## 1bfaea2023002

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---

### Executive summary — context, objectives, and program design
- Context and immediate challenges:
  - Large balance of payments (BoP) and security needs aggravated by acute food insecurity and political instability.
  - March 2023: authorities obtained Fund emergency financing under the Food Shock Window (FSW) of the Rapid Credit Facility to address the ongoing food insecurity crisis.
  - Following two military coups in 2022, international development support has declined; agreement with ECOWAS on return to constitutional order with elections to be held by July 2024.
- Program framework and objectives:
  - ECF arrangement articulated around three pillars: (i) creating fiscal space for priority spending; (ii) strengthening resilience to shocks and reducing poverty and inequality; (iii) reinforcing fiscal discipline, transparency, and governance.
  - Fiscal anchor: bring the deficit-to-GDP ratio to 3 percent by the end of the program period; significantly reduce the wage-bill-to-revenue ratio; raise the tax revenue-to-GDP ratio by the end of the program period.
  - Program aims to help Burkina Faso return to a moderate risk of debt distress and meet large development needs requiring capital inflows for a protracted period.
- Program design and IMF engagement:
  - Proposed: 48-month ECF arrangement; access of 190 percent of quota (1.5 percent of GDP, SDR 228.76 million).
  - Current outstanding credit to the Fund: 233 percent of quota.
  - IMF emergency financing under FSW of the RCF: SDR 60.2 million (US$81 million, CFAF 49 billion), disbursed on March 29, 2023.
  - Complementary donor support: other donors (including IDA) provided significant financing assurances, bringing IMF’s financing contribution below 50 percent of the estimated financing gap in the first program year.
  - Procedural note: staff informally briefed the Executive Board on June 15, 2023, under PRGT High Access Procedure.

### Key risks and mitigation
- Principal risks:
  - Further deterioration in security conditions.
  - Protracted war in Ukraine affecting food, fertilizers, energy prices, and inflation.
  - Tighter financing conditions on the regional bond market.
  - Protracted social and political instability within Burkina Faso and across the Sahel.
- Mitigation measures:
  - Close engagement with authorities and burden sharing with donors.
  - Comprehensive capacity development (CD) program.
  - Consideration of faster fiscal deficit reduction.

### Selected recent economic developments (exact figures)
- Real GDP growth:
  - 2022 overall real GDP growth: 1.5 percent (down from 6.9 percent in 2021).
  - Sector changes in 2022: secondary sector contracted by 7.4 percent relative to 2021; primary sector expanded by 8.5 percent; tertiary sector expanded by 5.9 percent.
  - Displacement of about 1.9 million people.
- Inflation:
  - Headline inflation peaked at over 18 percent y-o-y in August 2022.
  - Average annual inflation in 2022: 14.1 percent (from 3.9 percent in 2021).
  - Inflation decelerated to -0.7 percent y-o-y in June 2023 (other excerpts report -0.3 percent y-o-y in May 2023).
- Monetary and financial sector:
  - Private sector credit growth: 14.2 percent in 2022 (after 10.1 percent in 2021).
  - Banks held 14 percent of risk-weighted assets as equity capital (end-June 2022 / Dec 2022 reported).
  - Loan exposure to top 5 borrowers increased to 80 percent from 67 percent at end-2021.
  - Non-performing loans net of provisions at 5.6 percent of total loans in December 2022 (7.4 percent one year earlier).
  - Share of liquid assets in total assets: 21 percent at end-December 2022 (from 19 percent at end-2021).
- Fiscal performance (2022):
  - Overall deficit widened to 10.7 percent of GDP (from 7.5 percent in 2021).
  - Revenues increased by 1.6 percentage points to 19.4 percent of GDP.
  - Current transfers increased to 9.3 percent of GDP, with fuel subsidies at 5 percent of GDP.
  - Domestically financed public investment: 7.4 percent of GDP (2.6 percentage points higher than in 2021).
  - Wage bill: 8.6 percent of GDP.
  - Large deficit largely financed by tapping the regional bond market, increasing debt and debt service costs.
- External position:
  - Current account deficit in 2022 widened to 6.2 percent of GDP, mainly driven by lower gold production and exports.
  - Capital account supported mainly by portfolio inflows from bond issuances in the regional market.

### Outlook and projections (selected projections)
- Growth:
  - 2023: 4.4 percent.
  - 2024: 6.4 percent.
  - Medium-term potential cited as 5.3 percent.
- Inflation:
  - Average inflation expected to drop to 1.4 percent in 2023 and rebound to 3 percent in 2024.
  - End-of-period inflation in 2023 expected to reach 2.4 percent.
- External balances:
  - Current account deficit projected to narrow to 4.7 percent of GDP in 2023 and reach 4.0 percent of GDP in 2025.
  - External financing requirement: CFAF 19 billion in 2023 net of IMF FSW disbursement, reducing to CFAF 39 billion in 2024 and remaining broadly stable thereafter (Table 6 referenced).

### Food crisis response (Box 1)
- Severity:
  - At least 3.5 million Burkinabè (over 15 percent of the population) suffer from acute food insecurity.
- Authorities’ Response and Support Plan for Vulnerable Populations (RSPVP) objectives:
  - Facilitate food access for the most vulnerable; prevent and cure malnutrition among children, pregnant and lactating women; protect food insecure households.
- Cost and IMF emergency support:
  - Total cost of the RSPVP: US$111 million (CFAF 67 bn, 0.5 percent of GDP).
  - IMF emergency financial support (FSW of RCF): SDR 60.2 million (US$81 million, CFAF 49 billion).
- Implementation and safeguards:
  - FSW resources aided (i) distribution of free food; (ii) cash transfers; (iii) sale of cereals at subsidized prices; (iv) improvement of water supply and distribution; (v) distribution and sale at subsidized prices of agricultural inputs; (vi) measures to support livestock farming.
  - Safeguards: semi-annual reports and an audit after one year on implementation of cash transfer programs and all emergency food expenditure (structural benchmark and MEFP ¶78). First report due after September 30, 2023.
  - As of June 30, total actual expenditure on the RSPVP amounted to US$34 million (CFAF 20 bn), about 31 percent of the total cost.
  - As of June 30, 2023, all budgeted resources spent on emergency measures for immediate needs; about 15 percent spent on measures with longer timeframes.

---

### Debt Sustainability Analysis (DSA) — findings, risks, and program anchors
- DSA finding and risk rating:
  - Burkina Faso remains at moderate risk of external debt distress and overall public debt distress; debt sustainable over the medium term (DSA Supplement).
  - All external debt indicators remain below relevant indicative thresholds under the baseline and most extreme stress tests; mechanical results point to low risk of external debt distress but judgment raises the assessment to moderate given uncertainties.
  - Public debt increased as a share of GDP and is very close to threshold for a high debt distress risk rating.
  - Debt-carrying capacity: medium, with some but limited space to absorb shocks.
- Macroeconomic outlook and risks (DSA):
  - Outlook highly uncertain; risks tilted to downside (Annex II).
  - Downside risks: more security disruptions; difficulties in revenue mobilization; high short-term borrowing costs in WAEMU regional market; global slowdown or intensification of Russia’s war in Ukraine; extreme climate events; increased regional instability.
- Program anchor and debt strategy:
  - 48-month ECF arrangement (2023–27) to address protracted BoP problems and achieve macro stabilization and poverty reduction after exogenous shocks.
  - Authorities committed to reduce the fiscal deficit by 7.6 percent of GDP during 2023-2027, to 3 percent of GDP, through revenue and expenditure measures and improved financing conditions.
  - Domestic debt: about 58 percent of total public debt in 2023 and accounting for 85 percent of interest payments in 2022; domestic debt is expensive and has relatively short maturities.
  - Program includes ceilings on net domestic financing in regional market; present value of external debt; contingent liabilities; and value of PPPs.
- DSA quantitative highlights (selected exact numbers preserved):
  - Public Sector Debt (percent of GDP): 2020: 43.3; 2021: 55.4; 2022: 58.3; 2023: 60.9; 2024: 61.0; 2025: 61.2; 2026: 60.7; 2027: 59.7.
  - PV of PPG External Debt-to-GDP Ratio (memorandum): entries include 18.4; 17.3; 16.4; 15.8; 15.3; 15.0; 14.5; 12.0; 8.0 (projection rows).
  - Debt service-to-revenue and grants ratio escalates from 42.8 percent in 2023 to 74.4 percent by 2026 (reflecting short maturities of domestic financing).
  - Under baseline, all external PPG debt indicators remain below policy-relevant thresholds for next ten years; PV of public debt-to-GDP breached only in commodity price stress test.

