## 1. Selected Economic Indicators, 2014–25 ## Source details **Canonical URL:** [1. Selected Economic Indicators, 2014–25](https://www.imf.org/-/media/files/publications/cr/2020/english/1bdiea2020001.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2020/english/1bdiea2020001.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2020/english/1bdiea2020001.pdf.json) --- ### Economic impact of COVID-19 and financing needs - Economic growth projections for 2020 have been revised down by 5.3 percentage points to -3.2 percent in 2020. - The pandemic creates an external financing need of 4.7 percent of GDP in 2020 and 2021. - The pandemic creates a fiscal financing need of 6.9 percent of GDP, which will need to be met mainly from external sources. - Staff expects pandemic-related spending needs will reach at least US$150 million (4.7 percent of GDP). So far, financing for this plan is US$5 million from the World Bank. - The authorities intend to provide targeted support to hard-hit sectors at a net cost of US$12 million after budget reprioritization. - Overall fiscal deficit including grants is expected to reach 9.6 percent of GDP in 2020 (compared to a pre-pandemic projected deficit of 6.1 percent of GDP). ### Public health-related and macroeconomic policy response - Border and travel measures: - quarantining travelers from affected countries, - stopped providing entry visas, - closed borders except for merchandise trade, humanitarian, and medical travel and transport. - Pandemic response plan focuses on: - strengthening the health care system; - the social safety net; - parts of the road network to facilitate access to sick people. - Monetary policy: - remains focused on containing inflation; - regulators will work with banks to enable targeted and time-bound extensions of loan maturities to hard-hit creditors. - Fiscal measures: - grants provided under the CCRT will be used to help finance additional pandemic-related spending. ### IMF relations, eligibility, and staff assessment - Burundi currently has no Fund-supported program. The last Article IV consultation was concluded in August 2014. - In April the authorities requested emergency assistance through the Rapid Credit Facility and improved data provision substantially. - Staff supports Burundi’s request for debt relief under the CCRT. - Burundi meets the income threshold with GNI per capita of US$280 in 2018, well below the threshold of US$1,175. - Staff assesses that Burundi faces exceptional balance of payments needs stemming from the impact of COVID-19 and is pursuing appropriate macroeconomic policies to address this need. - As the authorities’ response has been gradual and risks are evolving, further measures may be needed. The authorities are requesting grants from donors. ### Fiscal, external, and financial system findings (select) - Aid used to contribute about half of the government’s total revenue prior to the 2015 crisis; aid fell from 8.5 percent to 2.3 percent of GDP over 2014–16. - Over 2015–19 fiscal deficits averaged 7 percent of GDP a year. - Domestic public debt is estimated to have risen to 39.6 percent of GDP in 2019 (from 16.6 percent in 2014); external debt fell slightly to 17.8 percent of GDP (from 19.6 percent). - The real effective exchange rate has appreciated by 18 percent since end-2014; a parallel market premium was 55 percent at end-2019 (up from near zero in 2014). - Foreign currency reserves have dwindled to around one month of imports (from 4 months of imports in 2014). - Banking sector: banks’ claims on the government reached 45 percent of their assets at end-2019. - Central bank capitalization: equity dropped to 2.3 percent of assets by June 2019, below the mandatory minimum of 10 percent of assets. ### Selected payments and debt relief specifics - Upcoming eligible debt service falling due for the period from July 21st to October 13, 2020: SDR 5.48 million. - Debt service falling due in the period from July 21st, 2020 to April 13, 2022 (maximum potential period of debt service relief, subject to availability of resources and decisions of the Executive Board): SDR 17.96 million. - Projected payments to the IMF listed by schedule date total: - Total for the year 2020: 5,480,000 (SDR) - Total for the year 2021: 8,980,000 (SDR) - Total for the year 2022: 3,500,000 (SDR) - Grand total: 17,960,000 (SDR) *Source: IMF staff report, "Burundi: Selected Economic Indicators, 2014–25."