76; 2019 -394; 2020 -343; 2021 -325.
  - Project loans (CFAF billions): 2019 131; 2020 125; 2021 125.
  - Official transfers, net (CFAF billions): 2018 110; 2019 97; 2020 80; 2021 86.
- IMF program disbursement schedule (selected)
  - SDR 18.06 million — March 14, 2018 — Executive Board Approval.
  - SDR 18.06 million — December 15, 2018 — Completion of first review.
  - SDR 18.06 million — June 15, 2019 — Completion of second review.
  - Subsequent SDR 18.06 million payments scheduled December 15, 2019; June 15, 2020; December 15, 2020 contingent on reviews and criteria.

### Social protection, PNDES implementation, and service delivery priorities
- Social protection coverage and programs
  - Social protection system covers social safety nets and social insurance.
  - Social safety nets reach about 102,500 vulnerable households in targeted regions via cash transfers of CFAF 30,000 to CFAF 40,000 per quarter.
  - In-kind transfers: more than 40,000 tonnes of food to at least 400,000 vulnerable people; SONAGESS distributions: 27,852 tons to 89,506 vulnerable households.
  - Support to refugees and internally displaced: more than 25,122 refugees and 492,725 internally displaced persons assisted.
- PNDES implementation (2018)
  - Continued infrastructure, social services, and resilience activities despite difficult security and social context.
  - Highlights: health and education infrastructure progress, water and roads gains, internet bandwidth increase from 16 Gbps in 2017 to 39.3 Gbps in 2018, energy installed capacity increase to 351.7 MW in 2018 (324.6 MW in 2017) and renewable share 13.99% in 2018.
- Poverty reduction targets (selected)
  - Health and nutrition, employment, sanitation, local development and social transfer expansion targets specified for 2019–2020.

_International Monetary Fund — Burkina Faso: Staff assessment, data and projections as presented in the chapter._

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- The government resigned in January 2019 amid widespread concern about the security crisis and protracted public sector pay disputes; a new government installed with a mission to combat the security crisis remains under tremendous pressure.
- Security threats intensified since the final quarter of 2018, with the state of emergency in place in 7 out of 13 regions.
- The number of internally displaced people increased from about 40,000 at the end of December 2018 to 170,000 in May 2019 and is expected to exceed 200,000 by year end.
- Security disruptions resulted in the closure of 18 health centers and over 1000 schools, affecting almost 146,000 pupils.
- Additional external support is deemed necessary; heightened security needs increased spending pressures by 0.6 percent of GDP in 2018 and projected 0.6 percent of GDP in 2019.

### Outlook and Risks
- Growth and inflation
  - Real GDP growth estimated at 6.8 percent in 2018 (from 6.3 percent in 2017).
  - Primary sector growth in 2018 estimated at 9.9 percent; agriculture growth at 17.2 percent (after -9.7 percent in 2017).
  - Non-agriculture GDP growth slowed to 5.7 percent (from 8.4 percent in 2017).
  - Inflation subdued at 0.3 percent year-on-year (y/y) in December 2018 (2 percent on average); annual y/y and average inflation in April 2019 at -2.5 percent and 0.6 percent, respectively.
  - Average inflation projected to remain within the WAEMU convergence criterion of 3 percent.
- Growth projections and drivers
  - Growth projected to moderate to 6 percent in 2019 and in the medium term.
  - Agriculture expected to revert toward normal levels but remain above long-term average in 2019; cotton production expected to rebound in 2019.
  - Mining sector to remain an important source of growth with one new mine in 2019 and two in 2020.
- External sector
  - Current account deficit narrowed to 5.8 percent of GDP in 2018 (from 7.3 percent in 2017).
  - Current account projected to widen to 6.1 percent of GDP in 2019, with a medium-term resumption of narrowing.
  - Regional reserves at 4.4 months of imports in 2018.
- Risks
  - Main risks: heightened security risks and further labor disputes.
  - Balance of risks tilted to the downside; downside risks to growth increased relative to the first review.
  - External risks include spillovers from intensified protectionism and downside risks to global growth.

### Program Performance under the ECF Arrangement
- Overall assessment
  - Performance broadly satisfactory under the ECF-supported program approved in March 2018.
  - All but one performance criteria were met; all indicative targets at end-December 2018 were met.
  - 8 out of 13 structural benchmarks through mid-June 2019 were met.
- Specific nonobservance
  - The ceiling on net domestic financing at end-December 2018 was breached by CFAF 15 billion.
  - End-March 2019 indicative target for net domestic financing was not met.
  - Breach attributed to a substantial cash adjustment reflecting paying down short-term outstanding commitments from 2017 (stock declined from CFAF 110.8 billion at end-December 2017 to CFAF 20.6 billion at end-December 2018).
  - Authorities request a waiver for this nonobservance and propose corrective measures to enhance monitoring of investment programming and improve intra-year planning and spreading of commitments.
- Structural measures
  - Delay in establishing the Treasury Single Account (TSA) due to weaknesses in accounting systems and procurement of necessary software interface with the central bank.
  - Tender launched for development of IT platform and acquisition of storage servers for online asset declarations.
  - Rebasing of national accounts: rebased nominal estimates published for year 2015 (new base year); work underway to finalize series from 1999 to 2014 and from 2016 onward.
  - Publication of number of civil servants by grades, regions and ministry moved from a structural benchmark for April 2019 to a prior action as part of measures to help contain the wage bill.

### Recent Economic Developments and Key Statistics
- Output and sectoral developments
  - Real GDP growth: 6.8 percent in 2018 (6.3 percent in 2017).
  - Agriculture growth: 17.2 percent in 2018 (after -9.7 percent in 2017).
  - Primary sector: 9.9 percent growth in 2018.
  - Cotton production: 29 percent decline in 2018.
  - Cereals production: 27.5 percent increase in 2018.
- Inflation
  - 0.3 percent y/y in December 2018; 2 percent on average in 2018.
  - April 2019: annual y/y inflation -2.5 percent; average inflation 0.6 percent; monthly food inflation 0.7 percent since March 2019.
- Fiscal outcomes
  - Overall fiscal deficit declined from 7.8 percent of GDP in 2017 to 4.9 percent of GDP in 2018.
  - Total revenue, excluding grants, 19.5 percent of GDP in 2018 (19.4 percent in 2017); program target was 18.8 percent.
  - Wage bill rose from 8.6 percent in 2017 to 9.0 percent in 2018.
  - Consolidation achieved mainly through reduction in investment (2 percent of GDP lower than in 2017) and current transfers (1.5 percent of GDP lower than in 2017).
- Credit and financial system
  - Total credit to the economy growth: 12.4 percent in 2018 (10.5 percent in 2017).
  - Credit to public corporations grew 181 percent in 2018 (including a CFAF 60 billion securitization to SONABHY).
  - Private sector credit growth: 6.7 percent in 2018 (14.4 percent in 2017); 5.4 percent at end-March 2019.
  - Banking system aggregate capital above prudential requirements; non-performing loans at 8.7 percent (end-2017 level).
- External receipts and reserves
  - Trade balance surplus of 0.7 percent of GDP in 2018.
  - Exports: gold increased 8.5 percent; agricultural products except cotton increased 28.2 percent.
  - Official transfers at 10.2 percent of GDP in 2018, particularly budget support grants.
  - Regional reserves at 4.4 months of imports in 2018.

### Fiscal Outlook and Wage Bill
- Fiscal projections
  - Overall fiscal deficit expected to narrow to 3 percent of GDP in 2019 (consistent with WAEMU convergence criterion).
  - Budget for 2019 assumes tax revenue mobilization around 17.8 percent of GDP (realization was 17.3 percent in 2018).
- Wage bill
  - Projected to rise to 9.9 percent of GDP in 2019 (from 9.0 percent in 2018) reflecting agreements with labor unions.
  - As an interim measure, a transitional system of bonuses introduced in April 2019 would reduce bonuses by around 60 percent relative to their size in 2018.
  - Agreement contains “Prime de Motivation” bonuses at about 23 billion CFAF (about 40 percent of their size in 2018, 55 billion CFAF).

### Policy Discussions — Budget Implementation
- Revenue performance and risks
  - Tax revenue projections in line with outlook at time of the first review, but risks of revenue shortfall remain due to potential continuation of industrial actions by ministry of finance staff.
  - First-quarter revenue supported by higher income tax from the mining sector and online filing and telepayments by big enterprises.
  - Revenue collection from small and medium enterprises requires more tax administration efforts.
- Industrial actions and resolution
  - Industrial actions by ministry of finance staff affected revenue performance in the first quarter but stopped following an agreement on bonuses.
  - With the agreement on “Prime de Motivation” bonuses at about 23 billion CFAF, authorities are confident that tax revenue objectives for 2019 will be met.
  - Implementation of tax measures included in the 2019 budget expected to accelerate after a timid start.

*Source: EXECUTIVE SUMMARY*

### 18.      A revenue windfall from telecommunication licenses in the first half of 2019 is

### 18. A revenue windfall from telecommunication licenses in the first half of 2019 is expected to boost overall revenue and create room for additional investment and security spending

### Revenue windfall and fiscal impact
- Windfall telecommunication license payments:
  - 40 billion CFAF in the first quarter of 2019.
  - 80 billion CFAF in the second quarter of 2019.
  - Total windfall raised to 1.4 percent of GDP.
- Total revenue in the first quarter reached 396.4 billion CFAF (18.7 percent higher year-on-year).
- Authorities indicated allocation plans:
  - 0.6 percent of GDP to finance higher security spending.
  - Remaining to be allocated to investment.
- Staff estimate:
  - Investment could be around 5 percent of GDP, compared to 3.6 percent of GDP in the 2019 budget.
- Timing and budget procedures:
  - The total windfall is untouched thus far.
  - Allocation to be decided at adoption of the updated 2019 budget (Loi de finance rectificative) by September 2019.
- Baseline projection for 2020 absent a similar windfall:
  - Total revenue and grants would decline to 23.1 percent of GDP (from 24.4 percent of GDP in 2019).
  - Tax revenue expected to continue to grow by 0.5 percent of GDP reflecting full-year effect of 2019 revenue measures.

### Expenditure composition and near-term projections
- Other expenditures expected broadly in line with the adopted 2019 budget.
- Projected changes (2019 relative to 2018):
  - Current expenditure increase due to higher wages and salaries (0.9 percent of GDP) and transfers (0.6 percent of GDP).
  - Provision of 66 billion CFAF to clear subsidy arrears to SONABHY accumulated in the second half of 2018.
  - Goods and services lower by 0.2 percent of GDP.
- Wages and salaries expected to start declining in 2020.
- Implementation of the fuel price mechanism expected to limit subsidies to SONABHY.

- Consolidated operations (percent of GDP) — selected figures from Text Table 1:
  - Total revenue and grants: 2017: 22.1; 2018: 22.2; 2019 (Prel.): 24.4; 2020 (Proj.): 23.1
  - Total revenue: 2017: 19.4; 2018: 19.5; 2019: 21.3; 2020: 20.4
  - Tax: 2017: 17.3; 2018: 17.3; 2019: 17.8; 2020: 18.3
  - Nontax: 2017: 2.1; 2018: 2.2; 2019: 3.5; 2020: 2.1
  - Grants: 2017: 2.7; 2018: 2.7; 2019: 3.0; 2020: 2.7
  - Total expenditure: 2017: 29.9; 2018: 27.1; 2019: 27.4; 2020: 26.1
  - Current spending: 2017: 18.4; 2018: 17.6; 2019: 18.9; 2020: 18.0
  - Wages and salaries: 2017: 8.6; 2018: 9.0; 2019: 9.9; 2020: 9.6
  - Goods and services: 2017: 2.4; 2018: 2.5; 2019: 2.3; 2020: 2.1
  - Interest payments: 2017: 1.0; 2018: 1.2; 2019: 1.3; 2020: 1.4
  - Current transfers: 2017: 6.4; 2018: 4.9; 2019: 5.5; 2020: 4.9
  - Investment expenditure: 2017: 11.6; 2018: 9.6; 2019: 8.5; 2020: 8.1
  - Overall balance: 2017: -7.8; 2018: -4.9; 2019: -3.0; 2020: -3.0
  - Memo: security expenditure: 2017: 2.5; 2018: 3.2; 2019: 3.7

### Fiscal consolidation and policy priorities
- Public debt:
  - Increased from 38.4 percent of GDP in 2017 to 42.9 percent of GDP in 2018.
  - Assessed as manageable but rising.
- Authorities advised to adopt a multipronged approach:
  - (i) enhance revenue mobilization;
  - (ii) contain recurrent spending, particularly the wage bill;
  - (iii) improve spending efficiency;
  - (iv) eliminate energy subsidies and channel resources toward social spending.

### Enhancing revenue mobilization (tax policy and administration)
- Importance: higher domestic revenue mobilization to finance priority investment, social spending, and increased security spending.
- Constraints: work stoppages in the Ministry of Finance in 2018 and Q1 2019 constrained revenue mobilization and led to accumulation of tax arrears and deferral of some tax reforms.
- IT and procedural modernization:
  - Continue simplification and computerization of tax declaration and payment procedures.
  - Remote filing and payment for large enterprises introduced.
  - Further modernization of tax directorate IT systems (e- syntax) foreseen for late 2019 to enable mobile payments, cash-payments at banks, online issuance of documents, remote VAT re-imbursement requests.
  - Extend dematerialization to all government taxes and taxpayer categories.
- Authorities committed measures (MEFP references):
  - Enhance implementation of new revenue measures in the 2019 Budget.
  - Improve collection of arrears: thorough assessment of tax arrears, analyze seniority and collectability, establish strategy for clearing especially 2018–2019 arrears; finalize instruction on conditions/procedures for accepting bad debts as accounting write-offs.
  - Simplify and improve VAT credit refund procedures by:
    - Limiting production of supporting documents to enterprises that generate risk.
    - Conducting off-site or on-site audits for enterprises presenting obvious risk.
    - Enabling online VAT refund claims.
    - Replenishing the escrow account through a levy on the customs VAT and domestic VAT.
    - Establishing a special account for VAT credit refunds funded with a portion of VAT revenues and producing quarterly operational reports (structural benchmark).