---

### Program-related priorities, policy measures, and expected fiscal impact
- Program duration and rationale:
  - Four-year program to allow policies and reforms to yield results and secure lasting adjustment.
- Financing priorities:
  - Catalyze additional concessional resources to complement IMF financing given existing outstanding credit and BoP needs.
- Conditionality and safeguards:
  - Structural benchmarks and reporting requirements related to emergency food expenditure and cash transfer programs; performance monitored through semi-annual QPCs, ITs, and SBs.
- A. Creating fiscal space and reducing debt vulnerabilities — measures and targets:
  - Domestic revenue mobilization:
    - Staff projects a 1.5 percent of GDP increase in tax revenues relative to the baseline over the program.
    - Measures include broadening the tax base (reducing VAT and vehicle exemptions), incorporating firms into a new "non-determined" regime, increasing tax rates on beverages and tobacco, closing mining sector loopholes, recovering tax and customs arrears, digitalizing land and procurement registration and certified digital invoicing, and strengthening mining revenue collection.
    - Revised customs and mining code and new strategic plan for tax and customs administration to be adopted by December 2024 (structural benchmark).
    - Completion of tax expenditure assessment report for 2018-2021 (indicative SB).
    - Lift budget ceiling on VAT credit reimbursement to reduce arrears accumulation (structural benchmark).
  - Wage bill:
    - Authorities committed to bring wage bill-to-tax revenue ratio to 45 percent by 2027 (structural benchmark), from currently over 50 percent.
    - Control of wage bill growth: about 6 percent nominal average growth annually; annual reconciliations between personnel and payroll registries covering about 50 percent of workforce each year to eliminate “ghost workers”.
    - No new wage agreement (except security) that increases wage bill share of tax revenues (continuous structural benchmark).
    - Consult IMF staff if quarterly deviations between actual and projected wage bill growth occur.
  - Energy sector:
    - Move toward fuller cost recovery; review fuel-price-setting mechanism (MEFP ¶73).
    - Implement electricity tariff reform with World Bank and others; adopt performance-contracts with SONABHY and SONABEL by end-December 2023 (structural benchmark).
  - Expected fiscal impact:
    - Measures create fiscal space for priority spending including security, development, and social expenditures.
    - Security-related expenditures expected to reach about 1/3 of the wage bill, and less than half of public investment, in both 2023 and 2024, declining thereafter.
    - Between 2022 and 2027, mobilization of domestic revenues and reduction in primary current expenditure projected to reduce overall fiscal deficit by more than 7 percent of GDP during program period.
- Tax policy and administration gains under program (Text Table 3 totals, percent of GDP by year 2023–2027):
  - Vehicle tax: 0.01, 0.02, 0.02, 0.02, 0.02
  - Obligation to withhold VAT at source: 0.09, 0.15, 0.16, 0.16, 0.16
  - "Non-determined" tax regime: 0.07, 0.10, 0.10, 0.12, 0.14
  - Increase in tax rate on beverages: 0.01, 0.05, 0.10, 0.15, 0.19
  - Increase in tax rate on tobacco & cigarettes: 0.05, 0.10, 0.15, 0.15, 0.15
  - Developing e-CME Module: 0.00, 0.00, 0.00, 0.01, 0.01
  - Digitizing land/properties registration: 0.00, 0.06, 0.12, 0.20, 0.30
  - Certified digital invoicing: 0.00, 0.00, 0.08, 0.10, 0.10
  - Tax arrears recovery: 0.46, 0.50, 0.45, 0.37, 0.40
  - TOTAL: 0.69, 0.98, 1.18, 1.26, 1.46
- B. Strengthening resilience to shocks while reducing poverty and inequality:
  - Security: improve efficiency and transparency of security spending; include Patriotic Support Fund (PSF) transparency in 2024 budget and CAST special account with expenditures capped by cash inflows (MEFP ¶83 and structural benchmark).
  - Climate: attach annex to the 2025 budget detailing climate adaptation infrastructure investment (MEFP ¶77, indicative SB).
  - Social protection: expand cash transfer programs to rural and security-affected areas; create Single National Registry of Beneficiaries; cost of establishing nationwide SSN: about US$581 million (2.9 percent of GDP) during program (indicative SB).
- C. Fiscal discipline, transparency, governance, and AML/CFT:
  - Publish annual budget execution reports including FSW fund usage on Ministry of Finance website (continuous SB).
  - Prior actions: submit revised 2023 budget aligned with program objectives; instruct ASCE-LC to audit all government arrears and floating debts.
  - Semi-annual reports and audits on cash transfer program and all food emergency spending by end-June 2024 (structural benchmark); audits by ASCE-LC.
  - Governance Diagnostic Assessment with IMF support by December 2025 (indicative SB).
  - Publish beneficial owner information for procurement contracts related to food insecurity, water supply, or subsidized agricultural inputs (structural benchmark).
  - Roadmap to improve public investment efficiency (PIMA implementation, indicative SB).
  - Put in place beneficial ownership registry accessible without restrictions to relevant government authorities and financial institutions with CDD obligations (indicative SB).

### Domestic arrears (preliminary data as of June 2023)
- Reported domestic arrears ≈ 2.8 percent of GDP, composition:
  - Unpaid VAT refunds (more than 90 days): CFAF 86 billion (about 0.7 percent of GDP).
  - Unpaid obligations to government suppliers: CFAF 34 billion (about 0.3 percent of GDP).
  - Arrears vis-à-vis SONABHY (staff estimates): about CFAF 220 billion (1.8 percent of GDP).
- Program allows securitization of VAT refunds in arrears as one-time adjustor by end-December 2023 up to CFAF 85 billion to reach level consistent with Indicative Target.

---

### Program modalities, access, financing, disbursement schedule, and monitoring
- Access and financing:
  - Staff propose 48-month arrangement with access of 190 percent of quota (SDR 228.76 million).
  - Fund financing used for budget support to help close financing needs given lack of external financing.
  - Program success depends on reforms: reduce wage bill to below 45 percent of revenues and budget deficit to 3 percent of GDP by 2027; increase overall revenue-to-GDP ratio to at least 20 percent by 2027.
  - Four-year duration intended to anchor commitments and preserve debt sustainability.
- Disbursement schedule under four‑year ECF 2023–27 (proposed SDR amounts and dates):
  - SDR 24.08 million (20.0 percent of quota) — 21-Sep-23: Executive Board Approval.
  - SDR 24.08 million (20.0 percent) — 31-Mar-24.
  - SDR 24.08 million (20.0 percent) — 30-Sep-24.
  - SDR 24.08 million (20.0 percent) — 31-Mar-25.
  - SDR 24.08 million (20.0 percent) — 30-Sep-25.
  - SDR 24.08 million (20.0 percent) — 31-Mar-26.
  - SDR 24.08 million (20.0 percent) — 30-Sep-26.
  - SDR 30.1 million (25.0 percent) — 31-Mar-27.
  - SDR 30.1 million (25.0 percent) — 31-Aug-27.
  - Total: SDR 228.76 million (190.0 percent of quota).
- Balance of payments and financing requirements (selected Table 6 figures, CFAF billions):
  - Financing Need: 2022 Proj. -1,750.3; 2023 Proj. -850.4; 2024 Proj. -736.7; 2025 Proj. -912.6; 2026 Proj. -976.8; 2027 Proj. -928.3.
  - Financing: 2022 1,693.5; 2023 781.9; 2024 642.1; 2025 818.1; 2026 882.4; 2027 823.8.
  - Financing Gap (excluding past IMF financing): 2022 56.7; 2023 18.5; 2024 94.6; 2025 94.4; 2026 94.3; 2027 104.5.
  - Residual Financing Gap (after IMF and donor financing): 0.0 for 2022–2027 (table entry).
- IMF capacity-to-repay indicators (selected, outstanding IMF credit in millions of SDRs):
  - Outstanding IMF credit: 2023 274.3; 2024 258.0; 2025 227.3; 2026 185.1; 2027 143.9; 2028 109.2; 2029 57.8; 2030 30.1; 2031 18.1; 2032 6.0; 2033–2035 0.0.
  - Outstanding IMF credit as percent of quota: 2023 227.8; 2024 214.3; 2025 188.8; 2026 153.7; 2027 119.5; 2028 90.7; 2029 48.0; 2030 25.0; 2031 15.0; 2032 5.0; 2033–2035 0.0.
- Program monitoring and safeguards:
  - Program performance monitored through semi-annual QPCs, indicative targets, structural benchmarks; prior actions included revised 2023 budget submission and ASCE-LC instruction to audit all government arrears.
  - Structural benchmarks kept parsimonious due to fragility and capacity constraints (aligned with Fund’s Strategy for Fragile and Conflict Affected States).