* ### Appendix I. Letter of Intent — Context and purpose - Date and place: Bujumbura, July 14, 2020. - Addressee: Ms Kristalina Georgieva, Managing Director, International Monetary Fund. - Purpose: Describe Burundi’s policy commitments to address the COVID-19 pandemic and its economic and balance of payments impacts. ### Appendix I. Letter of Intent — Assessment of economic impact - IMF staff revised economic growth projection for 2020 to -3.2 percent (from 2.1 percent projected before the pandemic). - IMF staff estimate the pandemic creates: - external financing need of 4.7 percent of GDP (cumulated over 2020 and 2021), - budgetary financing need of 6.9 percent of GDP (cumulated over 2020 and 2021). - Reported channels of deterioration: - lower economic growth; - decline in tax revenue; - increased pandemic-related expenditure; - fall in exports; - fall in remittances by migrants; - rise in imports; - banking-sector difficulties due to unpaid debts. ### Appendix I. Letter of Intent — Public health and containment measures already taken - Quarantine of travelers from affected countries; suspension of entry visas; border closures except for merchandise trade, humanitarian, and medical travel and transport. - Massive nationwide COVID-19 testing campaign. - Intensified awareness campaigns to prevent human-to-human transmission. - Strengthened laboratories with COVID-19 diagnostic equipment. - Each health facility provided with a team responsible for testing COVID-19 and supervising/monitoring suspected infected persons. ### Appendix I. Letter of Intent — Pandemic response plan (intentions and costs) - Objectives: strengthen the health care system, the social safety net, and parts of the road network to facilitate access to sick people. - Health-system measures: - intensify communication on risks; - enhance screening capacity; - equip hospitals and health centers; - increase stock of drugs. - Estimated cost: at least US$150 million (4.7 percent of GDP) cumulatively over 2020 and 2021. - Existing pledged financing: US$5 million by the World Bank. - Current financing gap: no cash buffers or credit sources beyond the World Bank pledge; authorities have contacted development partners to request additional support. ### Appendix I. Letter of Intent — Fiscal policy response - Consideration of support to hard-hit sectors such as transport and hotels. - Financing approach: largely via reprioritization of the existing budget. - Net financing need from this reprioritization: about US$12 million (0.4 percent of GDP) over 2020 and 2021. ### Appendix I. Letter of Intent — Monetary and exchange rate policy - Monetary policy geared to containing inflation. - Economy constrained by foreign exchange shortages; central bank direct interventions used to ensure financing for critical imports. - Given low reserves, no room presently to draw down reserves further to address the external need created by the pandemic. - Authorities are developing a strategy to broaden access to foreign exchange as inflows increase. ### Appendix I. Letter of Intent — Financial sector supervision - Monitor impact of the COVID-19 shock on loan performance to protect financial stability. - Work with banks to encourage, on a targeted and time-bound basis, extension of loan maturities to borrowers in hard-hit sectors, applying existing regulation in a flexible manner. ### Appendix I. Letter of Intent — Request for external relief and financing - Request: grants under the Catastrophe Containment window of the CCRT of SDR17.96 million, equivalent to 11.7 percent of our quota, to cover IMF debt service falling due from July 21st, 2020 to April 13, 2022, or as much as is available from resources. - Purpose of debt relief: free up budgetary resources to address public health needs and help contain the exceptional balance of payments need resulting from the pandemic. - Authorities are also actively seeking additional support from the IMF, including under the Rapid Credit Facility. ### Appendix I. Letter of Intent — Transparency and accountability measures - Ex post audit: The Court of Auditors, in consultation with development partners concerned, will undertake and publish an ex post audit of COVID-related expenses on the government’s website within 9 months after the end of the fiscal year. - Authorization: The government authorizes the IMF to publish this Letter of Intent and the staff report for the CCRT request. ### Appendix I. Letter of Intent — Executive Director statement (July 20, 2020) — summary points - Authorities appreciate the Fund’s timely response and view CCRT relief as critical to create fiscal space. - Growth projections for 2020 revised downwards by 5.3 percentage points due to the pandemic. - Estimated cost of the COVID response plan reiterated at US$150 million. - Fiscal deficit expected to widen to 9.6 percent of GDP in 2020 compared to pre-crisis projection of 6.1 percent of GDP. - Authorities have submitted a request for emergency financing from the Fund, expected to catalyze additional donor resources. - Commitment to publish the results of the ex-post audit within 9 months after the end of the fiscal year. ### Appendix I. Letter of Intent — Concluding commitments and signatories - Continue work with IMF staff to maintain broad macroeconomic stability. - Continue outreach to development partners for additional support. - Commitment to medium-term macroeconomic stability and use of Fund support to catalyze additional resources to address urgent balance of payments needs. /s/ Jean CIZA, Governor, Bank of the Republic of Burundi /s/ Dr. Domitien NDIHOKUBWAYO, Minister of Finance, Budget, and Economic Planning *Appendix I. Letter of Intent — Burundi (July 14, 2020).