### Customs administration reforms
- Actions taken and planned:
  - Creation of a Unit to manage and monitor application of transaction value.
  - Development of IT tools to make visit certificate mandatory.
  - Establishment of products-at-risk list for control.
- Committed reforms (MEFP ¶58-59):
  - Increase by 28 the number of imported products at higher risk of fraud subjected to value control.
  - Outsource evaluation of used vehicles under ten years old and public works machinery to CCVA.
  - Finalize interconnection of Burkina Faso's customs IT systems with those of Togo and Côte d'Ivoire.
  - Complete splitting of Bobo Station Customs Office (Bobo Inter) in three offices (road, railway station and hydrocarbon).
  - Ensure customs department equipped and staffed to control value of imports in line with WTO standards after end of COTECNA’s support.
  - Strengthen post-clearance audit to assume decisive role for transaction value.

### Managing energy subsidies
- Fiscal burden and stock of unpaid subsidies:
  - At end-June 2018, unpaid subsidies stood at 176.9 billion CFAF (or 2.3 percent of GDP).
  - December 2018 agreement with SONABHY: payment of 20 billion CFAF through direct transfers and securitization of remaining amount in two government bond notes of 60 billion CFAF and 96.9 billion CFAF.
  - New debt in H2 2018 put stock of debt at 64.6 billion CFAF at end-2018.
  - 2019 budget provisioned 116 billion CFAF for energy subsidy: 50 billion CFAF for 2019 subsidies and 66 billion CFAF to clear arrears from H2 2018.
- Automatic fuel price adjustment mechanism adopted November 2018:
  - Upward adjustment in November 2018; downward adjustment in January 2019.
  - SONABHY recorded 4.8 billion CFAF profits in Q1 2019 despite March losses.
- Implementation concerns:
  - Mechanism not consistently implemented; April adjustment did not take place due to discretion.
  - Government commits to cover any difference between cost-recovery price and retail price imposed on SONABHY, so discretionary deployment can sustain subsidies.
  - Current process requires Prime Minister signoff each time to enact adjustments.
- Commitment to strengthen implementation (MEFP ¶80):
  - (i) Delegate enforcement from Prime Minister (no signoff needed) to a technical team or a ministry, while retaining Prime Minister discretion for exceptional circumstances.
  - (ii) Improve government communication by publishing amounts of subsidy paid per unit of each fuel type and conducting outreach campaigns on budgetary trade-offs of high subsidies.
- Staff recommendation: use discretionary power judiciously and sparingly.

### Containing the medium-term growth in the wage bill
- Recent developments and metrics:
  - Proliferation of sectoral salary scales with comparability clauses led to continuous pay disputes and sector-specific allowances.
  - Wage bill: 9.0 percent of GDP in 2018 (705 billion CFAF), up 0.4 percentage points from 2017.
  - Projected wages in 2019: 9.9 percent of GDP (836 billion CFAF).
  - Wage bill exceeded 50 percent of tax revenue in 2018 (WAEMU convergence criterion: 35 percent of tax revenue).
- Structural reform approach:
  - Overarching legislation (organic law) to consolidate civil service compensation with unified pay and allowance scales.
  - First draft organic law examined by Cabinet sets principles: harmonize job descriptions, revise salary and indemnity scales, update salary indexation methodology.
  - Adoption of organic law requires constitutional amendment (via referendum or Parliament; Parliament route requires super majority of 80 percent which government lacks).
- Medium-term budget framework:
  - 2020-2022 multiannual budget projects continuous reduction in wage bill to tax revenue ratio from 2019 peak.
  - Framework adopted by Cabinet of Ministers in June 2019 (structural benchmark).
- Interim two-stage strategy given constitutional reform difficulties:
  - Stage 1: continue exploring politically feasible adoption routes for reform package.
  - Stage 2: near term, keep wage bill in line with understandings reached at first review; second conference planned to seek stakeholder support.
  - Note of caution: migrating to harmonized system may risk introducing burdensome increases undermining reduction objectives.
- Immediate measures to contain wage bill:
  - Endeavor to enact organic law as soon as possible.
  - Public statement by government committing to contain wage bill to tax revenue ratio and ensure reduction starting in 2020 (prior action).
  - Prepare a strategic document by end-September 2019 setting medium-term perspectives for pay, allowances, and recruitment planning consistent with WAEMU convergence criterion (MEFP ¶79).
  - Commit to sign no new agreements that could increase the wage bill until comprehensive reform is in place (MEFP ¶79).
  - Administrative measures:
    - New hires reduced by 33 percent in 2018 and 44 percent in 2019 relative to initial projections of 10,868 and 10,615 respectively.
    - Decree defining job descriptions for 14 ministries adopted; similar work ongoing for remaining ministries.
    - Administrative census carried out to assess adequacy of positions by region, grade, and ministry; preliminary results used to reinvigorate redeployment policy and inform new hiring strategy.
    - Civil service census being prepared with World Bank support to audit payroll database.
    - Ongoing functional review to base recruitment and posting on pre-identified vacancies (MEFP ¶¶18, 19, and 79).
  - Bonuses to Ministry of Finance staff:
    - 2019 budget limited “Prime de Motivation” bonuses to 25 percent of base salary.
    - Following union action, agreement replaced these bonuses with a prime de motivation with annual fiscal cost estimated at CFAF 23 billion; to be included in budget from 2020 onward (MEFP Table 4).

### Enhancing the efficiency of public spending and PFM reforms
- Program budgeting:
  - Transition to program budgeting started in 2017 with annual performance plans aligned with good practices.
  - Additional steps needed: publish the budget on a functional basis in standard budget documentation to reflect policy priorities.
  - Need to strengthen legal and institutional framework for public investment management and PPPs.
- Treasury single account (TSA):
  - Implementing TSA would optimize cash management and reduce borrowing needs.
  - Authorities conducting stock taking of all accounts in commercial banks to close inactive accounts and consolidate balances in TSA.
  - Decree being elaborated to delimit TSA scope and modalities.
  - Technical support for TSA (connection to STAR and SICA through SWIFT) being acquired with World Bank support.
- Financial accounts and accounting reforms:
  - Need for timely and reliable financial accounts to reconcile general ledger with BCEAO and commercial bank statements.
  - Current general ledger produced only at year end; move toward monthly accounts in progress.
  - Shift toward full accruals accounting due to be completed by end of 2019.
- Coordination and governance:
  - Recommend establishing a unit within the Treasury directorate to oversee TSA implementation.
  - For program budgeting: appoint program managers at various levels and move toward an integrated, non-modular information system across revenue directorates.

### Social sector spending and indicators
- Key social indicators lag regional comparators:
  - Adult literacy and child mortality among the worst in sub-Saharan Africa.
  - Access to health care is extremely limited.
- Existing social safety net:
  - Not sufficiently adapted to fully mitigate potential impacts of shocks and policies on the poor.

*Source: IMF staff and Burkinabe authorities (excerpts from the provided chapter).*

### 38.      The expansion of coverage and the rationalization of the delivery of social safety nets

### 38.      The expansion of coverage and the rationalization of the delivery of social safety nets

### Social safety nets: coverage, targeting, and immediate objectives
- Social safety net programs cover less than 3 percent of the population, with only about one third based on cash transfers.
- The targeting of social safety net programs is not well aligned with poverty indicators.
- Authorities are investigating how to compensate vulnerable groups for rises in fuel prices but have yet to identify an appropriate mechanism.
- Staff urged the authorities to protect social spending in line with the program indicative floor on poverty-reducing current social expenditure.
- Authorities’ immediate objectives include:
  - promoting health insurance for all; and
  - ensuring the effective implementation of free healthcare for pregnant women and children under five.

### Governance: anti-corruption, asset declarations, and oversight
- Government commitment to strengthen legal and institutional framework for the High Authority for State Control and Anti-Corruption (ASCE-LC).
- Implementing regulations of the anti-corruption Law No. 004-2015/CNT of March 3, 2015 are currently in cabinet for consideration.
- 2017 audit report on government management concluded and published; 2018 report in preparation.
- Reform to automating the Declaration of Interest and Assets (DIP) has faced delays but is progressing:
  - Development of a procedures manual for the DIP has been completed.
  - Uncertainty remains regarding hiring of an external expert to implement the DIP platform and the related IT procurement.
  - ASCE-LC website has been created, but the envisaged DIP platform is not operational.
  - The DIP platform is expected to be operational by March 2020 (structural benchmark).
- ASCE-LC envisages developing a national strategy of corruption prevention; peer-learning missions to Côte D’Ivoire and Morocco are planned.

### Program monitoring, financing, and safeguards
- Staff support authorities’ request for a waiver for non-observance of the ceiling on net domestic financing driven by cash adjustment.
- Authorities have taken corrective measures and plan further consultations with the Resident Experts of the IMF on matters of PFM.
- Proposals for revised June and December 2019 program targets, and newly proposed structural benchmarks are presented in MEFP.
- Authorities committed to submit to the national assembly by end-September 2019 a draft 2020 budget aligned with the current framework, especially regarding the public wage bill.
- Completion of the review will release a third disbursement under the ECF arrangement in the amount of SDR 18.06 million, in line with the disbursement schedule approved at the outset of the arrangement.
- Quantitative performance criteria (PC) and indicative targets (IT) through June 2020 are set out in Tables 1 and 3 of the MEFP; structural benchmarks are listed in Tables 2 and 4 in the MEFP.
- Program financing:
  - The program is fully financed.
  - Financing assurances are in place for the next 12 months of the program with good prospects for the remainder.
  - External financing requirement is met through budget support and project loans from other IFIs and bilateral donors (totaling 412 bil   lion CFAF), as well as limited non-concessional borrowing.
  - Project support (grants and loans) projected to remain robust; direct budget support (loans and grants) projected to continue a downward trend.
- Burkina Faso’s capacity to repay the Fund remains adequate:
  - Obligations to the Fund would peak in 2019 at only 1.1 percent of government revenue or 0.2 percent of GDP.
- Safeguards assessment update for the BCEAO (completed in 2018):
  - Central bank maintained a strong control environment.
  - Audit arrangements in broad conformity with international standards.
  - Financial statements prepared in accordance with International Financial Reporting Standards (IFRS).
  - BCEAO has enhanced the oversight role of its audit committee in line with assessment recommendations.
- Capacity Development:
  - Staff and authorities agreed on technical assistance priorities under the capacity building framework.
  - Ongoing technical assistance areas include mobilization of domestic revenues (customs and taxation), management of fiscal risks, control of recurrent spending (particularly wages and salaries), reforms to strengthen spending efficiency (public investment spending, PFM, and debt management).
  - Further technical assistance expected to continue.

### Staff appraisal: macroeconomic performance, policy stance, and reforms
- Development context and constraints:
  - Burkina Faso continues to pursue development goals amid increasing security threats and public sector pay disputes.
  - Review of the Programme Nationale de Development Economique et Sociale (PNDES) noted progress in key priorities, infrastructure provision and social services, but fiscal space is constrained by security spending needs and the size of the public sector pay bill.
- Economic activity:
  - GDP growth reached 6.8 percent in 2018 and is projected to stabilize around 6 percent in 2019 and in the medium term, as the impact of the bumper harvest of 2018 fades away.
  - Security incidents and strikes have increased and could affect medium-and-long-term prospects.
- Program performance:
  - Program performance remains broadly satisfactory: all quantitative targets but one, and most structural benchmarks have been met.
  - Authorities have taken corrective actions to address the missed quantitative target; staff support proposals for revised program targets through end-December.
  - Eight out of thirteen structural benchmarks have been met; effort is underway to meet those not met.
- Fiscal stance and use of windfalls:
  - Authorities’ commitment to the fiscal deficit of 3 percent of GDP in 2019 is welcome.
  - Windfall revenues of about 1.4 percent of GDP from the 4G license proceeds in 2019 provide adequate fiscal space to allow some increase in investment and security spending without relaxing borrowing targets.
  - Windfall revenues should only be used after the passage of the Loi de Finance Rectificative.
  - Staff encouraged authorities not to rely on one-off revenues to accommodate permanent expenditures and to continue efforts to increase fiscal space through broadening the tax base, improved tax administration, and bearing down on exemptions.
  - Staff reiterated importance of enhancing expenditure efficiency by following PIMA recommendations on investment spending.
- Public sector pay and constitutional reform:
  - Political uncertainty surrounding adoption of the organic law is disappointing.
  - Staff welcome first steps to control the wage bill and urge authorities to remain committed to agreed transitional measures while pursuing a durable solution.
  - Delays in constitutional revision have held back reform progress.
  - Staff urged authorities to provide further details on the up-front cost of reforms and implications going forward.
  - Given uncertainty on adoption of the Organic Law in the near term, staff and authorities agreed that the nominal wage bill will remain in line with projections agreed at the last review.
  - Authorities committed to eschewing any new pay awards until the reform package is in place and to use the time to build consensus around the appropriate level of public pay.
- Fuel price adjustment mechanism and social protection:
  - Authorities agreed to reinforce implementation of the automatic fuel price adjustment mechanism while developing social safety nets for the most vulnerable.
  - Adjustment should be made regularly and consistently.
  - The discretion granted to the Prime Minister to overrule the decisions of the technical committee in exceptional circumstances should be used judiciously and be phased out as social safety nets improve.
  - Strengthening the price adjustment mechanism should include greater transparency through improved communication and avoiding discretion in its implementation.
  - Measures taken so far to limit negative impacts on the poor include a temporary agreement with transport operators to keep fares.
  - Authorities committed to entrust implementation of the price adjustment mechanism to a technical team not subject to political considerations to ensure enforcement.
- Public financial management (PFM) reforms:
  - Reforms require stronger coordination across departments.
  - Key reform priorities (program budgeting, move towards accruals accounting, ensuring more timely accounts, implementing the TSA) require intensive cooperation between the Ministry of Finance and other institutions.