### Conditionality, quantitative targets, and structural benchmarks (selected exact figures)
- Quantitative performance criteria (Table 9, ceilings and primary deficit, CFAF billions):
  - Ceiling on net domestic financing (cumulative): 739.9; 143.1; 286.3; 429.4 (four-period values as presented).
  - Ceiling on PV of external debt contracted or guaranteed by government: 410.0 (constant).
  - Ceiling on primary fiscal deficit including grants (cumulative): 560.0; 104.7; 209.5; 314.2.
- Indicative floors and ceilings (selected):
  - Floor on government revenue (2023 Dec. Prog.): 2,374.3 CFAF billions.
  - Floor on poverty-reducing current social expenditures (2023 Dec. Prog.): 296.2 CFAF billions.
  - Ceiling on stock of certified and unpaid VAT refunds older than 30 days: 40.0 CFAF billions.
  - Ceiling on primary current expenditure (2023 Dec. Prog.): 1,906.5 CFAF billions.
  - Ceiling on value of PPPs contracted: 200.0 CFAF billions.
- Prior actions and timed structural benchmarks (selected):
  - Prior actions: submit revised 2023 budget in line with program objectives; formally instruct ASCE-LC to launch audit of all government arrears and floating debts.
  - Continuous SB: do not grant new wage agreement (except security) that could push wage bill beyond 45% of tax revenues by 2027.
  - End-December 2023 SBs: contain wage bill-to-tax revenue ratio below 52.3 percent; adopt performance contracts with SONABHY and SONABEL; present annual reconciliations between personnel and payroll registers covering ~50% of civil service workforce.
  - End-June 2024 SBs: review energy subsidies and price-setting mechanism; prepare and implement strategy for clearing government arrears; raise ceiling on VAT credit reimbursements consistent to avoid accumulation of arrears.
  - End-June 2025 SB: put in place beneficial ownership registry accessible to relevant authorities and financial institutions.
  - End-December 2025 SBs: ensure PFS cash transfers cover at least 180,000 poorest households (in addition to donor coverage); conduct complete census of the civil service workforce and publish results.

---

### Financial sector, public investment, and borrowing program (selected figures)
- Banking sector (Table 5 highlights):
  - Reg. capital to risk-weighted assets: Dec-22 14.0 percent.
  - Gross NPLs / Total loans: Dec-22 5.6 percent; Provisions / NPLs: Dec-22 80.2 percent.
  - Loans to deposits: Dec-22 81.9 percent.
  - Liquid assets / total assets: Dec-22 21.2 percent.
- Public investment and borrowing:
  - Consolidated central government investment (percent of GDP): Investment expenditure: 2022 Prel. 9.1; 2023 Proj. 10.8; 2024 Proj. 9.1; 2025 Proj. 8.8; 2026 Proj. 8.8; 2027 Proj. 8.9.
  - Domestically financed investment (percent of GDP): 2022 4.8; 2023 7.4; 2024 6.6; 2025 5.5; 2026 5.1; 2027 5.2.
  - Projected external borrowing program (sample): USD million 629.9 (100 percent) with Concessional debt 575.8 (91 percent) and Non-concessional debt 54.1 (9 percent) breakdowns in table.

---

### Risks, vulnerabilities, and mitigating policy implications (DSA and program)
- Main downside risks (selected):
  - Security disruptions and political uncertainty reducing growth and donor support.
  - Difficulties in revenue mobilization and increased spending pressures deteriorating fiscal balance.
  - Tighter regional bond market financing increasing borrowing costs and deteriorating debt dynamics.
  - External shocks: global slowdown, intensification of Russia’s war in Ukraine, extreme climate events, increased regional instability.
- Policy implications and mitigation:
  - Mobilize concessional financing and donor support to ease refinancing risk.
  - Prioritize measures to create fiscal space for essential social and security spending while restoring fiscal discipline.
  - Strengthen revenue mobilization via tax administration reforms and base broadening.
  - Pursue energy sector reforms to limit subsidies and improve SOE performance.
  - Extend domestic debt maturities via syndicated issuances where feasible; rely on concessional resources and cautious non-concessional borrowing.

---

### Conclusions and staff recommendation
- Staff assessment:
  - Risk of external and overall public debt distress assessed as “moderate.”
  - Baseline: no breach of debt distress thresholds for external and public debt indicators; PV of debt-to-GDP ratio breaches only under commodity price stress test.
  - Program expected to mitigate policy-direction uncertainties and catalyze donor finance.
- Recommendation:
  - Staff supports the authorities’ request for an ECF arrangement equivalent to SDR 228.76 million (190 percent of quota) in view of protracted BoP problems and authorities’ program of policies and reforms.
- Closing note:
  - Considering authorities’ commitment, program ownership, prior actions, and track record (including FSW), staff calls for Executive Board positive consideration of Burkina Faso’s ECF request.

*Source: IMF staff report (1bfaea2023002).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context and immediate challenges
- Burkina Faso faces large balance of payments (BoP) and security needs aggravated by acute food insecurity and political instability.
- In March 2023, the authorities obtained Fund emergency financing under the Food Shock Window (FSW) of the Rapid Credit Facility to address the ongoing food insecurity crisis, which in some regions remains acute.
- Following two military coups in 2022, international development support has declined. Burkina Faso has agreed with the Economic Community of West African States (ECOWAS) on a return to constitutional order, with elections to be held by July 2024.

### Policy framework and program objectives
- The ECF arrangement is articulated around three main pillars:
  - Creating fiscal space for priority spending.
  - Strengthening resilience to shocks and reducing poverty and inequality.
  - Reinforcing fiscal discipline, transparency, and governance.
- Fiscal anchor of the program:
  - Bring the deficit-to-GDP ratio to 3 percent by the end of the program period.
  - Significantly reduce the wage-bill-to-revenue ratio.
  - Raise the tax revenue-to-GDP ratio by the end of the program period.
- The program aims to help Burkina Faso return to a moderate risk of debt distress and meet large development needs requiring capital inflows to finance investment for a protracted period.

### Program design and IMF engagement
- Proposed arrangement:
  - 48-month ECF arrangement.
  - Access of 190 percent of quota (1.5 percent of GDP, SDR 228.76 million).
- Context on past and current IMF engagement and financing:
  - Current outstanding credit to the Fund: 233 percent of quota.
  - IMF emergency financing under the Food Shock Window (FSW) of the Rapid Credit Facility (RCF): SDR 60.2 million (US$81 million, CFAF 49 billion), disbursed on March 29, 2023.
  - Earlier IMF support and adjustments: COVID-19 emergency financing of CFAF 65 billion (0.6 percent of GDP); an SDR allocation in 2021 of CFAF 91 billion (0.8 percent of GDP); debt relief under the CCRT of CFAF 31.5 billion (0.3 percent of GDP) during 2020-2022.
- Complementary donor support:
  - Other donors (including IDA) have provided significant financing assurances to complement ECF disbursements, bringing the IMF’s financing contribution below 50 percent of the estimated financing gap.
  - Donors view an IMF-supported program as a positive signal and as providing comfort for potentially scaling up budget support.
- Procedural note:
  - Prior to policy discussions, staff informally briefed the Executive Board on June 15, 2023, as required under the PRGT’s High Access Procedure.

### Risks to program success
- Principal risks identified:
  - A further deterioration in security conditions, which would negatively affect economic activity.
  - A protracted war in Ukraine, which could exert further pressures on food, fertilizers and energy prices and raise inflation, subsidies, and the fiscal deficit.
  - Tighter financing conditions on the regional bond market, making deficit financing more costly.
  - Protracted social and political instability, both within Burkina Faso and across the Sahel region, which may complicate implementation of policy measures and reduce the program’s catalytic effect.
- Risk mitigation measures:
  - Close engagement with the authorities and burden sharing with donors.
  - A comprehensive capacity development (CD) program.
  - Consideration of a faster fiscal deficit reduction.