* ### 1. Selected Economic Indicators, 2014–25 __________________________________________________ 4 ### 1. Selected Economic Indicators, 2014–25 ### Economic impact of COVID-19 and financing needs - Economic growth projections for 2020 have been revised down by 5.3 percentage points to -3.2 percent in 2020. - The pandemic creates an external financing need of 4.7 percent of GDP in 2020 and 2021. - The pandemic creates a fiscal financing need of 6.9 percent of GDP, which will need to be met mainly from external sources. - Staff expects pandemic-related spending needs will reach at least US$150 million (4.7 percent of GDP). So far, financing for this plan is US$5 million from the World Bank. - The authorities intend to provide targeted support to hard-hit sectors at a net cost of US$12 million after budget reprioritization. - Overall fiscal deficit including grants is expected to reach 9.6 percent of GDP in 2020 (compared to a pre-pandemic projected deficit of 6.1 percent of GDP). ### Public health-related and macroeconomic policy response - Border and travel measures: quarantining travelers from affected countries, stopped providing entry visas, and closed borders except for merchandise trade, humanitarian, and medical travel and transport. - Pandemic response plan focuses on: strengthening the health care system; the social safety net; parts of the road network to facilitate access to sick people. - Monetary policy: remains focused on containing inflation; regulators will work with banks to enable targeted and time-bound extensions of loan maturities to hard-hit creditors. - Fiscal measures: grants provided under the CCRT will be used to help finance additional pandemic-related spending. ### IMF relations, eligibility, and staff assessment - Burundi currently has no Fund-supported program. The last Article IV consultation was concluded in August 2014. - In April the authorities requested emergency assistance through the Rapid Credit Facility and improved data provision substantially. - Staff supports Burundi’s request for debt relief under the CCRT. - Burundi meets the income threshold with GNI per capita of US$280 in 2018, well below the threshold of US$1,175. - Staff assesses that Burundi faces exceptional balance of payments needs stemming from the impact of COVID-19 and is pursuing appropriate macroeconomic policies to address this need. - As the authorities’ response has been gradual and risks are evolving, further measures may be needed. The authorities are requesting grants from donors. ### Fiscal, external, and financial system findings (select) - Aid used to contribute about half of the government’s total revenue prior to the 2015 crisis; aid fell from 8.5 percent to 2.3 percent of GDP over 2014–16. - Over 2015–19 fiscal deficits averaged 7 percent of GDP a year. - Domestic public debt is estimated to have risen to 39.6 percent of GDP in 2019 (from 16.6 percent in 2014); external debt fell slightly to 17.8 percent of GDP (from 19.6 percent). - The real effective exchange rate has appreciated by 18 percent since end-2014; a parallel market premium was 55 percent at end-2019 (up from near zero in 2014). - Foreign currency reserves have dwindled to around one month of imports (from 4 months of imports in 2014). - Banking sector: banks’ claims on the government reached 45 percent of their assets at end-2019. - Central bank capitalization: equity dropped to 2.3 percent of assets by June 2019, below the mandatory minimum of 10 percent of assets. ### Selected payments and debt relief specifics - Upcoming eligible debt service falling due for the period from July 21st to October 13, 2020: SDR 5.48 million. - Debt service falling due in the period from July 21st, 2020 to April 13, 2022 (maximum potential period of debt service relief, subject to availability of resources and decisions of the Executive Board): SDR 17.96 million. - Projected payments to the IMF listed by schedule date total: - Total for the year 2020: 5,480,000 (SDR) - Total for the year 2021: 8,980,000 (SDR) - Total for the year 2022: 3,500,000 (SDR) - Grand total: 17,960,000 (SDR) *Source: IMF staff report, "Burundi: Selected Economic Indicators, 2014–25."