*Source: IMF staff report (content unit: 1bfaea2019001 - 38).*

### 53.      Staff supports the authorities’ request for a waiver and recommend the completion of

### Staff supports the authorities’ request for a waiver and recommend the completion of the second review and the disbursement of SDR18.06 million under the ECF

### Recommendation and program status
- Staff supports the authorities’ request for a waiver and recommend the completion of the second review and the disbursement of SDR18.06 million under the ECF.
- The authorities’ letter of intention and MEFP spell out measures necessary to ensure that the objectives of the program would be met.
- The capacity to repay the Fund remain adequate and risks to the program are manageable.

### Recent economic developments (highlights from Figures and text)
- Growth accelerated to 6.8 percent in 2018, despite rising security concerns.
- Credit growth slowed down sharply in 2018 amid more stingent prudential rules.
- Inflation remained subdued, despite the fuel price hikes in late 2018.
- Tax revenues remained stable in 2018, despite a weak perfomance in the first semester.
- Growth was supported by agriculture, services and mining.
- Public investment execution increased, despite declining as a percentage of GDP.
- Real GDP Growth series (selected): 2018 real GDP growth reported as 6.8 percent.
- Tax Revenue, 2014-18 (percent of GDP) and inflation series are shown in the figures (2018 figures labeled preliminary).

### Real and external sector developments (Figure 2 highlights)
- Commodities exports: cotton (thousand tonnes) and gold (tonnes) series show gold production and export volumes reach a new high as the cotton sector faces a crisis of production.
- Higher average cotton prices in 2018 represented a buffer to cotton exports.
- The gold mining sector is increasingly the main driver of total exports.
- Imports composition (2011–18): imports are mostly driven by oil and manufactured goods.
- The current account balance showed a strong improvement in 2018 at -5.8% of total GDP.
- The real exchange rate depreciated by end of 2018, after the appreciation in the start of the year.
- International Gold and Cotton Prices, Mar-2014 - Mar-2019: gold (USD per troy ounce) and cotton (US cents per pound) series presented; figures for 2018 are preliminary.

### Fiscal developments (Figure 3 and Tables 5a–5d highlights)
- Current spending declined; the wage bill is higher than in peers.
- Investment spending is estimated to have declined in 2018.
- The fiscal deficit shrinked markedly in 2018; public debt increased as the share of domestic debt continued to rise.
- Domestic revenue remained stable in 2018.
- Total Public Debt (percent of GDP) increased between 2011 and 2018 with a rising share of Domestic Debt.
- Public Wage Bill (percent of GDP) and Domestic Revenue (percent of GDP) show Burkina Faso compared to peers (WAEMU, MSSA, Benin, Mali, Togo, Senegal, Côte d'Ivoire).

Selected central government fiscal aggregates (from Table 1 and Tables 5a/5b):
- Current revenue (percent of GDP): 2018 Act. 19.1; 2019 Est. 19.4; 2020 Proj. 19.5; 2021 Proj. 21.3; 2022 Proj. 20.4; 2023 Proj. 20.8; 2024 Proj. 21.2.
- Tax revenue (percent of GDP): 2018 Act. 16.7; 2019 Est. 17.3; 2020 Proj. 17.3; 2021 Proj. 17.8; 2022 Proj. 18.3; 2023 Proj. 18.7; 2024 Proj. 19.0.
- Total expenditure and net lending (percent of GDP): 2018 Act. 25.4; 2019 Est. 29.9; 2020 Proj. 27.1; 2021 Proj. 27.4; 2022 Proj. 26.1; 2023 Proj. 26.4; 2024 Proj. 26.7.
- Overall fiscal balance, incl. grants (commitments) (percent of GDP): 2018 Act. -3.5; 2019 Est. -7.8; 2020 Prel. -4.9; 2021 Proj. -3.0; 2022 Proj. -3.0; 2023 Proj. -3.0; 2024 Proj. -3.0.
- Total Public Debt (percent of GDP): 2018 Act. 39.2; 2019 Est. 38.4; 2020 Prel. 42.9; 2021 Proj. 42.5; 2022 Proj. 42.2; 2023 Proj. 41.9; 2024 Proj. 41.7.
- Of which: external debt (percent of GDP): 2018 Act. 27.9; 2019 Est. 24.1; 2020 Prel. 24.4; 2021 Proj. 23.1; 2022 Proj. 22.3; 2023 Proj. 21.2; 2024 Proj. 20.6.

### Macroeconomic projections and key indicators (from Table 1, Table 2, Table 3)
- GDP at constant prices (annual growth): 2018 Act. 5.9; 2019 Est. 6.3; 2020 Prel. 6.8; 2021 Proj. 6.0; 2022 Proj. 6.0; 2023 Proj. 6.0; 2024 Proj. 6.0.
- Consumer prices (annual average): 2018 Act. -0.2; 2019 Est. 0.4; 2020 Prel. 2.0; 2021 Proj. 1.1; 2022 Proj. 1.4; 2023 Proj. 2.0; 2024 Proj. 2.0.
- Exports (f.o.b.; valued in CFA francs): 2018 Act. 19.9; 2019 Est. 12.6; 2020 Prel. 10.8; 2021 Proj. 5.9; 2022 Proj. 8.9; 2023 Proj. 7.6; 2024 Proj. 6.0.
- Imports (f.o.b.; valued in CFA francs): 2018 Act. 8.8; 2019 Est. 12.7; 2020 Prel. 7.9; 2021 Proj. 7.5; 2022 Proj. 6.1; 2023 Proj. 6.4; 2024 Proj. 6.5.
- Current account (percent of GDP): 2018 Act. -7.2; 2019 Est. -7.3; 2020 Prel. -5.8; 2021 Proj. -6.1; 2022 Proj. -5.3; 2023 Proj. -4.7; 2024 Proj. -4.6.
- BCEAO Reserves (in billion USD, selected): 2016 10; 2017 13; 2018 15; 2019 16; 2020 17; 2021 19; 2022 21; 2023 24; 2024 30.
- Net domestic assets (banking system) (annual change as percent of beginning-of-period broad money): 2018 Act. -1.3; 2019 Est. 11.4; 2020 Act. 8.6; 2021 Proj. 12.1; 2022 Proj. 13.6.
- Credit to Private Sector (annual change): 2018 Act. 12.1; 2019 Est. 14.4; 2020 Act. 6.7; 2021 Proj. 12.7; 2022 Proj. 12.9.
- Private sector credit/GDP: 2018 Act. 30.5; 2019 Est. 31.3; 2020 Act. 30.5; 2021 Proj. 31.8; 2022 Proj. 33.2.

### Balance of payments and external financing (selected figures from Table 2, Table 6)
- Current account (CFAF billions): 2018 Act. -462; 2019 Est. -520; 2020 Prel. -454; 2021 Proj. -518; 2022 Proj. -486; 2023 Proj. -471; 2024 Proj. -498.
- Exports of goods (CFAF billions): 2018 Act. 1,676; 2019 Est. 1,887; 2020 Prel. 2,090; 2021 Proj. 2,214; 2022 Proj. 2,412; 2023 Proj. 2,596; 2024 Proj. 2,752.
  - Of which: gold: 2018 Act. 1,092; 2019 Est. 1,278; 2020 Prel. 1,387; 2021 Proj. 1,536; 2022 Proj. 1,672; 2023 Proj. 1,830; 2024 Proj. 1,954.
  - Of which: cotton: 2018 Act. 198; 2019 Est. 253; 2020 Prel. 250; 2021 Proj. 201; 2022 Proj. 245; 2023 Proj. 251; 2024 Proj. 261.
- Imports of goods (CFAF billions): 2018 Act. -1,677; 2019 Est. -1,890; 2020 Prel. -2,039; 2021 Proj. -2,191; 2022 Proj. -2,326; 2023 Proj. -2,474; 2024 Proj. -2,636.
  - Of which: oil: 2018 Act. -283; 2019 Est. -356; 2020 Prel. -444; 2021 Proj. -421; 2022 Proj. -440; 2023 Proj. -457; 2024 Proj. -477.
- External financing requirements and projections (Table 6):
  - Financing need (CFAF billions): 2017 -229; 2018 -76; 2019 -394; 2020 -343; 2021 -325.
  - Private capital flows (CFAF billions): 2017 456; 2018 562; 2019 311; 2020 295; 2021 310.
  - Project loans (CFAF billions): 2017 124; 2018 103; 2019 131; 2020 125; 2021 125.
  - Official transfers, net (CFAF billions): 2017 100; 2018 110; 2019 97; 2020 80; 2021 86.
  - NFA central bank (excl. prospective IMF disbursements and repayments) (CFAF billions): 2017 -115; 2018 -307; 2019 -61; 2020 -73; 2021 -80.
  - IMF ECF-Financing (past and prospective): 41; 44; 32; 90 (years as presented).

### IMF program disbursements schedule (Table 7)
- SDR 18.06 million — March 14, 2018 — Executive Board Approval of a new arrangement under the Extended Credit Facility.
- SDR 18.06 million — December 15, 2018 — Observance of continuous and end-June 2018 performance criteria, and completion of the first review under the arrangement.
- SDR 18.06 million — June 15, 2019 — Observance of continuous and end-December 2018 performance criteria, and completion of the second review under the arrangement.
- SDR 18.06 million — December 15, 2019 — Observance of continuous and end-June 2019 performance criteria, and completion of the third review under the arrangement.
- SDR 18.06 million — June 15, 2020 — Observance of continuous and end-December 2019 performance criteria, and completion of the fourth review under the arrangement.
- SDR 18.06 million — December 15, 2020 — Observance of continuous and end-June 2020 performance criteria and completion of the fifth review under the arrangement.

### Indicators of capacity to repay the IMF (Table 8, selected)
- Fund obligations based on existing and prospective credit (in millions of SDRs), total obligations:
  - 2018 Prel. 24.1 (principal 24.1; charges and interest 0.0); 2019 22.9; 2020 19.5.
- Total obligations (in billions of CFAF): 2018 Prel. 19.0; 2019 18.3; 2020 15.5.
- Total obligations as percent of government revenues: 2018 Prel. 1.2; 2019 1.0; 2020 0.8.
- Outstanding IMF credit (in millions of SDRs): 2017 Act. 141.9; 2018 Prel. 135.8; 2019 166.3; 2020 183.4.
- Outstanding IMF credit (in billions of CFAF): 2017 Act. 114.3; 2018 Prel. 106.7; 2019 133.3; 2020 146.5.
- Outstanding IMF credit as percent of government revenues: 2017 Act. 8.2; 2018 Prel. 7.0; 2019 7.4; 2020 7.8.
- Net use of IMF credit (in millions of SDRs): 2017 -13.3; 2018 -6.1; 2019 31.3; 2020 16.7.
- Disbursements recorded in Table 8 (in millions of SDRs): 2018 4.5; 2019 18.1; 2020 54.2; 2021 36.1.
- Memorandum nominal GDP (in billions of CFAF): 2018 Prel. 7,849; 2019 8,484; 2020 9,170; 2021 9,916; 2022 10,723; 2023 11,593; 2024 12,535.

_International Monetary Fund — Burkina Faso: Staff assessment, data and projections as presented in the chapter._

### Annex I. Risk Assessment Matrix

### Annex I. Risk Assessment Matrix

### Risk Assessment Matrix — summary of identified risks, likelihoods, impacts, and possible policy responses
- Tightening of global financial conditions  
  - Relative Likelihood: Low/Medium  
  - Impact if Realized: Medium  
  - Possible Policy Response: Limit domestic financing needs through adherence to fiscal deficit targets
- Tighter financing conditions in regional market  
  - (Listed under Source of Risk; implied linkage to tightening of global financial conditions)
- Rising protectionism  
  - Relative Likelihood: High  
  - Impact if Realized: Medium  
  - Possible Policy Response: Implement measures to improve competitiveness and the business environment
- Weaker-than-expected global growth  
  - Relative Likelihood: Medium/High  
  - Impact if Realized: High  
  - Possible Policy Response: Adhere to fiscal deficit targets to preserve international reserve adequacy. Implement measures to improve competitiveness and the business environment.
- Lower gold and cotton prices, higher oil prices  
  - Relative Likelihood: Medium  
  - Impact if Realized: High  
  - Possible Policy Response: Adhere to fiscal deficit targets to build buffers for shocks. Allow more flexibility in pump fuel prices.
- Pressures for higher recurrent spending, particularly on wages  
  - Relative Likelihood: High  
  - Impact if Realized: Medium/High  
  - Possible Policy Response: Contain recurrent spending, especially the wage bill. Intensify efforts to mobilize domestic revenues.
- Further terrorist attacks  
  - Relative Likelihood: Medium/High  
  - Impact if Realized: Medium/High  
  - Possible Policy Response: Maintain efforts to strengthen security services; participate in regional security arrangements; adhere to fiscal deficit targets to create space for security spending.
- Revenue mobilization lags  
  - Relative Likelihood: Medium  
  - Impact if Realized: High  
  - Possible Policy Response: Pursue tax policy and revenue administration reforms; optimize current spending and re-prioritize public investment.
- Poor weather conditions; agricultural pests  
  - Relative Likelihood: Medium  
  - Impact if Realized: High  
  - Possible Policy Response: Adhere to fiscal deficit targets to address food emergencies. In the medium-term, provide support to farmers through better seeds, feritilizer, and irrigation.