### Key recent economic developments (selected figures)
- Real GDP growth:
  - 2022 overall real GDP growth: 1.5 percent, down from 6.9 percent in 2021.
  - Sector changes in 2022: secondary sector contracted by 7.4 percent relative to 2021; primary sector expanded by 8.5 percent; tertiary sector expanded by 5.9 percent.
  - Displacement of about 1.9 million people (Text Figure 1 references 2 million displaced earlier in the doc).
- Inflation:
  - Headline inflation peaked at over 18 percent year-on-year (y-o-y) in August 2022.
  - Average annual inflation in 2022: 14.1 percent (from 3.9 percent in 2021).
  - Inflation decelerated to -0.7 percent y-o-y in June 2023.
- Monetary and financial sector:
  - Private sector credit growth accelerated to 14.2 percent after 10.1 percent in 2021.
  - Banking system indicators (end-June 2022 / Dec 2022 as reported):
    - Banks held 14 percent of risk-weighted assets as equity capital.
    - Loan exposure to the top 5 borrowers increased to 80 percent from 67 percent at end-2021.
    - Non-performing loans net of provisions at 5.6 percent of total loans in December 2022, compared to 7.4 percent one year earlier.
    - Share of liquid assets in total assets increased to 21 percent at end-December 2022 from 19 percent at end-2021.
  - Note: The level of bank exposure to sovereign securities is a source of concentration risk in the banking system.
- Fiscal performance (2022):
  - Overall deficit widened to 10.7 percent of GDP, from 7.5 percent in 2021.
  - Revenues increased by 1.6 percentage points to 19.4 percent of GDP.
  - Current transfers increased to 9.3 percent of GDP, especially fuel subsidies at 5 percent of GDP.
  - Domestically financed public investment: 7.4 percent of GDP, 2.6 percentage points higher than in 2021.
  - Wage bill: 8.6 percent of GDP.
  - Financing: large deficit largely financed by tapping the regional bond market, increasing debt and debt service costs.
- External position:
  - Current account deficit in 2022 widened to 6.2 percent of GDP, mainly driven by lower gold production and exports.
  - Capital account was supported mainly by portfolio inflows from bond issuances in the regional market.

### Outlook and projections (selected projections and numbers)
- Growth:
  - 2023: 4.4 percent.
  - 2024: 6.4 percent.
  - Medium-term: progressively moderate to potential; medium-term potential cited as 5.3 percent.
- Inflation:
  - Average inflation expected to drop to 1.4 percent in 2023 and rebound to 3 percent in 2024 (within the WAEMU inflation target range).
  - End-of-period inflation in 2023 expected to reach 2.4 percent.
- External balances:
  - Current account deficit projected to narrow to 4.7 percent of GDP in 2023 and reach 4.0 percent of GDP in 2025.
  - External financing requirement: CFAF 19 billion in 2023 net of the IMF emergency financing disbursement under the Food Shock Window, reducing to CFAF 39 billion in 2024 and remaining broadly stable during the remaining program period (table 6).

### Food crisis response (Box 1: Authorities’ Response to the Food Crisis)
- Severity:
  - At least 3.5 million Burkinabè (over 15 percent of the population) suffer from acute food insecurity.
- Authorities’ Response and Support Plan for Vulnerable Populations (RSPVP) objectives:
  - Facilitate food access for the most vulnerable, prevent and cure malnutrition among children, pregnant and lactating women, and protect food insecure households.
- Cost and IMF emergency support:
  - Total cost of the RSPVP: US$111 million (CFAF 67 bn, 0.5 percent of GDP).
  - IMF emergency financial support (FSW of RCF): SDR 60.2 million (US$81 million, CFAF 49 billion).
- Implementation and safeguards:
  - FSW resources aided measures including (i) distribution of free food, (ii) cash transfers, (iii) sale of cereals at subsidized prices, (iv) improvement of water supply and distribution, (v) distribution and sale at subsidized prices of agricultural inputs (fertilizers, seeds), and (vi) measures to support livestock farming (e.g., vaccinations, feed).
  - Authorities committed to safeguards including semi-annual reports and an audit after one year on implementation of cash transfer programs and all emergency food expenditure (structural benchmark and MEFP ¶78). The first report is due after September 30, 2023.
  - As of June 30, total actual expenditure on the RSPVP amounted to US$34 million (CFAF 20 bn), equivalent to about 31 percent of the total cost of the RSPVP.
  - As of June 30, 2023, all budgeted resources have been spent on emergency measures to address immediate needs; about 15 percent of budgeted resources spent on measures with longer implementation timeframes.

### Program-related priorities and modalities (high level)
- Program duration and rationale:
  - Four-year program to allow policies and reforms to yield results and secure lasting adjustment.
- Financing priorities:
  - Given current outstanding credit and BoP needs, a key program priority is to catalyze additional concessional resources to complement IMF financing.
- Conditionality and safeguards:
  - The program includes structural benchmarks and reporting requirements related to emergency food expenditure and cash transfer programs.

*Source: EXECUTIVE SUMMARY (IMF staff report).*

### 10. The Debt Sustainability Analysis (DSA) finds that Burkina Faso remains at moderate

### 10. The Debt Sustainability Analysis (DSA) finds that Burkina Faso remains at moderate

### DSA findings and debt risk
- The DSA finds that Burkina Faso remains at moderate risk of external debt distress and overall public debt distress, with debt sustainable over the medium term (DSA Supplement).
- All external debt indicators remain below the relevant indicative thresholds under the baseline scenario and the most extreme stress tests.
- Mechanical results point to a low risk of external debt distress, but judgment was applied given high uncertainties (external and domestic macro outlook and donor support); the risk of external debt distress is therefore assessed to be moderate.
- Overall public debt remains sustainable over the medium term and at moderate risk of debt distress, breaching the relevant benchmark only under the most extreme scenario of a commodity price shock.
- Public debt has increased as a share of GDP and is very close to the threshold for a high debt distress risk rating.
- Burkina Faso has a medium debt-carrying capacity, with some, but limited space to absorb shocks on public and external debt.

### Macroeconomic outlook and risks
- Outlook is highly uncertain, with risks tilted to the downside (Annex II).
- Downside risks described:
  - More security disruptions → political uncertainty, food insecurity, internal displacement, and lower growth.
  - Difficulties in revenue mobilization and increased spending pressures → deterioration of fiscal balance.
  - High short-term borrowing costs in the WAEMU regional financing market → rapid increases in debt service costs and constrained fiscal space.
  - External risks: global slowdown, an intensification of Russia’s war in Ukraine, deeper geo-economic fragmentation, extreme climate events, increased regional instability → could worsen fiscal outcomes, reduce FDI inflows and exacerbate food insecurity.

### New ECF arrangement: objectives and policy anchor
- Program: 48-month ECF arrangement (2023-27) to address protracted BoP problems, achieve macroeconomic stabilization and reduce poverty after exogenous shocks (COVID-19 pandemic, adverse weather, deteriorating domestic security, food insecurity).
- Program pillars:
  - (i) creating fiscal space for priority spending,
  - (ii) strengthening resilience to shocks while reducing poverty,
  - (iii) strengthening fiscal discipline, transparency, and governance.
- Program anchor: gradual decline of the fiscal deficit, maintaining debt sustainability, and remaining at moderate risk of debt distress while supporting growth.
- Authorities committed to reducing the fiscal deficit by 7.6 percent of GDP during 2023-2027, to 3 percent of GDP, through revenue and expenditure measures and more favorable financing conditions.
- Fiscal adjustments broadly evenly spaced; frontloaded expenditure adjustments especially on energy subsidies; revenue measures yield dividends over time.
- Program expected to catalyze concessional financing (World Bank, African Development Bank, European Union).
- Domestic debt: about 58 percent of total public debt in 2023 and accounting for 85 percent of interest payments in 2022; domestic debt is expensive and has relatively short maturities.

### Program vs. No-program scenarios (Box 2)
- Without a program:
  - Fiscal adjustment would be more moderate and rely more on public investment reductions.
  - Weaker efforts to mobilize domestic revenues and reduce current public expenditures (wage bill and energy subsidies).
  - Lower real GDP growth from weaker public investment growth.
  - Miss the fiscal anchor of 3 percent of GDP by 2027 by a large margin.
  - Financing larger deficits would rely on non-concessional deficit financing and higher interest rates on the regional bond market.
  - Average interest rates on new financing would be substantially higher and remain so in the medium term → less favorable debt dynamics and a high risk of debt distress.