* ### Appendix I. Letter of Intent ### Appendix I. Letter of Intent ### Context and purpose - Date and place: Bujumbura, July 14, 2020. - Addressee: Ms Kristalina Georgieva, Managing Director, International Monetary Fund. - Purpose: Describe Burundi’s policy commitments to address the COVID-19 pandemic and its economic and balance of payments impacts. ### Assessment of economic impact - IMF staff revised economic growth projection for 2020 to -3.2 percent (from 2.1 percent projected before the pandemic). - IMF staff estimate the pandemic creates: - external financing need of 4.7 percent of GDP (cumulated over 2020 and 2021), - budgetary financing need of 6.9 percent of GDP (cumulated over 2020 and 2021). - Reported channels of deterioration: lower economic growth; decline in tax revenue; increased pandemic-related expenditure; fall in exports; fall in remittances by migrants; rise in imports; banking-sector difficulties due to unpaid debts. ### Public health and containment measures already taken - Quarantine of travelers from affected countries; suspension of entry visas; border closures except for merchandise trade, humanitarian, and medical travel and transport. - Massive nationwide COVID-19 testing campaign. - Intensified awareness campaigns to prevent human-to-human transmission. - Strengthened laboratories with COVID-19 diagnostic equipment. - Each health facility provided with a team responsible for testing COVID-19 and supervising/monitoring suspected infected persons. ### Pandemic response plan (intentions and costs) - Objectives: strengthen the health care system, the social safety net, and parts of the road network to facilitate access to sick people. - Health-system measures: intensify communication on risks; enhance screening capacity; equip hospitals and health centers; increase stock of drugs. - Estimated cost: at least US$150 million (4.7 percent of GDP) cumulatively over 2020 and 2021. - Existing pledged financing: US$5 million by the World Bank. - Current financing gap: no cash buffers or credit sources beyond the World Bank pledge; authorities have contacted development partners to request additional support. ### Fiscal policy response - Consideration of support to hard-hit sectors such as transport and hotels. - Financing approach: largely via reprioritization of the existing budget. - Net financing need from this reprioritization: about US$12 million (0.4 percent of GDP) over 2020 and 2021. ### Monetary and exchange rate policy - Monetary policy geared to containing inflation. - Economy constrained by foreign exchange shortages; central bank direct interventions used to ensure financing for critical imports. - Given low reserves, no room presently to draw down reserves further to address the external need created by the pandemic. - Authorities are developing a strategy to broaden access to foreign exchange as inflows increase. ### Financial sector supervision - Monitor impact of the COVID-19 shock on loan performance to protect financial stability. - Work with banks to encourage, on a targeted and time-bound basis, extension of loan maturities to borrowers in hard-hit sectors, applying existing regulation in a flexible manner. ### Request for external relief and financing - Request: grants under the Catastrophe Containment window of the CCRT of SDR17.96 million, equivalent to 11.7 percent of our quota, to cover IMF debt service falling due from July 21st, 2020 to April 13, 2022, or as much as is available from resources. - Purpose of debt relief: free up budgetary resources to address public health needs and help contain the exceptional balance of payments need resulting from the pandemic. - Authorities are also actively seeking additional support from the IMF, including under the Rapid Credit Facility. ### Transparency and accountability measures - Ex post audit: The Court of Auditors, in consultation with development partners concerned, will undertake and publish an ex post audit of COVID-related expenses on the government’s website within 9 months after the end of the fiscal year. - Authorization: The government authorizes the IMF to publish this Letter of Intent and the staff report for the CCRT request. ### Executive Director statement (July 20, 2020) — summary points - Authorities appreciate the Fund’s timely response and view CCRT relief as critical to create fiscal space. - Growth projections for 2020 revised downwards by 5.3 percentage points due to the pandemic. - Estimated cost of the COVID response plan reiterated at US$150 million. - Fiscal deficit expected to widen to 9.6 percent of GDP in 2020 compared to pre-crisis projection of 6.1 percent of GDP. - Authorities have submitted a request for emergency financing from the Fund, expected to catalyze additional donor resources. - Commitment to publish the results of the ex-post audit within 9 months after the end of the fiscal year. ### Concluding commitments - Continue work with IMF staff to maintain broad macroeconomic stability. - Continue outreach to development partners for additional support. - Commitment to medium-term macroeconomic stability and use of Fund support to catalyze additional resources to address urgent balance of payments needs. /s/ Jean CIZA, Governor, Bank of the Republic of Burundi /s/ Dr. Domitien NDIHOKUBWAYO, Minister of Finance, Budget, and Economic Planning *Appendix I. Letter of Intent — Burundi (July 14, 2020).* --- _Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1bdiea2020001.pdf_