### Key guidance on policy responses (as listed in RAM)
- Limit domestic financing needs through adherence to fiscal deficit targets
- Implement measures to improve competitiveness and the business environment
- Adhere to fiscal deficit targets to preserve international reserve adequacy
- Allow more flexibility in pump fuel prices
- Contain recurrent spending, especially the wage bill
- Intensify efforts to mobilize domestic revenues
- Maintain efforts to strengthen security services; participate in regional security arrangements
- Pursue tax policy and revenue administration reforms; optimize current spending and re-prioritize public investment
- Provide medium-term support to farmers through better seeds, feritilizer, and irrigation

### Selected macroeconomic and fiscal findings from the Letter of Intent and MEFP (end-2018 and end-March-2019)
- Real GDP growth: 6.8 percent in 2018 (compared with 6.3 percent in 2017)
  - Primary sector growth: 9.9 percent
  - Secondary sector growth: 3.6 percent
  - Tertiary sector growth: 6.7 percent
- Inflation: annual average 2 percent in 2018 (below WAEMU regional norm of 3 percent)
  - Inflation at end March 2019: 1 percent (vs. 1.7 percent in March 2018)
- Program performance: All quantitative performance criteria and indicative objectives met except the ceiling on net domestic financing of the government at end-2018 and end-March 2019
- Government request: waiver for nonobservance of the performance criterion on the ceiling on net domestic financing of the government at end-December 2018
- Overall deficit: expected to stand at 3.0 percent of GDP in 2019 (a decline of 1.9 percentage points with respect to 2018); to remain at this level in 2020
- Requested IMF disbursement: SDR 18.06 million, or CFAF 14.27 billion

### External and monetary sector indicators
- Balance of payments:
  - Overall balance of payments estimated at CFAF 113.4 billion in 2018 (after CFAF 247 billion surplus in 2017)
  - Change: deterioration of CFAF 133.6 billion year-on-year
- Money supply: 10.3 percent increase at end December 2018 compared with end December 2017
  - Domestic receivables: +11.8 percent
  - Net foreign assets (NFA) from deposit institutions: +8.5 percent
  - Loans to the economy: 33.9 percent of GDP at end December 2018 (vs. 33.2 percent at end December 2017)
- At end March 2019:
  - Money supply growth: 4.8 percent compared with end December 2018
  - NFA: +4.8 percent
  - Domestic debt: +3.1 percent
  - Credit to the economy growth in the quarter: 2 percent (vs. 4.3 percent in first quarter 2018)
  - BCEAO NFA increase: CFAF +311.5 billion
  - Other Deposit-taking Institutions (AID) NFA: CFAF -198.1 billion
  - Central Bank gross commitments to non-residents: CFAF -279.7 billion
  - Central Bank gross claims on non-residents: CFAF +31.8 billion
  - Commercial banks' decline in NFA: -14.9 percent
  - Declines contributing to banks' NFA fall: outstanding public securities in other Union States (-15.8 percent), outstanding loans to non-residents (-24.5 percent), deposits with non-resident financial institutions (-16.2 percent)
  - Decrease in foreign liabilities of deposit-taking institutions: CFAF -173.3 billion (credits from non-resident financial institutions -37.2 percent; deposits by non-residents -20.4 percent)

### Public finance and revenue mobilization
- Total revenue and grants at end December 2018: CFAF 1,745.95 billion (vs. CFAF 1,583.57 billion in 2017), increase of CFAF 162.38 billion (+10.25%)
  - Share of GDP: 22.4 percent at end December 2018 (vs. 22.06 percent in 2017)
  - Own revenues increase: CFAF 141.59 billion (+10.19%)
  - Grants increase: CFAF 20.79 billion (+10.70%)
- At end March 2019: total income and grants amounted to CFAF 416.61 billion (vs. CFAF 370.94 billion at end March 2018), increase of 12.31%
- Own revenue at end December 2018: CFAF 1,530.86 billion (+10.19% vs. end December 2017)
  - Tax revenue: CFAF 1,354.27 billion (+9.37% or CFAF 116.02 billion)
  - Non-tax revenue: increase of CFAF 25.57 billion (+16.93%)
  - Tax burden rate: 17.25 percent of GDP in 2018 (same as 2017)
- At end March 2019: mobilized tax revenues CFAF 333.01 billion (vs. CFAF 301.15 billion at end March 2018), increase of 10.58%
- Mining revenue at end December 2018: CFAF 253.40 billion (including CFAF 187.77 billion of tax revenue) vs. CFAF 223.45 billion (including CFAF 164.65 billion of tax revenue) at end December 2017; increase of CFAF 29.95 billion (+13.40%)
  - Mining revenues as percent of GDP: 3.23 percent in 2018 (vs. 3.11 percent in 2017)
- At end March 2019: mining revenues CFAF 63.13 billion (vs. CFAF 51.12 billion at end March 2018), increase of 23.50%
- Grants at end December 2018: CFAF 215.09 billion (vs. CFAF 194.30 billion at end December 2017), increase of CFAF 20.79 billion
- At end March 2019: grants contracted to CFAF 11.36 billion (vs. CFAF 36.97 billion in same period 2018)

### Expenditure and fiscal composition
- Total expenditure and net loans at end December 2018: CFAF 2,127.61 billion (vs. CFAF 2,146.47 billion in 2017), contraction of CFAF 18.86 billion (-0.88%)
  - Share of GDP: 27.11 percent at end December 2018 (vs. 29.91 percent in 2017)
  - Capital expenditure: CFAF 754.34 billion (9.61 percent of GDP) at end December 2018; decline attributed to social unrest and shrinking investment resources
  - Change in expenditures: capital expenditure decreased by CFAF 76.99 billion; current expenditure increased by CFAF 64.70 billion
  - Increase in personnel expenditure: 14.10 percent (+CFAF 87.16 billion)
  - Interest on debt increase: 39.88 percent (+CFAF 27.73 billion) — attributed to domestic debt payments and increased issuance in a rising interest rate context
- Government commitments and wage bill policy:
  - Prepare a medium-term strategy document on civil service compensation (covering the organic law, salary indexation and indemnity scales)
  - Conduct communications campaign on wage bill strategy; public announcement in June 2019 of commitment to gradually reduce the wage bill as a proportion of tax revenue starting in 2020; publication of number and repartition of public servants by grade, region and ministry
  - Commit to contain the public wage bill in 2019 and 2020 within levels envisaged during the first program review and to abstain from concluding any new agreement that might induce an increase of the public wage bill

### Fuel price mechanism and SONABHY
- Continue efforts to improve the fuel price adjustment mechanism implemented in 2018
- Plans to ensure viability of national oil company SONABHY, safeguard supply mission, and reduce fuel subsidies to free up resources for investment and social sectors
- Implementation delegated to a technical unit to automatically communicate new real prices to the public at the beginning of each quarter
- Government retains prerogative to define fuel price adjustment policy and discretionary readjustment

_Annex I. Risk Assessment Matrix — content from the IMF staff document provided in the source PDF._

### 16. At end March 2019, total expenditures and net loans were executed at CFAF 399.11 billion

### 16. At end March 2019, total expenditures and net loans were executed at CFAF 399.11 billion

### Fiscal outturns and expenditure execution (Q1 2019 vs Q1 2018)
- Total expenditures and net loans executed at CFAF 399.11 billion at end March 2019 against CFAF 470.12 billion in the same period in 2018.
- Low spending performance in Q1 2019 compared with Q1 2018 attributed to social unrest and a desire to streamline current expenses.
- Current expenditure:
  - Executed at CFAF 306.42 billion against CFAF 364.43 billion in Q1 2018.
  - Recorded a decrease of 15.92%.
- Investment expenses:
  - Executed at CFAF 93.20 billion against CFAF 110.68 billion in Q1 2018.
  - Registered a 15.80% decline.
- Overall commitment-basis deficit:
  - CFAF 381.65 billion in 2018 against CFAF 562.90 billion in 2017.
  - Accounted for 4.86% of GDP in 2018 against 7.84% in 2017.

### Measures to contain current expenditure and wage bill
- Government measures targeted improved staff strength management and reform of the remuneration system of government employees.
- Staff strength management actions:
  - Effected a reduction of 41,8% (6 326 positions actually filled) and 44.5% (5 892 selected positions to be filled) in the number of new staff to be recruited in 2018 and 2019 compared with the initial projections of 10,868 and 10,615 respectively.
  - Adopted a decree relating to the description of workstations in the public administration; workstations are described for 14 (fourteen) ministries, process ongoing for remaining ministries.
  - Begun preparing a draft decree on the inter-ministerial directory of State trades (RIME) which is currently being finalized.
  - Plans to finalize and adopt various special rules and regulations implementing the general rules and regulations (decrees organizing jobs: responsibilities, methods and conditions of access, classifications by category, transitional provisions).
  - Carried out an administrative census of government employees; results are being finalized.
- Remuneration system reform actions:
  - Set up a monitoring committee and a technical secretariat to implement recommendations of the national Conference of the live forces of the Nation on the remuneration system held in June 2018.
  - Initiated preparation of a preliminary draft organic law to lay down the fundamental principles and values of the civil service applicable to all State employees; remains to be adopted by the Council of Ministers and then tabled before Parliament; debate about its constitutional basis is ongoing.
  - Prepared harmonized remuneration instruments (index and allowance scales) to provide a sustainable mechanism for a single remuneration mechanism for State employees based on the dual principle of equity between State employees and budget sustainability.
  - Finalizing a draft decree on the remuneration of senior State officials to have an objective and transparent basis for fixing their remuneration with a view to rationalization.
  - Reviewing the decree on the standard organization of ministerial departments to ensure consistency between central and decentralized structures and the program budget, aiming to reduce the number of structures and administrative officials and related charges.
- The drafted instruments should be subject to a "review conference" to make necessary amendments and provide guidance to accelerate finalization.

### Public investment policy, project selection, and monitoring
- Adopted Decree No. 2018-0092/PRES/PM/MINEFID of 15 February 2018: new general regulation for development projects and programs.
  - New selection criteria: select only new projects evaluated ex-ante with an investment share of at least 85% for category 1 projects and 75% for category 2 projects.
- Adopted Decree No. 2019-0141/PRES/PM/MINIFID in February 2019: national guide for maturing and ex-ante evaluation of development projects and programs; provides a harmonized approach to developing and maturing public investment projects and programs.
- Developed draft instruments on creation and management of development projects and programs to guide ministries and institutions.
- Included development projects and programs monitoring and evaluation module in the External Finance Integrated Circuits (EFIC) platform.
- Organized trainings for actors involved in design, implementation and monitoring-evaluation to build capacity to use the EFIC tool.
- Measures to avoid past accumulation of non-mandated committed expenditures (DENO):
  - Improved monitoring of investment programming.
  - Better planning and spreading of commitments throughout the year expected to avoid large accumulations of DENO.
  - Planned assessment with the IMF Resident Adviser during its visit in October 2019 of the adequacy of expenditure tracking systems.

### Public-private partnerships (PPPs) framework
- Undertook review of Law No. 020-13/AN of 23 May 2013 on the PPP legal regime and its implementation instruments to distinguish PPPs from conventional supplier credit.
- Produced a diagnostic report on the legal framework based on technical assistance recommendations and guidelines on PPP support strategy and the draft WAEMU directive.
- Began strategy review to inform law revision; adoption of revised PPP strategy and law envisaged in 2020.
- Pending adoption of new PPP law, 2018 measures:
  - Gave preference to concessionary PPPs.
  - Banned PPPs likened to State pre-financing and guarantees.

### Energy sector and rural electrification
- Installed electric power:
  - Estimated at 324.6 MW in 2017; reached 351.7 MW in 2018 due to increase in electricity import on average of 60 MW through interconnections.
- Zagtouli solar photovoltaic power plant produced 33 Megawatts Peak (MWp).
- Renewable energy share of total production:
  - 13.99% in 2018 compared with 12.53% in 2017.
  - Noted increase from 6.4% in 2015 to 13.99% in 2018.
- Rural electrification achievements in 2018:
  - Completion of electrification of 20 rural localities by the Electrification Development Fund (EDF).
  - Electrification of 20 localities under the project for electrification of 100 localities by hybrid or isolated photovoltaic solar system.

### Security, defense, and regional operations
- Increasingly difficult security environment with more frequent terrorist attacks causing civilian and military casualties, school closures, destruction of public property, and internally displaced populations.
- Government reorganized defence and security forces:
  - Strengthened operational capacities through increased personnel, acquisition of equipment, intensified intelligence, and construction/completion of District Police Stations and Territorial Gendarmerie Brigades.
- Major investments and projects progressed, including:
  - Institution of the electronic passport system (e-passport).
  - Continuation of the project to secure Burkina Faso visas (PSV-BF).
  - Police identification, rapprochement and analysis project (IRAPOL).
- December 2018: state of emergency declared in several provinces in the north and east; intensification of national armed forces offensive.
- January 2019: ministers of defence and security replaced following a cabinet reshuffle.
- Since February 2019, President Roch Marc Christian Kabore is heading the rotating presidency of G5 Sahel.
- Burkina Faso hosted Operation Flintlock 2019 from 18 February to 1 March 2019:
  - A US-backed multinational military exercise involving more than 2,000 military personnel from more than 30 African and Western partner countries.

### Social sectors: health, education, employment, and social dialogue
- Health sector achievements in 2018:
  - Equipping University Teaching Hospital (Sourou-Sanon and Yalgado-Ouédraogo) and Regional Hospitals (Kaya, Gaoua, Dori, Koudougou and Fada N'Gourma) in autonomous oxygen production systems.
  - Transformation of 23 CSPS in chief towns of rural councils into medical centres.
  - Construction and equipping of a haemodialysis centre in Bobo-Dioulasso.
  - Transformation of Ouahigouya Regional Hospital into a University Teaching Hospital.
  - Construction of Dédougou Regional Hospital.
  - Construction and equipping of 93 CSPSs.
- Education sector achievements:
  - Increase in number of primary schools to 15,756 including 3,985 private schools in 2017/2018 versus 14,655 including 3,363 private schools in 2015/2016 (7.5% increase), supporting an 11.6% increase in primary enrolment.
  - Post-primary and secondary education: new classrooms increased number of post-primary and secondary schools to 3,810 in 2017-2018 compared with 3,282 in 2016-2017 (15% increase) with a 10.21% increase over the same period.
- Employment actions:
  - Reviewed Law No. 028/2008/AN to institute the Labour Code and promoted socioeconomic reintegration of laid-off and retired workers.
  - Funded 84 micro projects from a forecast of 100, increasing the number to 318 micro projects at end December 2018.
  - Implementation of Youth Employment Program for National Education (PEJEN) recruited 1,659 young people out of 2,100 young university graduates envisaged in 2018.
- Social dialogue and labour matters:
  - Rehabilitated Ouagadougou Labour Exchange.
  - Supported social partners in concluding collective agreements (BRAKINA -SODIBO, mines, banks and financial institutions and security companies).
  - Settled 6,930 individual labour disputes out of 7,084 recorded in Regional Directorates of Labour and Social Protection.