### A. Creating fiscal space and reducing debt vulnerabilities — policy measures
- Domestic revenue mobilization:
  - Under the program (relative to no-program), staff projects a 1.5 percent of GDP increase in tax revenues relative to the baseline, including tax and customs administration gains.
  - Key measures:
    - Broadening the tax base (reducing VAT and vehicle exemptions; incorporating firms previously outside the tax code with the new non-determined regime).
    - Increasing tax rates on beverages and tobacco products.
    - Closing tax loopholes in the mining sector.
    - Recovering tax and customs duties arrears by strengthening tax and customs administration capacity.
    - Digitalizing land and public procurement registration and certified digital invoicing.
    - Strengthening mining revenue collection.
  - A revised customs and mining code and a new strategic plan to strengthen tax and customs administration will be adopted by December 2024 (structural benchmark).
  - Completion of a tax expenditure assessment report for 2018-2021, including economic impact analysis (indicative structural benchmark).
  - Lift budget ceiling on VAT credit reimbursement to reduce accumulation of arrears (structural benchmark).
- Wage bill:
  - Authorities committed to bring wage bill-to-tax revenue ratio to 45 percent by 2027 (structural benchmark), from currently over 50 percent.
  - Intermediate target achieved through control of wage bill growth (about 6 percent nominal average growth annually) and increased domestic revenue collection.
  - Key measures:
    - Annual reconciliations between personnel and civil service payroll registries covering about 50 percent of workforce each year to eliminate “ghost workers”.
    - Enhanced and transparent wage bill statistics; centralization of collective bargaining; improved staffing needs assessments; limiting new recruitment to essential service needs.
    - No new wage agreement (except in security) that would increase the wage bill as a share of tax revenues (continuous structural benchmark).
    - Authorities to consult with IMF staff if quarterly deviations between actual and projected wage bill growth occur.
- Energy sector:
  - Move toward fuller cost recovery citing global oil prices down from 2021 peak.
  - Measures:
    - Review fuel-price-setting mechanism to move toward full cost recovery pricing (MEFP ¶73).
    - Implement comprehensive electricity tariff reform in cooperation with World Bank and others to limit subsidies and reduce regressivity (MEFP ¶73).
    - Adopt performance-contracts with state-owned firms in energy sector (SONABHY and SONABEL) to strengthen operational and financial performance (structural benchmark for end-December 2023, MEFP ¶73).
- Expected fiscal impact:
  - These measures create fiscal space for priority spending including security, development, and social expenditures.
  - Security-related expenditures expected to reach about 1/3 of the wage bill, and less than half of public investment, in both 2023 and 2024, declining thereafter.
  - Between 2022 and 2027, efforts to mobilize domestic revenues and reduce primary current expenditure are projected to reduce the overall fiscal deficit by more than 7 percent of GDP during the program period.

### Tax policy and administration gains under the program (Text Table 3) — (Percent of GDP)
- Vehicle tax (reducing exemptions): 0.01, 0.02, 0.02, 0.02, 0.02 (2023–2027)
- Obligation to withhold VAT at source: 0.09, 0.15, 0.16, 0.16, 0.16
- "Non-determined" tax regime (reduction of VAT exemptions): 0.07, 0.10, 0.10, 0.12, 0.14
- Increase in the tax rate on beverages: 0.01, 0.05, 0.10, 0.15, 0.19
- Increase in the tax rate on tobacco & cigarettes: 0.05, 0.10, 0.15, 0.15, 0.15
- Developing e-CME Module: 0.00, 0.00, 0.00, 0.01, 0.01
- Digitizing land/properties registration: 0.00, 0.06, 0.12, 0.20, 0.30
- Certified digital invoicing: 0.00, 0.00, 0.08, 0.10, 0.10
- Tax arrears recovery: 0.46, 0.50, 0.45, 0.37, 0.40
- TOTAL: 0.69, 0.98, 1.18, 1.26, 1.46 (2023–2027)

### B. Strengthening resilience to shocks while reducing poverty and inequality
- Security:
  - Improve efficiency and transparency of security spending, including wage reporting and procurement in defense and security.
  - Appropriate budgetary transparency for the Patriotic Support Fund (PSF) in 2024 budget, including a special account (CAST) run on a cash basis with expenditures capped by cash inflows (MEFP ¶83 and structural benchmark).
- Climate change:
  - Attach an annex to the 2025 budget detailing efforts to sustain infrastructure investment spending to adapt to climate change (MEFP ¶77, indicative structural benchmark).
- Social protection:
  - Expand cash transfer programs to rural areas and security-affected regions.
  - Create conditions for the Single National Registry of Beneficiaries and consolidate existing social safety net (SSN) programs into a single nationwide SSN.
  - Cost of establishing a nationwide SSN: about US$581 million (2.9 percent of GDP) during the program period (indicative structural benchmark).
  - Donors committed to complement authorities’ efforts to extend social protection.

### C. Fiscal discipline, transparency, governance, and AML/CFT
- Commitments and measures:
  - Publish on the Ministry of Finance website annual budget execution reports including information on use of funds disbursed under the FSW (continuous structural benchmark).
  - Submit a revised 2023 budget aligned with program objectives (prior action) and a draft 2024 budget (structural benchmark) detailing security-related spending included in CAST; include appendix detailing PSF funding arrangements (MEFP ¶83).
  - Formally instruct the High Anti-Corruption Authority (ASCE-LC) to launch an audit of all government arrears and floating debts (prior action).
  - Prepare semi-annual reports and publish audits on cash transfer program and all food emergency spending by end-June 2024 (structural benchmark); audits performed by ASCE-LC.
  - Conduct with IMF support and publish a Governance Diagnostic Assessment by December 2025 (indicative structural benchmark) to identify macro-critical governance weaknesses and prioritized policy recommendations.
  - Publish information on beneficial owners of entities awarded public procurement contracts related to food insecurity, water supply, or subsidized agricultural inputs (structural benchmark).
  - Prepare a roadmap to improve public investment efficiency (full implementation of PIMA recommendations, indicative structural benchmark).
  - Put in place a beneficial ownership registry accessible without restrictions for relevant government authorities and financial institutions with CDD obligations (indicative structural benchmark) to support exit from FATF grey list.

- Domestic arrears (preliminary data as of June 2023):
  - Reported domestic arrears ≈ 2.8 percent of GDP, composition:
    - Unpaid VAT refunds (more than 90 days): CFAF 86 billion (about 0.7 percent of GDP).
    - Unpaid obligations to government suppliers: CFAF 34 billion (about 0.3 percent of GDP).
    - Arrears vis-à-vis SONABHY (staff estimates): about CFAF 220 billion (1.8 percent of GDP).
  - Program allows securitization of VAT refunds in arrears as a one-time adjustor by end-December 2023 to reach level consistent with the Indicative Target (IT).

### Program modalities, access and financing
- Staff propose a 48-month arrangement with access of 190 percent of quota.
- Program used for budget support to help authorities close financing needs in context of lack of external financing.
- Program success depends on reform efforts: reducing wage bill to below 45 percent of revenues and the budget deficit to 3 percent of GDP, both by 2027; increasing overall revenue-to-GDP ratio to at least 20 percent by 2027.
- A four-year duration to anchor commitments and preserve debt sustainability.
- Financing gap estimates:
  - IMF disbursement under the FSW: about CFAF 50 billion.
  - Financing gap after accounting for FSW: about CFAF 407 billion (see Table 6 referenced).

### Key macroeconomic indicators (Text Table 1 excerpts; percent of GDP unless otherwise specified)
- Real GDP (percent change): 2020 Act. 1.9; 2021 Prel. 6.9; 2022 Prel. 1.5; 2023 Proj. 4.4; 2024 Proj. 6.4; 2025 Proj. 6.0; 2026 Proj. 5.6; 2027 Proj. 5.3
- CPI inflation (percent change): 2020 1.9; 2021 3.9; 2022 14.1; 2023 1.4; 2024 3.0; 2025 2.0; 2026 2.0; 2027 2.0
- Overall balance (commitment basis, incl grants): 2020 -5.1; 2021 -7.5; 2022 -10.6; 2023 -6.6; 2024 -5.6; 2025 -4.7; 2026 -3.8; 2027 -3.0
- Tax Revenue: 2020 13.3; 2021 15.4; 2022 17.4; 2023 16.7; 2024 16.9; 2025 17.3; 2026 17.8; 2027 18.3
- Current Expenditures: 2020 16.7; 2021 18.6; 2022 21.6; 2023 17.4; 2024 17.3; 2025 17.2; 2026 16.7; 2027 16.4
- Public Debt: 2020 43.3; 2021 55.4; 2022 58.3; 2023 60.9; 2024 61.0; 2025 61.2; 2026 60.7; 2027 59.7; (another line shows 37.8 and separate lines "15.1 -0.3 Average 2017-19 16.3 -4.8 6.2" as presented in the table)

- Text Table 2 (Program vs No-program selected indicators, percent of GDP):
  - Real GDP growth (Program): 2023 4.4; 2024 6.4; 2025 6.0; 2026 5.6; 2027 5.3
  - Real GDP growth (No program): 2023 4.4; 2024 6.1; 2025 5.3; 2026 4.9; 2027 4.3
  - Tax revenues (Program): 2023 16.7; 2024 16.9; 2025 17.3; 2026 17.8; 2027 18.3
  - Tax revenues (No program): 2023 16.0; 2024 15.9; 2025 16.2; 2026 16.5; 2027 16.8
  - Wage bill (Program): 2023 8.8; 2024 8.7; 2025 8.6; 2026 8.4; 2027 8.1
  - Wage bill (No program): 2023 8.8; 2024 9.1; 2025 8.9; 2026 8.9; 2027 8.9
  - Energy subsidies (Program): 2023 0.7; 2024 0.1; 2025 0.1; 2026 0.1; 2027 0.1
  - Energy subsidies (No program): 2023 1.4; 2024 1.0; 2025 1.0; 2026 1.0; 2027 0.9
  - Investment (Program): 2023 10.1; 2024 9.2; 2025 8.9; 2026 8.9; 2027 8.8
  - Investment (No program): 2023 9.8; 2024 7.7; 2025 7.2; 2026 6.8; 2027 6.6
  - Overall balance (Program): 2023 -6.6; 2024 -5.6; 2025 -4.7; 2026 -3.8; 2027 -3.0
  - Overall balance (No program): 2023 -7.9; 2024 -7.5; 2025 -7.1; 2026 -6.7; 2027 -6.3
  - Total debt (Program): 2023 60.9; 2024 61.0; 2025 61.2; 2026 60.7; 2027 59.7
  - Total debt (No program): 2023 62.0; 2024 64.0; 2025 66.5; 2026 68.6; 2027 70.7

*Source: Burkinabè authorities and IMF staff estimates and projections.*

### Box 1 summarizes the main measures adopted by the authorities to address the food insecurity crisis.

### Box 1 — Main measures adopted by the authorities to address the food insecurity crisis

### Measures to address the food insecurity crisis
- Sale of food and agricultural inputs at subsidized prices.
- Distribution of free food to combat acute malnutrition.
- Conditional and unconditional cash transfers to affected populations.
- Setting up a nation-wide targeted cash-transfer program for the most vulnerable (part of social safety net strengthening).

### Program design, financing, and burden sharing
- Fund would cover the remaining BoP need of CFAF 183 billion (190 percent of quota) under the cumulative disbursement of the ECF arrangement.
- The proposed program duration is four year.
- Disbursements under the ECF are expected to cover almost half of the projected budget support during the program period; staff assess the program has potential to catalyze additional external financing from the World Bank, the African Development Bank, and the European Union.
- The CFAF equivalent of the proposed access will be made available by BCEAO to the government’s budget (on terms consistent with the ECF program) to help close financing gaps.
- Program entails nine disbursements, designed to ensure positive net disbursements and to balance incentives, donor assurance, and safeguarding IMF resources.
- The program is fully financed for the first 12 months; IMF’s financing contribution under the ECF is brought below 50 percent during the first program year.
- Donors indicated they would welcome an IMF-supported program as a positive signal and potential catalyst for scaling up support.

### Key financing and disbursement figures (as reported)
- Total outstanding IMF credit projected to peak at 309.5 percent of quota by end-2027, equivalent to 2 percent of GDP, 7 percent of exports and 9.9 percent of revenues.
- Total obligations to the IMF peak at about 0.25 percent of GDP in 2029, 0.9 percent of exports, and 1.2 percent of revenues in 2029.
- Repayments to the IMF in percent of government revenues are projected to peak at 43.6 percent of quota, equivalent to 0.2 percent of GDP, 0.9 percent of exports and 1.2 percent of revenues.
- Share of preferred creditor status debt (including multilateral debt) in total external debt is almost 90 percent at program initiation and projected to remain high over the medium term.
- Total multilateral debt owed to preferred creditors as a share of GDP remains stable, declining slightly from 23 to 22 percent of GDP under the program.
- Burkina Faso has pre-HIPC legacy external arrears: USD 54.7 million due to Côte d’Ivoire and USD 6.9 million to Libya, representing 0.3 and 0.04 percent of GDP in 2022, respectively — equivalent to less than 0.1 percent of GDP in NPV terms.

### Debt strategy, limits, and risk assessment
- Debt sustainability anchored by gradual deficit reduction and debt limits; program targets fiscal deficit reduction to reach the regional deficit target of 3 percent of GDP by 2027.
- Program includes ceilings on:
  - Net domestic financing in the regional financial market.
  - Present value of external debt (to incentivize concessional financing).
  - Contingent liabilities, including government guarantees to banks, suppliers and contractors.
  - Value of public-private partnerships (PPPs).
- Current assessment: moderate risk of overall debt distress; external debt distress risk is moderate.
- Elevated levels of short-term domestic-currency debt pose rollover risks.
- If concessional and non-concessional borrowing become unavailable, further reliance on WAEMU gross international reserves may be necessary to service Fund debt.
- Exposure risks to the IMF are mitigated by authorities’ track record of servicing IMF obligations and envisaged policy measures; concessional support from donors and partners will be key.

### Program monitoring, safeguards, and capacity development
- Program performance monitored through semi-annual quantitative performance criteria (QPCs), indicative targets (ITs), structural benchmarks (SBs); two prior actions include submitting the revised 2023 budget and instructing the Anti-Corruption State Agency (ASCE-LC) to launch an audit of all government arrears and floating debts.
- Structural benchmarks are proposed parsimoniously owing to fragility and capacity constraints, in line with the Fund’s Strategy for Fragile and Conflict Affected States (FCS).
- Authorities committed to provide detailed data on:
  - Wage bill (number of employees and average wages, by ministries/government agencies).
  - Energy subsidies.
  - Pump price adjustment mechanism.
  - Planned and realized syndicated and auctioned bond issuances.
  - Liabilities, including contingent liabilities.
- Safeguards: 2023 update assessment of the BCEAO found a robust control environment with strong governance arrangements; all recommendations from the 2018 safeguards assessment have been implemented; financial reporting and external audit arrangements remain in line with international practices.
- Capacity development priorities: tax policy and administration reforms to enhance revenue mobilization; public financial management (PFM) to promote efficiency; upgrading macroeconomic statistics; a revised CD strategy will be discussed with authorities including in the context of a governance diagnostic exercise.

### Risks and outlook
- Main risks: political uncertainty (domestic and regional), access to financing, deterioration in security and humanitarian situations, protracted war in Ukraine with further pressures on food, fertilizers and energy prices, tighter financing on the regional bond market, and protracted social and political instability that could reduce the program’s catalytic effect or jeopardize the program.
- Prospects improved in 2023 owing to recovery in growth, declining inflation, commitment to deficit reduction, and disbursement of IMF emergency funds under the FSW to help address the food crisis; outlook remains uncertain with sizeable downside risks.
- Without a Fund-supported program and its catalytic role, macroeconomic vulnerabilities would deepen and debt sustainability would deteriorate.

*Source: IMF staff appraisal and projections as presented in the Box summarizing measures to address the food insecurity crisis.*

### 36. In view of Burkina Faso’s protracted BoP problems and the authorities’ strong

### 36. In view of Burkina Faso’s protracted BoP problems and the authorities’ strong program of economic policies and reforms, staff supports the authorities’ request for an ECF arrangement in the amount equivalent to SDR 228.76 million (190 percent of quota).