### Program implementation and quantitative performance criteria (end-December 2018 and end-March 2019)
- Almost all program quantitative criteria met at end December 2018 and end March 2019.
- Non-compliance:
  - Net domestic financing of the State:
    - Stood at CFAF 394.59 billion at end December 2018 with the inclusion of SONABHY securities (ceiling CFAF 258 billion).
    - Stood at CFAF 71.23 billion at end March 2019 (ceiling zero).
- Non-concessional external debt contracted or guaranteed by the State:
  - CFAF 56.42 billion at end December 2018 against a ceiling of CFAF 200.00 billion.
  - At end March 2019, external debt contracted or guaranteed by the State (in actual value) amounted to CFAF 6.07 billion for a ceiling of CFAF 370 billion.
- Additional compliance outcomes:
  - State did not accumulate external arrears or guarantee domestic loans to suppliers and contractors.
  - State did not guarantee bank pre-financing for public investment.
- Historical context on program budgeting transition:
  - Emergency Program for the Sahel (PUS-BF) overall budget about CFAF 455 billion for 2017-2020.
  - Accumulation of non-mandated committed expenditures (DENO) of approximately CFAF 110 billion at end December 2017 due to acceleration of commitments.
- Indicative targets met or exceeded at end December 2018 and end March 2019:
  - No domestic arrears at end December 2018 and end March 2019.
  - Overall budget deficit including grants: CFAF 381.74 billion at end December 2018 for a ceiling of CFAF 382 billion.
  - Collected own revenue: CFAF 1,530.78 billion at end December 2018 and CFAF 396.42 billion at end March 2019 for ceilings set at CFAF 1,444 billion and CFAF 376 billion respectively.
  - Current social expenditures for poverty reduction: executed CFAF 204 billion for a ceiling of CFAF 176 billion at end December 2018; executed CFAF 73 billion at end March 2019 for a ceiling of CFAF 48 billion.
  - Stock of more than 30 days certified and unpaid VAT reimbursement: CFAF 26.8 billion against a ceiling of CFAF 55 billion at end December 2018; CFAF 44 billion at end March 2019 for a ceiling of CFAF 45 billion.
  - No PPP project contracted at end December 2018 or end March 2019.

### Structural benchmarks, technical assistance, and reforms in progress
- In 2018, of 7 (seven) structural benchmarks remaining, 4 (four) met and 3 (three) in progress:
  - Benchmarks include development and adoption of a single treasury account (STA) operating mechanism; recruitment of an independent external auditor to audit SONABHY's financial operations and accounting practices; digitalization of declaration of property and establishment of an online database.
- Single Treasury Account (STA):
  - IMF technical assistance mission conducted in Ouagadougou from 15 to 26 April 2019 after another mission in January 2019 focused on review of shares.
  - Mission ensured quality control on technical and regulatory documents and produced a roadmap for implementation.
  - Training and awareness workshop held for national actors, including BCEAO.
  - A focal point has been designated and a note establishing the STA steering committee is in the process of being signed.
  - Technical support for setting up the STA (connection to STAR and SICA through SWIFT) is being acquired with World Bank support.
- SONABHY external audit recruitment:
  - The firm shortlisted initially withdrew after negotiations; invitation sent to firm ranked 2nd and deemed qualified.
  - That firm submitted its technical and financial proposal on Wednesday, 24 April 2019.
  - Committee approved the proposal and file was sent to the funding body for a no-objection opinion.
- Digitalization of asset declarations:
  - Consultants recruited for platform development, quality review, delivery of equipment and website set-up.
  - Specifications for the platform drafted; website created and hosted by the National Agency for the Promotion of Information and Communication Technologies (ANPTIC) pending delivery of ASCE-LC servers.
  - ASCE-LC had planned development of the platform for declaration of interests and property at end March 2019 and installation of server platform plus local network overhaul and standardization of computer room plus security at end May 2019.
  - Deadlines could no longer be respected due to delays by the recruited service provider.

*Source: IMF PDF chapter/section titled "16. At end March 2019, total expenditures and net loans were executed at CFAF 399.11 billion."*

### 40. For 2019, 14 (fourteen) benchmarks were selected for implementation. All 4 (four) measures

### 1bfaea2019001 - 40. For 2019, 14 (fourteen) benchmarks were selected for implementation. All 4 (four) measures

### Implementation of 2019 benchmarks and measures
- For 2019, 14 (fourteen) benchmarks were selected for implementation.
- All 4 (four) measures scheduled to be implemented during the first quarter of 2019 were realized.
- Two measures were due by the end of April 2019:
  - Of these two, one has been completed and the other is in progress.
  - The measure currently being executed concerns the publication of the number and distribution of civil servants by category, rank, region and ministry. At this level, data has been collected and processing is in progress.
- One measure is to be carried out by end June 2019:
  - It relates to the establishment of a special account funded by a portion of the VAT revenue and dedicated to refunds of VAT credits and the quarterly production of a report on the operational management of this account. This measure is at an advanced stage of implementation.
- The 6 (six) measures to be carried out during the second half of 2019 are generally being implemented satisfactorily and will have to be completed by the end of the year.

### IMPLEMENTATION OF PNDES — context and overall appraisal
- Implementation of the PNDES in 2018 took place in a very difficult security context and a social front marked by particularly numerous wage demands.
- Persistent wage demands, an upsurge in terrorist attacks, and brief episodes of community tensions affected 2018 implementation.
- Despite this context, the implementation of the PNDES is described as highly appreciable.
- Highlights are presented by strategic thrusts.

### Thrust 1 — Institutional reform, administration modernization, human rights and justice
- Main results: strengthening of the operational capacities of the defence and security forces.
- Human rights and justice gains:
  - Increased financial accessibility to the justice system through the Legal Aid Fund covering the court costs of 297 people, including 111 women in 2018.
  - Expedited processing of disputes, humanization of prisons, and strengthening of judicial personnel, court officers and human rights specialists.

### Thrust 1 — Good economic governance and planning achievements
- Major achievements in planning and management of the economy include:
  - Adoption and implementation of the law on steering of the economy and development management.
  - Operationalization of new financing instruments: Bank for Agricultural Financing (BADF) and the Deposits and Consignment Office (Caisse des Dépôts et de Consignation - CDC).
  - Reinforcement of accountability of public expenditure actors with accentuation of audits of public structures and ASCE-LC investigations into suspicions of malpractices.

### Thrust 2 — Human capital development (health and education)
- Health sector:
  - Continuation of free healthcare policy for pregnant women and children aged less than 5 years.
  - Total of 17,861,499 acts of free care at a total cost of CFAF 31,701,313,632.
  - Maintenance of HIV prevalence in the general population below 1%.
  - Increased couple-year protection: 32% as against 27% in 2017.
  - Establishment of the National Pharmaceutical Regulation Agency (ANRP).
- Education sector:
  - Expansion of educational and administrative infrastructures; recruitment of teachers/trainers; increased access to scholarships and school canteens.
  - Post-primary and secondary completion rate increased to 40.3% from 32.95% in 2017.
  - Proportion of students enrolled in vocational training branches suitable for structural transformation: 45.8% for a target of 20%.

### Water, infrastructure, connectivity, and energy gains
- Drinking water:
  - National rate of access to drinking water increased from 73.4% in 2017 to 74% in 2018.
  - Increase in storage and water production capacity of ONEA to 450 m3 and 7658 m3 per day.
  - Implementation of AEPS, autonomous supply points, 2,491 new equipped boreholes in rural areas, Human-Powered Pumps (PMH), and rehabilitation works.
- Roads and rural infrastructure:
  - Completion of 171 km of tarred roads and construction of 660 km of rural roads.
  - Proportion of developed rural roads increased to 36.5% for a target of 32.6% in 2018.
  - Completion and commissioning of bridges over River Mouhoun and River Sirba.
- Industrial and investment framework:
  - Adoption of Law No. 038-2018 to institute the Investment Code.
  - Implementation of the SME Promotion Orientation Law via signing of the SME Charter.
- Internet and ICT:
  - Internet bandwidth rose from 16 Gbps in 2017 to 39.3 Gbps in 2018.
  - Internet use rate in the last 12 months estimated 31.26% in 2018 as against 24% in 2017.
  - Deployment of 295 km of optical fibres as part of the National Backbone.
- Energy:
  - Increase in installed electric power and solar photovoltaic supply of several villages and socioeconomic infrastructures.

### Macroeconomic framework (2019 projections)
- Real GDP growth rate projected to decelerate to around 6% in 2019 compared with 6.8% in 2018, mainly due to a normalization of agricultural production.
- Inflation expected to remain within the Community standard limit of 3% maximum in 2019.
- Foreign trade in 2019 projected to be marked by increased imports and exports; expected deterioration of the trade balance due to higher oil import bills and cotton fibre exports, partly offset by expected rise in world price of gold and expected growth of mining production.
- Net capital inflows and net financial flows expected to improve with the rest of the world.
- Current account deficit in 2019 expected to deteriorate to 6.3% of GDP, mainly in line with a higher increase in imports.

### Fiscal policy and revenue measures
- Government objectives: continue efforts to consolidate public finances, increase revenue mobilization and strengthen expenditure monitoring; reform measures will continue and intensify.
- Measures outlined in the 12 December 2018 Memorandum of Economic and Financial Policies include:
  - broadening the scope of the tax on gains on the issuance of mining permits;
  - imposition of a tax on luxury vehicles;
  - raising the rates of the arms tax;
  - raising the tariff of levies on air tickets;
  - broadening the scope of the liquor licence;
  - abolition of the flat-rate system of taxation of activities of the beverages sector and their submission to the common-law tax system with institution of a 5% levy as deposit of the tax on profits;
  - raising the tax rate on non-alcoholic beverages from 10% to 15%;
  - raising the rate of the tax on biodegradable and authorized non-biodegradable plastic packaging and plastic bags;
  - improving the yield of the Property Tax on Buildings and Unbuilt Land (TFB/NB), the Residence Tax (TR) and the Micro Enterprises Contribution (CME) thanks to data from the general census of Ouaga and Bobo taxpayers;
  - the expected performance in the collection of outstanding amounts;
  - strengthening audit in offices by activating the ASYCUDA value module;
  - continuous monitoring of the valuation of goods in the offices by the Value Control Unit;
  - the continued outsourcing of CCVA's evaluation of used vehicles under ten years old and public works machinery with the reduction of the discount to 25% of the value instead of 50%.
- Additional steps to be implemented:
  - Under the DGI, implementation of new e-sintax e-services launched on 28 May 2019 with features including online declaration and online payment of contract registration fees, online payments via mobile money in partnership with Orange Money, DGI cash partnerships with UBA for cash payments of online declarations, online VAT refund claims, and issuance of tax status certificates and turnover certification online.
  - Under the Directorate General of Customs, submission of 28 (twenty-eight) other products to the control value: 8 (eight) at end June and 20 (twenty) in the second half of 2019, and 50 (fifty) risk products controlled in ASYCUDA and monitored by the value control team.

### Tax administration and collections
- At end March 2019, DGI recorded outstanding receivables (RAR) amounting to CFAF 26.32 billion due to a lack of follow-up caused by a strike action.
- DGI planned a major recovery operation from 3 to 30 June 2019 targeting systematic reminders to defaulting taxpayers in specified departments to restore timely declarations and payments.

### 2019 fiscal aggregates and expenditure management
- Projected revenue and donations in 2019: CFAF 1,945.4 billion (against CFAF 1,745.9 billion in 2018), i.e., an 11.4% increase.
- Tax burden rate expected to be around 18% following measures.
- Expenditure forecasts for total expenditure and net lending in 2019: CFAF 2,204.14 billion compared with CFAF 2,127.61 billion in 2018 (a 2.3% increase).
  - Staff costs stand at [9.9%] of GDP compared with 9% in 2018.
  - Capital expenditure on own resources will be [4.1%].
  - Total spending and net lending expected to account for 25.2% of GDP, down by 1.8 percentage points from 2018.
- Measures to streamline recurrent expenditures include:
  - adoption and implementation of a policy to optimize the vehicle fleet of the State;
  - restriction of the relocation of activities;
  - effective implementation of stores accounting;
  - better monitoring of electricity, telephone and water consumption.
- Actions to strengthen fiscal management effectiveness:
  - anticipation of the procurement process and reconciling physical and financial execution of the budget, particularly in the context of delegated project management;
  - commissioning of program managers for better steering of public action;
  - continuation and strengthening of legal and regulatory expenditure procedures (ex-ante and ex-post) including security-related procedures;
  - institution of a mechanism to monitor and control physical achievements on the State budget, at regional level.
- Overall deficit in 2019 expected to be 3% of GDP, down by 1.9 percentage points from its 2018 level; this deficit level will continue in 2020 in line with commitments under the IMF-supported ECF program and WAEMU convergence criteria.
- Financing of the deficit in 2019 and 2020 to be through fiscal support, drawings on IMF resources and issuance of securities on the financial and monetary markets.

### Debt management policy and stock
- Medium-term strategy aims to keep the risk of debt distress at a moderate level by reducing domestic and regional borrowing and resorting more to external financing with lower costs and more favourable terms for the next two years.
- Government objective: meet State financing needs at the lowest possible long-term cost while containing risks and monitoring contingent liabilities by streamlining State guarantees.
- In context of reduced concessional resources, non-concessional financing will be an alternative for projects with high and guaranteed economic return.
- Outstanding public debt at 31 December 2018: CFAF 3,365.95 billion composed of CFAF 1,456.39 billion domestic debt and CFAF 1,909.56 billion external debt (43.27% and 56.73% respectively).
- Debt ratio (outstanding debt/nominal GDP) at 31 December 2018: 42.9% against 38.4% at 31 December 2017.
- Provisional stock of public debt at end March 2019: CFAF 3,387.66 billion composed of CFAF 1,424.92 billion domestic debt and CFAF 1,962.73 billion external debt (42.06% and 57.94% respectively).
- Drawings mobilized at 31 December 2018:
  - External debt mobilized: CFAF 146.50 billion.
  - Domestic debt mobilized on the financial market: CFAF 704.7 billion, including CFAF 347.2 billion for bonds and CFAF 357.5 billion for Treasury bills.
- As at 31 March 2019, drawings composed of CFAF 117.864 billion of domestic debt (equivalent Treasury Bills and Treasury bonds) and CFAF 36.51 billion of external debt.
- Ceiling for external debt contracted or guaranteed by the State in 2019: CFAF 370 billion in net current value.
- Financing strategy for 2019: government issuance of securities on the regional financial market and a combination of concessional and non-concessional borrowings.
- Planned debt management operation: replace maturing domestic debt with concessional external borrowing for debt and cash management purposes without increasing overall expenditures beyond the 3% of GDP limit set by the program in 2019; consultation with IMF staff and provision of detailed financing conditions required before such operations.
- Debt management capacity building: actions to improve design and publication of the debt statistical bulletin drawing on technical assistance recommendations.