### Recent economic developments and near-term outlook
- Growth:
  - GDP at constant prices: 2022 Act. 6.9; 2023 Prel. 1.5; 2024 Proj. 4.4; 2025 Proj. 4.4; 2026 Proj. 6.0; 2027 Proj. 5.6; 2028 Proj. 5.3 (annual percent change).
  - Growth fell in 2022 amid continued security and external shocks; projected to rebound in 2023.
  - Since 2020, reduced growth in Industry and mining (contribution to growth noted in figures).
- Inflation:
  - GDP deflator: 2022 Act. -0.8; 2023 Prel. 6.1; 2024 Proj. 1.9; 2025 Proj. 3.0; 2026–2027 Proj. 2.0.
  - Consumer prices (annual average): 2022 Act. 3.9; 2023 Prel. 14.1; 2024 Proj. 1.4; 2025–2027 Proj. 3.0, 2.0, 2.0 respectively.
  - Food and headline inflation have continued to decline from their peaks in 2022 (figure commentary).
- Credit and money:
  - Private sector credit/GDP (2022): 29.4 percent.
  - Private sector credit (levels): 2021 Est. 3,220; 2022 Est. 3,676; 2023 Proj. 3,807; 2024 Proj. 3,921; 2025 Proj. 4,168; 2026 Proj. 4,394; 2027 Proj. 4,637 (CFAF billions, Table 4).
  - Broad money (M3) growth: 2021 Est. 19.1 (annual percentage change).
  - Private credit growth has been declining recently reflecting the slowdown in growth (figure commentary).

### External sector and commodities
- Exports and imports (CFAF billions, Table 2):
  - Exports of goods: 2022 Act. 3,110; 2023 Proj. 3,131; 2024 Proj. 3,367; 2025 Proj. 3,541; 2026 Proj. 3,695; 2027 Proj. 3,920.
  - Imports of goods: 2022 Act. -3,107; 2023 Proj. -3,020; 2024 Proj. -3,218; 2025 Proj. -3,408; 2026 Proj. -3,607; 2027 Proj. -3,828.
  - Trade balance (goods) (percent of GDP, memorandum): 2019 2.3; 2020 7.4; 2021 6.4; 2022 0.0; 2023 0.9; 2024 1.1; 2025 0.9; 2026 0.5; 2027 0.5.
- Commodities:
  - Gold remains the main driver of exports. Gold values (tonnes): 2019 Act. 1,686; 2020 Act. 2,279; 2021 Act. 2,401; 2022 Act. 2,230; 2023 Proj. 2,390; 2024 Proj. 2,600; 2025 Proj. 2,759; 2026 Proj. 2,887; 2027 Proj. 3,078.
  - Cotton volumes (thousand tonnes): 2019 185; 2020 168; 2021 245; 2022 383; 2023 Proj. 278; 2024–2027 projections provided in table entries.
  - Nominal gold exports estimated to have decreased in 2022; gold prices rebounding in 2023 while cotton prices continued their decline (figure commentary).
- Current account:
  - Current account (percent of GDP): 2022 Act. 0.4; 2023 Prel. -6.2; 2024 Proj. -4.7; 2025 Proj. -4.2; 2026 Proj. -4.0; 2027 Proj. -3.9; 2028 Proj. -3.7 (Table 1 and Table 2).
  - The current account deficit is expected to have widened substantially in 2022 (figure commentary).
- Exchange rates:
  - REER index and USD/CFAF have begun to depreciate; USD/CFAF rebounded (figure commentary).

### Fiscal developments and projections
- Revenues and expenditure (percent of GDP, Table 3b):
  - Current revenue: 2022 Prel. 17.8; 2023 Proj. 19.4; 2024 Proj. 19.0; 2025 Proj. 19.1; 2026 Proj. 19.6; 2027 Proj. 20.0; 2028 Proj. 20.5.
  - Tax revenue: 2022 Prel. 15.4; 2023 Proj. 17.4; 2024 Proj. 16.7; 2025 Proj. 16.9; 2026 Proj. 17.3; 2027 Proj. 17.8; 2028 Proj. 18.3.
  - Total expenditure and net lending: 2022 Prel. 27.8; 2023 Proj. 32.2; 2024 Proj. 26.5; 2025 Proj. 26.0; 2026 Proj. 26.0; 2027 Proj. 25.6; 2028 Proj. 25.2.
  - Current expenditure: 2022 Prel. 18.6; 2023 Proj. 21.6; 2024 Proj. 17.4; 2025 Proj. 17.3; 2026 Proj. 17.2; 2027 Proj. 16.7; 2028 Proj. 16.4.
  - Wage bill (percent of GDP): 2022 Prel. 8.7; 2023 Proj. 8.6; 2024 Proj. 8.8; 2025 Proj. 8.7; 2026 Proj. 8.6; 2027 Proj. 8.4; 2028 Proj. 8.1.
- Deficit and debt:
  - Overall fiscal balance, incl. grants (commitments): 2022 Act. -7.5; 2023 Prel. -10.6; 2024 Proj. -6.6; 2025 Proj. -5.6; 2026 Proj. -4.7; 2027 Proj. -3.8; 2028 Proj. -3.0 (percent of GDP).
  - In 2022, the fiscal deficit increased to over 10 percent of GDP (figure commentary).
  - Total public debt (percent of GDP): 2021 55.4; 2022 58.3; 2023 Proj. 60.9; 2024 Proj. 61.0; 2025 Proj. 61.2; 2026 Proj. 60.7; 2027 Proj. 59.7.
  - Domestic debt near 30 percent of GDP in 2022 (figure commentary / table detail).
- Revenue composition and mining:
  - Mining revenue (CFAF billions, Table 3a memo): 2022 Act. 267.9; 2023 Act. 306.4; 2024 Proj. 371.2; 2025 Proj. 471.0; 2026 Proj. 504.8; 2027 Proj. 549.1; 2028 Proj. 582.7; 2029 Proj. 609.7; 2030 Proj. 650.7 (series in table).
  - Of total revenue, Gold Mining CIT and royalties are highlighted: Gold Mining CIT (percent of GDP): 2022 Prel. 1.2; 2023 Proj. 0.9; 2024–2028 Proj. ~1.0; Royalties from gold (percent of GDP): 2022 Prel. 0.7; 2023 Proj. 0.8; 2024–2028 Proj. ~0.8–0.7.

### External financing, financing needs, and capacity to repay
- ECF arrangement request supported: SDR 228.76 million (190.0 percent of quota).
- Schedule of proposed disbursements under four‑year ECF 2023–27 (Table 7):
  - SDR 24.08 million (20.0 percent of quota) — 21-Sep-23: Executive Board Approval.
  - SDR 24.08 million (20.0 percent) — 31-Mar-24: Observance of continuous and end-December 2023 performance criteria, completion of first review.
  - SDR 24.08 million (20.0 percent) — 30-Sep-24: Observance of continuous and end-June 2024 performance criteria, completion of second review.
  - SDR 24.08 million (20.0 percent) — 31-Mar-25: Observance of continuous and end-December 2024 performance criteria, completion of third review.
  - SDR 24.08 million (20.0 percent) — 30-Sep-25: Observance of continuous and end-June 2025 performance criteria, completion of fourth review.
  - SDR 24.08 million (20.0 percent) — 31-Mar-26: Observance of continuous and end-December 2025 performance criteria, completion of fifth review.
  - SDR 24.08 million (20.0 percent) — 30-Sep-26: Observance of continuous and end-June 2026 performance criteria, completion of sixth review.
  - SDR 30.1 million (25.0 percent) — 31-Mar-27: Observance of continuous and end-December 2026 performance criteria, completion of seventh review.
  - SDR 30.1 million (25.0 percent) — 31-Aug-27: Observance of continuous and end-June 2027 performance criteria, completion of eighth review.
  - Total: SDR 228.76 million (190.0 percent of quota).
- Balance of payments and financing requirements (Table 6):
  - Financing Need (CFAF billions): 2022 Proj. -1,750.3; 2023 Proj. -850.4; 2024 Proj. -736.7; 2025 Proj. -912.6; 2026 Proj. -976.8; 2027 Proj. -928.3.
  - Financing (CFAF billions): 2022 1,693.5; 2023 781.9; 2024 642.1; 2025 818.1; 2026 882.4; 2027 823.8.
  - Financing Gap (excluding past IMF financing): 2022 56.7; 2023 18.5; 2024 94.6; 2025 94.4; 2026 94.3; 2027 104.5.
  - Residual Financing Gap (after IMF and donor financing): 0.0 for 2022–2027 (table entry).
- IMF capacity-to-repay indicators (Table 8 highlights):
  - Outstanding IMF credit (in millions of SDRs): 2023 274.3; 2024 258.0; 2025 227.3; 2026 185.1; 2027 143.9; 2028 109.2; 2029 57.8; 2030 30.1; 2031 18.1; 2032 6.0; 2033–2035 0.0.
  - Total Fund obligations (principal, millions of SDRs): 2023 14.2; 2024 16.3; 2025 30.7; 2026 42.2; 2027 41.2; 2028 41.0; 2029 45.2; 2030 27.7; 2031 12.0; 2032 12.0; 2033 6.0; 2034–2035 0.0.
  - Outstanding IMF credit as percent of quota: 2023 227.8; 2024 214.3; 2025 188.8; 2026 153.7; 2027 119.5; 2028 90.7; 2029 48.0; 2030 25.0; 2031 15.0; 2032 5.0; 2033–2035 0.0.
  - Outstanding IMF credit as percent of government revenues: 2023 9.3; 2024 7.8; 2025 6.2; 2026 4.6; 2027 3.3; 2028 2.3; 2029 1.1; 2030 0.5; 2031 0.3; 2032 0.1; 2033–2035 0.0.
  - Total obligations as percent of government revenues: 2023 0.5; 2024 0.5; 2025 0.8; 2026 1.1; 2027 0.9; 2028 0.9; 2029 0.9; 2030 0.5; 2031 0.2; 2032 0.2; 2033 0.1; 2034–2035 0.0.