### Structural reforms for the rest of 2019 and 2020 — Public Finance focus
- Continued implementation of structural reforms will back the economic and financial program.
- Public Financial Management (PFM) system assessment using PEFA:
  - PEFA notes performance is still insufficient to meet fiscal discipline, strategic resource allocation and effective and efficient public service delivery.
  - First action plan for 2018-2020 was relatively weakly implemented due to lack of resources and weak ownership.
  - Action plan updated for 2019-2021 and will be reviewed to incorporate results of TADAT, PIMA and DeMPA evaluations.
- Authorities undertake to implement the single treasury account (STA):
  - Objectives: drain public liquidity from multiple bank accounts to a Treasury Regulation Account (TRA) to optimize cost of borrowing and invest temporary surpluses where necessary.
  - Planned actions to implement STA:
    - conduct the census of public accounts in commercial banks;
    - close inactive accounts;
    - repatriate their credit balance to the STA.
  - Plan to adopt a decree setting the perimeter of the STA and an order to lay down conditions of its opening and functioning (structural benchmark).
- Implementation prerequisites:
  - STA and public bank accounts monitoring system must be based on good quality accounting produced on time.
  - Production of a general balance of accounts is an essential prerequisite to reconcile balances of availability accounts of the general accounts with balances of statements of account transmitted by BCEAO and commercial banks.
  - Process of transitioning to accrual accounting is underway.

*International Monetary Fund — Burkina Faso mission report excerpt*

### 78. Actions will be carried out to continue the implementation of the program budget, which

### 1bfaea2019001 - 78. Actions will be carried out to continue the implementation of the program budget, which

### Program budget implementation
- Actions to continue implementation of the program budget (begun in 2017) include:
  - continued adaptation of the IT system of financial services to integrate new modules for greater efficiency;
  - finalization of the review of the budget programs template;
  - continued empowerment of stakeholders through the appointment of all program managers;
  - determination of the State property: establishment of the 1st opening balance sheet, effective keeping of stores accounting;
  - review of some guidelines and templates (monitoring-evaluation, Annual Performance Project, Annual Performance Report ...);
  - continuing reforms to improve the process of maturation, evaluation, execution and monitoring and evaluation of investment projects;
  - continued efforts for the streamlining of the expenditure chain and putting in place of initial expenditure programming tools as well as performance management tools;
  - publication of the budget in the form of functional nomenclature.

### Containment of the wage bill
- Objective: reduce personnel expenditure, in percentage of tax revenue, to the level required by the regional directives (UEMOA) in the medium term.
- Planned measures:
  - clearing of arrears in respect of pecuniary benefits owed staff over previous financial years;
  - intensification of the internal control of remunerations granted to State employees;
  - continued cleaning of the payroll, coupled with the biometric enrolment of the State employees;
  - continued implementation of the conclusions of the national conference on the remuneration system of government employees, including elaboration of related legislative and regulatory texts (organic law, salary indexation and indemnity scales);
  - redeployment of the workforce, particularly in the education sector, which accounts for about 60% of civil servants;
  - adoption of a text to regulate the salaries of top public personalities;
  - preparation by end-September 2019 of the medium-term strategy document on public service remuneration (organic law, salary and allowance scales) and recruitment, consistent with the WAEMU convergence criteria;
  - implementation of a communication policy on the wage bill strategy, including a public declaration by the government on its commitment to gradually reduce the ratio of the wage bill to tax revenues from 2020 onward (prior action);
  - non-completions of new agreements resulting in wage bill increases prior to adoption of all reforms intended to contain the wage bill.

### Pump price adjustment mechanism
- Continuation and operational improvement of the pump price adjustment mechanism put in place in 2018.
- Government objectives:
  - ensure the sustainability of SONABHY, safeguard its mission of ensuring adequate supplies, and reduce the hydrocarbon subsidy to free resources for investments and social sectors.
- Operationalization details:
  - delegation to a technical structure that automatically communicates the new real prices to the public at the beginning of each quarter (starting July 2019).
  - implicit subsidy for fuel prices at the pump is published monthly on the website of the Ministry of the Economy, Finance and Development.

### Improving the performance of the energy sector
- Implementation of the Memorandum of Understanding between the State, SONABEL and SONABHY improved SONABEL’s financial situation, resulting in:
  - profits registered from 2016 to 2018;
  - compliance with commitments to suppliers and TFPs;
  - clearance of all reimbursement arrears to the State;
  - increase in SONABEL's equity and improvement of its financial structure.
- SONABHY:
  - measures to settle its debt enabled it to record a 43.13% profit in 2018 compared with 2017.
  - the government will settle the remaining debt due to SONABHY in 2018 which was not yet securitized and amounted to CFAF 64.6 billion (in accordance with the 2019 Finance Law).

### Cotton and other agricultural sectors
- Cotton sector measures and objectives:
  - replenishment of the flattening fund and operationalization of the cotton inputs fund to consolidate the sector’s financial situation;
  - continued strategic support to increase productivity and quality of cotton and promote diversification;
  - implementation of the strategic plan from the national workshop on sustainable revival of cotton production held on 11, 12 and 13 March 2019 in Ouagadougou.
  - support private or public initiatives to increase value added through local processing of fibre to create jobs for young people and women.
- Broader agricultural measures (selected):
  - scale innovative mechanisms to improve delivery of the Agricultural Council;
  - institute a new mechanism for subsidizing inputs;
  - create an innovative incubator of agricultural entrepreneurs at some Centres for Rural Development (CPR) and the Multipurpose Agricultural Centre (CAP-Matroukou);
  - accelerate mechanization with subsidized equipment and open a tractors and tillers assembly plant;
  - promote mechanisms for access to agricultural credits such as agricultural insurance, agricultural storage and warrantage;
  - pursue cooperatives’ compliance with the OHADA Uniform Act;
  - decentralize the agricultural bank of Burkina Faso;
  - sign a technical assistance agreement with China for major irrigation facilities and provision of agricultural consultant support services;
  - continue implementation of irrigation development projects in the Sourou Agropole;
  - continue work on the Sanghin dam under the PVEN project with AGETER;
  - construct agricultural produce processing plants and post-harvest infrastructure (canneries, counters, warehouses);
  - set up an agricultural development fund (awaiting adoption by the Council of Ministers of the decree to establish the fund);
  - construct a natural phosphate-based mineral fertilizer production plant;
  - create an agricultural training centre in each of the regions of the Centre, Central plateau, North, East-Central and Cascades;
  - establish the national agency for rural land (ANTR) — preparatory documents developed and process ongoing.

### Financial inclusion
- Target: increase the bank use rate (total population base) to 35% by 2020 (PNDES objective).
- National Inclusive Finance Strategy (SNFI):
  - adopted by Decree No. 147/MINEFID/CAB/SP-PMF of 23 April 2019.
  - plans to set up a Monitoring Committee, a Technical Secretariat and working groups.
  - a round table is planned to mobilize funding from development partners; process of organizing the round table has begun.
- Credit information and institutions:
  - Law No. 013-2016/AN of May 3, 2016 on the Credit Information Bureau (BIC) and Decree No. 2016-425/PRES allowed operationalization of a private credit bureau.
  - an amending law modifying article 53 of Law No. 013-2016/AN to remove the obligation to obtain prior consent of the customer on old loans was adopted by the National Assembly in its session of May 14, 2019.
  - an agricultural bank became operational in February 2019 to reach the underserved agricultural sector.
  - operationalization of the Deposits and Consignment Office (CDC) advanced with appointment of the Director General and Central Cashier in April and May 2019; CDC aims to fund under-served market segments.

### Poverty reduction and social protection
- Health and nutrition targets and actions:
  - reduce maternal mortality rate, infant and child mortality rate, and death rate of severe malaria among children;
  - reduce the HIV prevalence rate to less than 0.77%;
  - continue free health care reforms for children aged 0 to 5 years, pregnant women, destitute elderly persons, and free family planning reform;
  - interventions to provide 95% health care for cases of severe malnutrition and increase the rate of severe malnutrition cure to 100%;
  - 2019 activities to focus on functioning of main health insurance bodies and beginning of CNAMU transfers, procurements and control of free health care for women and children aged less than five years.
- Employment and social outcomes:
  - raise the professional integration of young people and women to 20% through the employment promotion system;
  - reduce the proportion of children aged 5 to 17 years involved in economic activities to 25%;
  - integrate at least 75% of identified marginalized persons;
  - increase to at least 50% the proportion of active disabled persons employed;
  - support at least 70% of identified vulnerable children;
  - rehabilitate approximately 2,860 street children;
  - increase to 50% the proportion of female entrepreneurs.
- Water, sanitation and resilience targets:
  - raise the national rate of access to drinking water to 79% and increase the rate of sanitation to 34% in 2020;
  - maintain and intensify actions to reduce the proportion of non-resilient households to less than 5% and households with structural vulnerabilities to less than 5% in 2019 and 2020;
  - increase the coverage of cereal needs to 140% per year.
- Local development programs:
  - continue implementation of the Sahel Emergency Program (PUS-BF) extended to other regions and the Local Economies Development Support Program (PADEL) in six new regions.
- Social protection coverage and transfers:
  - social protection system covers social safety nets and social insurance;
  - about 102,500 vulnerable households in the North, Central East, and East, Central West and Sahel regions benefited from cash transfers under the project;
  - cash transfer amounts are CFAF 30,000 to CFAF 40,000 per quarter, depending on number of young children in beneficiary households (0 to 15 years);
  - in-kind transfers included free distributions of food (more than 40,000 tonnes to at least 400,000 vulnerable people) and subsidized food sales organized by SONAGESS (27,852 tons of food to 89,506 vulnerable households as part of the food insecurity response plan) and school kit distributions;
  - support to more than 25,122 refugees (majority from Mali) and 492,725 internally displaced persons due to terrorist attacks;
  - plan to transfer subsistence credits of CFAF 9.6 billion to 86,616 beneficiaries from poor and vulnerable households in all regions targeted by the project in 2019, an increase of 36.19% compared to 2018;
  - administrative formalities to begin interventions in Boucle du Mouhoun, the Center-North and the province of Sanguié in the Center-West; first payments to take place in the Sahel region.

### Improvement of macroeconomic data
- National accounts and price indices:
  - findings of the national survey on employment and the informal sector and the study on artisanal gold mining have been included in the national accounts for baseline year 2015 in accordance with the 2008 SCN; findings finalized and validated during an international technical workshop in November 2018 and published on the INSD website.
  - work underway to revise retrospective series for overall coherence; revised demand-side GDP series up to 1999 is available; production-side series being finalized; all retrospective series to be published by September 2019.
  - efforts to implement the IMF's new 2017 quarterly national accounts handbook commenced in the first quarter and a mission to finalize this work is expected by the end of the year.
  - base year of the Harmonized Consumer Prices Index (IHPC) revised from 2008 to 2014; revision of retrospective series underway and should be available by September 2019.
- Forecasting and models:
  - an IPA diagnostic mission (first half of 2018) produced a roadmap for updating and improving IPA by the end of 2019, including adoption of the INSD National Accounting (SCN 2008) ERR model and rewriting of TOFE, Balance of Payments and Monetary Situation modules according to new IMF manuals.

### Governance and anti-corruption
- ASCE-LC restructuring and mandates:
  - restructuring since adoption of Law No. 004-2015/CNT of March 2015 with creation of five departments: audit; corruption prevention; enquiries and investigation; litigation follow-up; digitalization of declarations of interest and assets.
  - guidance council composed of nine councillors.
  - position of Controller General filled by call for applications for a non-renewable 5-years term.
- Audit and follow-up:
  - annual management audit of the Government effective since 2016; management audit reports with recommendations for 2016 and 2017 published on the ASCE-LC website; 2018 report being drafted.
  - monitoring of audit recommendations: first release recorded a 51% implementation of recommendations; another release planned for June 2019.
  - a symposium planned for late October - early November to coordinate action with other control bodies and the judiciary.
- AML/CFT:
  - WAEMU AML/CFT directive (2015) and national AML/CFT directive Law 016-2016/AN of May 03 2016 adopted in 2016.
  - surveillance coordinated by CENTIF with representatives from the Ministry of Finance, Ministry of Security, judiciary and BCEAO.
  - CENTIF produced an evaluation report for 2017 showing a 37 percent increase in the number of suspect bank transactions relative to 2016 (increase reflects better reporting due to awareness campaigns).
  - existing framework considered adequate but CENTIF limited by lack of staff, resources and insufficient international cooperation; investigation of suspect transactions is lagging.
  - CENTIF is working on the 2018 report which is expected to discuss weaknesses and propose recommendations; report will be made public.

*Source: IMF content unit 1bfaea2019001 - 78. Actions will be carried out to continue the implementation of the program budget, which*

### 108. Government will take all necessary measures to meet the targets and criteria as set out in

### 1bfaea2019001 - 108. Government will take all necessary measures to meet the targets and criteria as set out in

### Program monitoring and timeline
- The program will be monitored via semi-annual reviews based on the PCs set through end-December 2019 and ITs set through end-June 2020 as described in Table 3 and the structural conditionality in Table 4.
- The third and fourth reviews are expected to be completed on or after December 15, 2019 and June 15, 2020, respectively.

### Quantitative performance criteria and indicative targets — 2018 (Table 1, CFAF billions)
- Quantitative Performance Criteria (Program / Outturn / Program Adj. / Outturn / Status as presented):
  - Ceiling on net domestic financing of the government 2/ 3/ 4/ 5/: 258 / 239 / 258 / 380 / 395 — Not met
  - Ceiling on the amount of nonconcessional external debt contracted or guaranteed by the government 3/ 6/: 200 / 52 / 200 / 200 / 56 — Met
  - Ceiling on the accumulation of external payment arrears by the government 7/: 0 / 0 / 0 / 0 / 0 — Met
  - Ceiling on the guaranteeing of new domestic loans to suppliers and contractors by the government 7/: 0 / 0 / 0 / 0 / 0 — Met
  - Ceiling on government guarantees on new bank pre-financing for public investments 7/: 0 / 0 / 0 / 0 / 0 — Met
- Indicative Targets:
  - Ceiling on the accumulation of domestic arrears by the government 7/: 0 / 0 / 0 / 0 / 0 — Met
  - Ceiling on the overall fiscal deficit including grants 2/ 3/: 312 / 212 / 382 / 436 / 382 — Met
  - Floor on government revenue 3/: 1,011 / 1,105 / 1,444 / 1,444 / 1,531 — Met
  - Floor on poverty-reducing current social expenditures 3/: 132 / 188 / 176 / 176 / 204 — Met
  - Ceiling on the stock of certified and unpaid VAT refunds older than 30 days 3/: 55 / 41 / 55 / 55 / 27 — Met
  - Ceiling on the value of PPPs contracted 3/: 200 / 0 / 200 / 200 / 0 — Met
- Memorandum Item:
  - Ceiling on the amount of concessional external debt contracted or guaranteed by the government 3/: 550 / 414 / 574 / 574 / 486 — Met
- Notes and adjustment rules included in the table:
  - 1/ Indicative Target, except for continuous performance criteria.
  - 2/ The net domestic financing ceiling is adjusted to reflect the shortfall in program grants and loans, while the overall deficit is adjusted to reflect the shortfall in program grants.
  - 3/ Cumulative from January 1, 2018.
  - 4/ The ceiling on net domestic financing will be lowered by the full proceeds of any private concessional budget support loan as specified in the TMU.
  - 5/ The ceiling on net domestic financing will be adjusted upward by the amount of securitization of SONABHY losses owing to below cost-recovery sales of petroleum products in 2018 and capped to a maximum of CFAF 80 billion.
  - 6/ The limit is not tied to specific projects.
  - 7/ To be observed continuously.

### Quantitative performance criteria and indicative targets — 2019–20 (Table 3, CFAF billions)
- Quarterly Program and Preliminary figures shown for June, Sept., Dec., Mar., June (Prog./Prel. where indicated):
  - Ceiling on net domestic financing of the government 2/ 3/ 4/ 5/: June Prog. 0; Sept. Prog. 70; Dec. Prog. 100; Mar. Prog. 146; June Prog. 200; June Prel. 60; Sept. Prel. 62
  - Ceiling on the amount of external debt contracted or guaranteed by the government (PV) 2/ 6/ 7/: June Prog. 370; Sept. Prog. 6; Dec. Prog. 370; Mar. Prog. 370; June Prog. 370; June Prel. 410; Sept. Prel. 410
  - Ceiling on the accumulation of external payment arrears by the government 8/: 0 / 0 / 0 / 0 / 0 / 0 / 0 — To be observed continuously
  - Ceiling on the guaranteeing of new domestic loans to suppliers and contractors by the government 8/: 0 / 0 / 0 / 0 / 0 / 0 / 0 — To be observed continuously
  - Ceiling on government guarantees of new bank pre-financing for public investments 8/: 0 / 0 / 0 / 0 / 0 / 0 / 0 — To be observed continuously
- Indicative Targets (June/Sept./Dec./Mar./June and preliminary where shown):
  - Ceiling on the accumulation of domestic arrears by the government 8/: 0 / 0 / 0 / 0 / 0 / 0 / 0 — To be observed continuously
  - Ceiling on the overall fiscal deficit including grants 2/ 3/: June Prog. 0; Sept. Prog. 9; Dec. Prog. 130; Mar. Prog. 196; June Prog. 258; June Prel. 0; Sept. Prel. 141
  - Floor on government revenue 2/: June Prog. 376; Sept. Prog. 396; Dec. Prog. 798; Mar. Prog. 1262; June Prog. 1697; June Prel. 415; Sept. Prel. 880
  - Floor on poverty-reducing current social expenditures 2/: June Prog. 48; Sept. Prog. 73; Dec. Prog. 95; Mar. Prog. 143; June Prog. 190; June Prel. 49; Sept. Prel. 98
  - Ceiling on the stock of certified and unpaid VAT refunds older than 30 days 2/: June Prog. 45; Sept. Prog. 44; Dec. Prog. 40; Mar. Prog. 40; June Prog. 40; June Prel. 40; Sept. Prel. 40
  - Ceiling on the value of PPPs contracted 2/: June Prog. 200; Sept. Prog. 0; Dec. Prog. 200; Mar. Prog. 200; June Prog. 200; June Prel. 200; Sept. Prel. 200
- Notes and adjustment rules included in the table:
  - 1/ Indicative target, except for continuous performance criteria.
  - 2/ Cumulative from January 1, 2019.
  - 3/ The ceiling on net domestic financing will be adjusted to reflect the shortfall in program grants and loans, while the overall deficit will be adjusted to reflect the shortfall in program grants.
  - 4/ The ceiling on net domestic financing will be adjusted upward by the amount of securitization of SONABHY losses owing to below cost‑recovery sales of petroleum products by end‑June 2018, up to a maximum of CFAF 97 billion, as specified in the TMU.
  - 5/ The ceiling on net domestic financing will be lowered by the full proceeds of any concessional budget support loan used for debt management purposes as specified in the TMU.
  - 6/ The limit is not tied to specific projects.
  - 7/ The ceiling on the amount of external debt will be increased up by the present value of the full amount of any concessional budget support loan used for debt management purposes as specified in the TMU.
  - 8/ To be observed continuously.

### Structural benchmarks — 2nd Review (Table 2) and Remaining 2019–2020 (Table 4)
- 2nd Review structural benchmarks (objectives, completion dates, status):
  - Establish a limit on the amount of PPPs that can be contracted by the Government — Improve budget transparency and mitigate fiscal risks — April 2018 — Not met (met with delay)
  - Include as an Annex to the 2019 Budget law an analysis of the costs-benefits of the ten largest investment projects, including PPP projects — Improve budget transparency and mitigate fiscal risks — December 2018 — Met
  - Develop and adopt a framework for transitioning to a single treasury account — Improve treasury management — December 2018 — Not met
  - Integrate the results of the artisanal gold study into the system of national accounts and revise the base year — Improve the accuracy of national statistics — December 2018 — Met
  - Complete the revision of national accounts statistics to the new base year, and disseminate the revised series — Improve the accuracy of national statistics — December 2018 — Not met
  - Proceed with the dematerialization of asset declarations of government officials and those covered by the law, by instituting online submissions, and create a searchable database — Improve governance and improve the fight against corruption — December 2018 — Not met
  - Raise the rate of tax on non-alcoholic beverages from 10 percent to 15 percent — Increase revenue — January 2019 — Met
  - Increase tax on airline tickets from CFAF 1000 to CFAF 20000 for economy class and from CFAF 7000 to CFAF 40000 for business class — Increase revenue — January 2019 — Met
  - Eliminate the flat-rate tax system for beverage sector businesses and place them under the standard tax regime by introducing a 5 percent tax as an advance income tax payment — Increase revenue — January 2019 — Met
  - Publish the implicit subsidy of fuel pump prices on the website of the Ministry of Economy, Finance and Development on a monthly basis — Increase transparency on the fiscal cost of fuel subsidies — January 2019 — Met
  - Make the inspection certificate compulsory for checking transactions for customs clearance purposes and ensure documents are scanned in ASYCUDA World — Increase revenue and protect the revenue base — April 2019 — Met
  - Publish the number of public servants on the government payroll according to grade, region and ministry — Contain public-sector wage bill — April 2019 — Not met
  - Approval by the Cabinet of Ministers of the 2020-2022 Multiannual Budget and Economic Programming Document with a continuous reduction in the ratio of the wage bill to tax revenue ratio from its peak of 55 percent in 2019 — Contain public-sector wage bill — Mid-June 2019 — Met
- Remaining 2019 and 2020 structural benchmarks (prior actions and milestones with completion dates):
  - Prior Actions:
    - Public statement of the government on its commitment and strategy to gradually reduce the ratio of the wage bill to tax revenue starting in 2020 — Contain public-sector wage bill — Prior action
    - Publish the number of public servants on the government payroll according to grade, region and ministry — Contain public-sector wage bill — Prior action
  - Structural benchmarks and dates:
    - Establish a special account for VAT credit refunds that is funded with a portion of VAT revenues and produce quarterly reports on the operational management of this account — Strengthen the integrity of the VAT system — June 2019
    - Appoint an independent external auditor to conduct an audit of SONABHY's operations, financial position, and accounting practices — Reduce fiscal risks and eliminate fiscal costs associated with subsidies — July 2019 (reset from April 2018)
    - Complete the revision of national accounts statistics to the new base year and disseminate the revised series — Improve the accuracy of national statistics — September 2019 (reset from December 2018)
    - Operationalize the Treasury Single Account — Improve treasury management — September 2019 (reset from December 2018)
    - Conduct a study on the taxation system of small- and medium-sized enterprises — Strengthen tax administration — September 2019
    - Reduce the number of new civil service staff members in 2019 compared to the initial projection of 10,615 hires (modified) — Tighten control of the wage bill — September 2019
    - In the appropriate budget accounts, budget and account for revenue from/expenditure on prime de motivation in the 2020 budget law (modified) — Improve fiscal transparency — September 2019
    - Submit to the National Assembly a 2020 budget proposal that is fully aligned with the projected wage bill of the ECF-supported program (new) — Contain public-sector wage bill — September 2019
    - Harmonize the taxation of tobacco in line with the new WAEMU directive by setting the rate at a minimum of 50 percent — Increase revenue — November 2019
    - Include PPPs in the public investment program — Mitigate fiscal risks — December 2019
    - Proceed with the dematerialization of asset declarations of government officials and those covered by the law, by instituting online submissions, and create a searchable database — Improve governance and improve the fight against corruption — March 2020 (reset from December 2018)

### Definitions and Technical Memorandum highlights (Attachment 2)
- Purpose of the TMU:
  - Defines the quantitative performance criteria, indicative targets, and structural benchmarks for the ECF-supported program and sets the framework and deadlines for data submission to IMF staff.
- Government definition:
  - “Government” means the central government of Burkina Faso and does not include local governments, the central bank, or any other public or government-owned entity with autonomous legal status not included in the TOFE.
- Definition of debt (per IMF Executive Board Decision No. 15688-(14/107)):
  - Debt means all current, i.e., not contingent, liabilities created under a contractual arrangement requiring future payments in assets or services; primary forms include loans, suppliers’ credits, and leases (debt in leases is the present value at inception of lease payments).
- Arrears and penalties:
  - Arrears, penalties, and judicially awarded damages arising from failure to make payment under contractual obligations that constitute debt are debt.
- Debt guarantees:
  - A government debt guarantee is an explicit legal obligation to service a debt in the event of borrower nonpayment.
- Debt concessionality:
  - A debt is concessional if it includes a grant element of at least 35 percent.
  - The present value (PV) of debt at the time contracted is calculated by discounting future debt service payments; the discount rate used is 5 percent.
- External debt:
  - Defined as debt contracted or serviced in a currency other than the CFA franc.
  - Relevant performance criteria apply to external debt of the government, public enterprises that receive government transfers, and other public entities in which the government holds more than 50 percent of the capital, and any private debt guaranteed by the government.
- Quantitative performance criteria for 2019 and 2020 (listed):
  - (i) ceiling on net domestic financing of the government;
  - (ii) ceiling on the contracting or guaranteeing of external debt by the government in PV terms;
  - (iii) ceiling on the accumulation of payment arrears on external debt service;
  - (iv) ceiling on the guaranteeing of domestic loans to suppliers and contractors;
  - (v) ceiling on the guaranteeing of bank pre-financing of public investments.
- Net domestic financing definition and components:
  - Sum of (i) net bank credit to the government (including net bank credit as defined vis-à-vis national banking institutions and claims associated with IMF disbursements); (ii) the stock of unredeemed government bills and bonds held outside national commercial banks; (iii) privatization receipts and other government claims and debts vis-à-vis national nonbank institutions.
  - Government claims include cash holdings, deposits with central bank, deposits with commercial banks, secured obligations, and government deposits in postal checking accounts (CCP).
  - Government debt to banking system includes funding from the central bank (statutory advances, consolidated advances, IMF financing, refinancing of secured obligations), government securities held by the central bank, and funding from commercial banks (including government securities held by commercial banks).
  - Net bank credit to the government is calculated based on TOFE information and government budget execution reports each month.
- Adjustors and data submission:
  - The cumulative ceiling on net domestic financing will be adjusted upward by the amount the external program support to central government falls short of the amount projected, up to a maximum of CFAF 80 billion (shortfall computed relative to Table 1 projected external program assistance).
  - Projected External Program Assistance (Cumulative, CFAF Billions): End-June 2019 — Program grants and loans 73 (Of which program grants (55)); End-December 2019 — Program grants and loans 113 (Of which program grants (93)).
  - The cumulative ceiling on net domestic financing will be adjusted downward by the full amount of any disbursement of concessional budget support loans related to debt management operations aiming at replacing relatively more expensive domestic debt.
  - The ceiling on net domestic financing will be adjusted upward by the amount of securitization of accumulated SONABHY losses owing to below cost recovery sales of petroleum products by end-June 2018, up to a maximum of CFAF 97 billion (applies only to securitization proceeds from 2018 not yet cashed by SONABHY).
  - The Ministry of the Economy and Finance will forward data on net domestic financing to the IMF within six weeks after the end of each quarter.
- Scope of the external debt performance criterion:
  - Applies to external debt as defined above and to private debt guaranteed by the government that constitutes a contingent government debt.
  - “Government” for this criterion includes the central government, public enterprises that receive government transfers, local governments, and other public-sector entities.
  - Exclusions: government bills and bonds issued in CFA francs on the WAEMU regional market, suppliers’ normal short-term credits, and IMF loans.
  - Measured cumulatively from the date of the IMF Executive Board’s approval of the ECF arrangement; no adjustment factor will apply.

*Source: IMF staff and Burkinabè authorities (material as presented in the program documents and Technical Memorandum of Understanding).*

### 16.      For 2019, the government undertakes not to contract or guarantee external debt

### 1bfaea2019001 - 16.      For 2019, the government undertakes not to contract or guarantee external debt

### External borrowing ceiling and concessional budget support
- For 2019, the government undertakes not to contract or guarantee external debt (concessional or non-concessional) with a total PV in excess of the ceiling indicated in MEFP table 3, measured on a cumulative basis from the start of the year (i.e. January 1, 2019).
- In case of a concessional budget support loan referred to in paragraph 12, the ceiling will be raised by the PV of the full amount of the loan. All other provisions and definitions in paragraph 12 will continue to apply.
- The proceeds of any concessional budget support loan referred to in paragraphs 12 and 19 will be used only to contribute to the financing of the gross financing requirements of the government that are consistent with the overall fiscal deficit ceilings of 3 percent of GDP.
- Any surplus of resources from such concessional budget support will be saved.

### Reporting deadlines for loans and guarantees
- Details on any loan (terms and creditors) contracted by the government must be reported within four weeks of the end of each month.
- The same reporting requirement applies to guarantees extended by the government.

### Non-accumulation of new external payment arrears (performance criterion)
- Definition: External payment arrears are external payments due but unpaid.
- Under the program the government agrees not to accumulate external payment arrears on its debt, except arrears arising from external payment obligations being renegotiated with creditors, including bilateral non-Paris Club creditors.
- Non-accumulation of new external arrears by the government is a performance criterion to be observed continuously.

### Guaranteeing new domestic loans to suppliers and contractors (performance criterion)
- The government undertakes not to provide new financial guarantees for domestic loans to its suppliers or contractors. This performance criterion shall be observed continuously.
- For this performance criterion, “government” includes:
  - the central government, institutions of an industrial or commercial nature (EPIC), public administrative agencies (EPA), public scientific and technical institutes, public vocational establishments, public health agencies, local authorities, public enterprises, national corporations, semi-public corporations (public corporations with financial autonomy, in which the government holds at least 50 percent of the capital), and state agencies.

### Guaranteeing new bank pre-financing for public investments (performance criterion)
- The government undertakes not to guarantee new bank pre-financing for public investments. This performance criterion shall be observed continuously.
- In a pre-financing arrangement, a private company granted a public works contract obtains a loan from a domestic commercial bank or group of commercial banks; the Ministry of Finance guarantees this loan and signs an unconditional and irrevocable substitution of debtor agreement to service all principal and interest.
- For this criterion, “government” is defined identically to the definition used for domestic loan guarantees (see above).

### Quantitative indicative targets included in the program
- The program includes quantitative indicative targets for:
  - (i) the accumulation of domestic arrears;
  - (ii) the overall fiscal deficit (commitment basis, grants included);
  - (iii) total government revenue;
  - (iv) poverty-reducing current social expenditures;
  - (v) value added tax refunds; and
  - (vi) public-private partnerships.

### Definitions and procedural details for targets and monitoring
- Accumulation of domestic arrears:
  - The government will not accumulate payment arrears on domestic obligations during the program period.
  - A “domestic obligation” is one serviced in CFA francs, excluding government liabilities to local governments or other public entities with autonomous legal status not included in the TOFE, except the central bank.
  - Arrears definitions:
    - (i) Debt unpaid for more than 30 days after the due date stipulated in the agreement.
    - (ii) Wages or pensions unpaid 90 days after their due date.
    - (iii) Payments for goods and services rendered received more than 90 days after processing of the supporting documents.
- Overall fiscal deficit including grants:
  - Valued on a commitment basis.
  - Defined as the sum of the government’s net foreign and domestic financing, measured from the financing side, plus a cash basis adjustment.
  - Net foreign financing = new foreign borrowing less amortization.
  - The ceiling on the overall fiscal deficit will be adjusted upward by the amount actual external program grants to central government fall short of the amount projected, up to a maximum of CFAF 80 billion. The ceiling will not be adjusted downward if actual external program grant assistance is higher than projected.
- Government revenue:
  - Valued on a cash basis; includes all tax and non-tax revenue collected by the Directorate General of Taxation, the Directorate General of Customs, the Burkinabè Treasury, and other government revenue collection units. It also includes revenue from treasury checks.
- Poverty-reducing current social expenditures:
  - Social spending is the sum of current expenditure included in the social spending program as defined in the budget. Criteria for programs include targeting poor households and ensuring access to basic social services, promoting access to health services and nutrition programs, fighting HIV/AIDS, promoting access to drinkable water, improving living conditions (environment and sanitation), or ensuring social protection. Only budget lines classified as social spending are retained within these programs or parts of programs.
- Certified and unpaid VAT refunds older than 30 days:
  - Stock comprises signed tax refund amounts. The 30-day period starts from the date of signature of the tax refund certificate by the Director General of Taxes.
- Public-private partnerships (PPP):
  - Defined as a long-term contract between a private party and a government entity for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance. Excludes pre-financing and supplier credit arrangements.

### Data reporting requirements (selected highlights)
- The government agrees to submit a range of data to IMF staff in paper and/or MS Excel format with specified frequencies and deadlines (examples):
  - The government’s fiscal reporting table (TOFE) and customary appendix tables — Monthly, 6 weeks.
  - Domestic budgetary financing (net bank credit to the government and stock of unredeemed government bonds and bills) — Monthly, 6 weeks.
  - Stock of external debt, external debt service, external debt contracted, and external debt repayment — Quarterly, 6 weeks.
  - Social poverty-reducing expenditures in table format — Monthly, 6 weeks.
  - Petroleum product prices, consumption and taxes, and related detailed breakdowns — Monthly, 4 weeks.
  - Consolidated balance sheet of monetary institutions and monetary survey — Monthly, 6 weeks (provisional), final data monthly 10 weeks.
  - Preliminary annual balance of payments data — Annual, 9 months.
  - Any study or official report on Burkina Faso’s economy, and any decision, order, law, decree, ordinance, or circular having economic or financial implications — on the date published or date of entry into force, 2 weeks.

### Supplementary information on external arrears and waiver request (July 2019)
- Staff received on July 11, 2019 additional information on minor external arrears temporarily accumulated to one official creditor (Government of Spain).
- Amount of arrears: EUR 494,383 as of end-June 2019.
- Cause: A loan contracted in 2008 (with a nine-year grace period) was not recorded in the authorities’ standard debt management database, leading to due repayment alerts not being automatically triggered.
- The new arrears accumulated on the June 2019 loan repayment gave rise to non-observance of the continuous performance criterion on accumulation of external payment arrears by government.
- The arrears amounted to 0.004 percent of GDP at end-June 2019.
- Corrective actions taken:
  - Authorities contacted the Spanish Embassy in Abidjan and authorized payment immediately.
  - The full amount of arrears was repaid; payment of €494,383 was made on July 16, 2019.
  - Authorities reviewed loan conventions to ensure no other loan is missing from the database.
  - Authorities envisage reviewing procedures for recording loans in the debt database and strengthening debt reconciliation with creditors.
- IMF staff position:
  - Given the relatively small amount (0.004 percent of GDP), the repayment of the full amount, and corrective measures, staff supports the authorities’ request for a waiver for the non-observance of the continuous performance criterion on non-accumulation of external arrears.

### Recent macroeconomic datapoints cited
- Real GDP growth: 6.8 percent in 2018 (6.3 percent in 2017).
- Overall fiscal deficit: improved to 4.9 percent of GDP in 2018 from 7.8 percent in 2017.
- Wage bill growth: 9.0 percent.
- Current account deficit: declined to 5.8 percent of GDP in 2018.

*Source: IMF document 1bfaea2019001 — program conditions, definitions, monitoring, and supplementary information (July 2019).*

### 7.3 percent of GDP in 2017, mainly on the back of higher gold and agricultural exports as

### 7.3 percent of GDP in 2017, mainly on the back of higher gold and agricultural exports as

### Recent macro-financial developments and banking system
- Current account improved to 7.3 percent of GDP in 2017, mainly on the back of higher gold and agricultural exports as well as increased official transfers in the form of budget support.
- These developments helped strengthen the regional central bank’s foreign reserves.
- Banking system:
  - Aggregate capital level in 2018 stood above prudential requirements.
  - Ratio of non-performing loans was contained at its 2017 level of 8.7 percent of total loans.

### III. Program performance
- Overall assessment: Program performance in the period under review has been satisfactory.
- Quantitative targets:
  - All quantitative performance criteria (PCs) and indicative targets set for end-December 2018 have been met except the PC related to the ceiling on net domestic financing of the government.
- Structural benchmarks:
  - 8 out of 13 structural benchmarks through mid-June 2019 were observed.
- Actions taken to address missed PC:
  - Authorities introduced a strengthened mechanism to better monitor public investment programming.
  - Planning and spreading of commitments over the year will be enhanced.
  - With Fund technical assistance, authorities will assess the adequacy of expenditure monitoring and execution mechanisms to avoid excessive accumulation of committed expenditures without payment orders (DENO).
- Request: Burkinabe authorities request a waiver for non-observance of this performance criterion.

### IV. Economic outlook and risks
- Growth and inflation:
  - Real GDP growth is projected at 6 percent in 2019 and in the medium-term, supported by the recovery of cotton production and higher mining production.
  - Inflation is projected to remain below the WAEMU convergence criterion of 3 percent.
- Fiscal and external:
  - Continued consolidation efforts will help meet the regional fiscal deficit convergence criterion of 3 percent of GDP in 2019.
  - Current account deficit is expected to improve over the medium-term owing to the impact of fiscal consolidation on import demand and steady increases in mining and agriculture exports.
- Downside risks highlighted:
  - Security challenges
  - Climate change
  - Rising protectionism
- Policy stance: Authorities will pursue efforts to preserve macroeconomic stability and strengthen the economy’s resilience.

### V. Policies and reforms for 2019 and beyond — Fiscal policy
- Fiscal strategy: Implement a prudent and growth-friendly fiscal policy as stated in the 2019 budget law.
- Revenue mobilization measures:
  - Broadening the tax base and enhancing tax administration.
  - Key measures: expanding taxes on mining activities and enhancing the yield of the property tax on buildings and unbuilt land.
  - Reforms to tax administration to focus on developing e-services and improving tax payment compliance.
- Expenditure measures:
  - Streamline current spending through reduction of the wage bill and government utilities bills.
  - Fully implement the 2018 recommendations of the national conference on the remuneration system for civil service reform.
  - Published results of the census of civil servants according to grade, region and ministry.
  - Undertaken a comprehensive communication campaign on civil service reform objectives.
  - Committed to contain the public wage bill in 2019 and 2020 within the levels agreed during the first program review.
- Public financial management:
  - Developed a 2018-2020 action plan based on the results of the PEFA exercise.
  - Will reinforce legal and regulatory expenditure procedures, streamline procurement, and improve budget execution.

### Debt management policy
- Objective: Preserve the country’s moderate risk of debt distress over the medium-term.
- Strategy:
  - Pursue a prudent borrowing strategy by giving priority to concessional resources.
  - Continue efforts to improve debt management capacity with the assistance of partners.

### Financial inclusion
- Priority: Financial inclusion remains among the government’s top priorities.
- Planned actions:
  - Organize a roundtable to mobilize resources for implementation of the National Inclusive Finance Strategy adopted last April.
  - Established a Credit Information Bureau to promote access to credit.
  - Two newly created financial institutions, Banque Agricole du Faso (BADF) and Caisse des D épôts et Consignations (CDC), have become operational.

### Structural reforms
- Petroleum pricing:
  - Adopted a price adjustment mechanism for petroleum products in 2018 to reduce hydrocarbon subsidies and ensure the financial stability of SONABHY (Société Nationale Burkinabè d’hydrocarbures).
  - Commit to improve operationalization of this adjustment mechanism to release additional resources for public investment and social sectors.
  - Plan to introduce a sustainable scheme to mitigate the impact of the adjustment mechanism on vulnerable groups.
- Energy sector:
  - Continue implementation of the Memorandum of Understanding on financial relations and hydrocarbon sale prices signed by the government, SONABEL (Société Nationale d’Electricité du Burkina Faso) and SONABHY.
- Governance and AML/CFT:
  - Commit to step up efforts to fight corruption.
  - Strengthened High Authority for State Control and Anti-Corruption (ASCE-LC); annual management audit reports of the government are posted on its website.
  - Plan to organize by November 2019 a symposium to improve coordination between the judiciary system and control units within the ministries.
  - Continue efforts to enhance the AML/CFT framework, including strengthening capacities of CENTIF (Cellule Nationale de Traitement des Informations Financières) and addressing framework weaknesses based on recommendations of CENTIF’s 2018 report.

### Poverty reduction and social measures
- Priorities:
  - Promote decent employment and expand social protection to make further progress in poverty reduction.
  - Reduce fragility through implementation of the Sahel Emergency Program (PUS-BF) and address regional disparities via the Local Economies Development Support Program (PADEL).
- Humanitarian response:
  - In response to the local humanitarian crisis from heightened insecurity in the Sahel, government actions are assisting refugees and internally displaced populations with support from development partners.

### VI. Conclusion
- Authorities’ commitment: Determined to continue implementing their ECF-supported program.
- Request: Seeking the support of Executive Directors for the completion of the second review under the ECF arrangement.

*IMF staff report excerpt*

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_Source: https://www.imf.org/-/media/files/publications/cr/2019/1bfaea2019001.pdf_