### Financial sector and soundness indicators
- Banking sector highlights (Table 5):
  - Reg. capital to risk-weighted assets: Dec-22 14.0 (percent).
  - Gross NPLs / Total loans: Dec-22 5.6 (percent); trend: Dec-14 8.6, Dec-15 8.9, Dec-16 8.9, Dec-17 8.8, Dec-18 7.4, Dec-19 7.6, Dec-20 7.8, Dec-21 7.4, Dec-22 5.6.
  - Provisions / NPLs: Dec-22 80.2 (percent).
  - Loans to deposits: Dec-22 81.9 (percent).
  - Liquid assets / total assets: Dec-22 21.2 (percent).

### Program conditionality: performance criteria, targets, and structural benchmarks
- Quantitative performance criteria and indicative targets for 2023–24 (Table 9, CFAF billions unless indicated):
  - Ceiling on net domestic financing of the government (cumulative from beginning of year): 2023 Dec. Prog. 739.9; 2024 Mar. Prog. 143.1; 2024 Jun. Prog. 286.3; 2024 Sept. Prog. 429.4.
  - Ceiling on the amount of external debt contracted or guaranteed by the government (PV): 410.0 (constant across periods shown).
  - Ceiling on the primary fiscal deficit including grants (cumulative): 2023 Dec. Prog. 560.0; 2024 Mar. Prog. 104.7; 2024 Jun. Prog. 209.5; 2024 Sept. Prog. 314.2.
  - Indicative floors and ceilings include: Floor on government revenue (2023 Dec. Prog. 2,374.3 CFAF billions), Floor on poverty-reducing current social expenditures (2023 Dec. Prog. 296.2 CFAF billions), Ceiling on stock of certified and unpaid VAT refunds older than 30 days (40.0 CFAF billions), Ceiling on primary current expenditure (2023 Dec. Prog. 1,906.5 CFAF billions), Ceiling on value of PPPs contracted (200.0 CFAF billions).
- Prior actions and structural benchmarks (selected, Table 10):
  - Prior actions (pre-arrangement):
    - Submit to Parliament the revised 2023 budget in line with program objectives (Reduce fiscal risks). — Prior action.
    - Formally instruct ASCE-LC to launch an audit of all the government’s arrears and floating debts (Improve fiscal transparency and governance). — Prior action.
  - Continuous and time-bound structural benchmarks include:
    - Do not grant any new wage agreement (except security sector) that could push the wage bill beyond 45% of tax revenues by 2027 (Wage bill control).
    - Publish beneficial owners of entities awarded public procurement contracts addressing food insecurity on the Ministry website quarterly (Improve fiscal transparency).
    - Publish annual/quarterly budget execution reports including FSW fund usage on the Ministry website (Improve fiscal transparency).
    - Adopt performance contracts with SONABHY and SONABEL and a tripartite contract (Improve energy sector efficiency). — End-December 2023.
    - Contain wage bill growth so wage bill to tax revenue ratio is below 52.3 percent (End-December 2023) and subsequent tighter targets Year‑by‑Year (e.g., below 51.8 percent End-December 2024; below 49.5 percent End-December 2025; below 47.1 percent End-December 2026).
    - Conduct review of energy subsidies and assessment of price-setting mechanism (End-June 2024).
    - Prepare and implement a strategy for clearing government arrears; raise ceiling on VAT credit reimbursements to the CAST account consistent to avoid accumulation of arrears (End-June 2024).
    - Adopt a new strategic plan for revenue mobilization 2024–27 (End-December 2024).
    - Publish an audit of all government arrears and floating spending on the Ministry website (End-December 2024).
    - Put in place a beneficial ownership registry accessible to government authorities and financial institutions (End-June 2025).
    - Ensure PFS cash transfers cover at least 180,000 poorest households in addition to donor coverage (End-December 2025).
    - Conduct a complete census of the civil service workforce and publish results (End-December 2025).
    - Publish governance action plan to be implemented over the remaining program period (End-June 2026).
    - Strengthen capacity of revenue authorities to collect mining revenues (End-December 2026).
  - Multiple structural benchmarks require alternating annual reconciliations between personnel registers and payroll registers covering around 50% of civil service workforce (excluding security sector) — repeated annually (End-December 2023, End-December 2024, End-December 2025, End-December 2026).
  - Many benchmarks aim to improve fiscal transparency, governance, wage bill control, energy sector efficiency, social protection, and public investment management.

### Public investment, borrowing program, and uses of new debt
- Consolidated central government investment (percent of GDP, Table 3b):
  - Investment expenditure: 2022 Prel. 9.1; 2023 Proj. 10.8; 2024 Proj. 9.1; 2025 Proj. 8.8; 2026 Proj. 8.8; 2027 Proj. 8.9.
  - Domestically financed investment (percent of GDP): 2022 4.8; 2023 7.4; 2024 6.6; 2025 5.5; 2026 5.1; 2027 5.2; 2028 5.5.
- Projected external borrowing program (Table 11, USD millions):
  - By sources of debt financing (sample shown): USD million 629.9 (100 percent) for the presented year; Concessional debt 575.8 (91 percent) and Non-concessional debt 54.1 (9 percent) breakdowns provided.
  - Uses of debt financing: Infrastructure USD 156.4; Social Spending USD 473.6; Budget Financing USD 0.0 (percent distributions shown in table).

*Sources: Burkinabè authorities; and IMF staff estimates and projections.*

### Annex I. Country Engagement Strategy

### Annex I. Country Engagement Strategy

### A. Background and Context
- Burkina Faso faces multiple development challenges related to the ongoing security crisis, climate change, and poverty, exacerbated by disruption of international supply-chains caused by the COVID-19 pandemic and Russia’s invasion of Ukraine.
- Poverty and human development indicators:
  - In 2021, 26.8 percent of the population was living on less than US$2.15 a day (2017 PPP).
  - Burkina Faso ranked 184th out of 191 countries in the 2021 Human Development Index (HDI).
  - Burkina Faso ranked 138th out of 163 countries in terms of overall performance on achieving the SDGs in 2022.
- Transitional government policy priorities:
  - (i) the restoration of security;
  - (ii) improvement of the population’s quality of life; and
  - (iii) promotion of good governance, including macroeconomic stability and fighting corruption.
- Financing context:
  - Financing needs are elevated, including spending related to the security sector, humanitarian, and development needs.
  - The authorities need to build fiscal space and secure increased external budget grants and concessional borrowing.

### B. Drivers of Fragility
- Structural drivers of fragility identified as complex and systemic, from external and internal sources, including:
  - Climate change:
    - Historically, extreme weather conditions such as flood and drought have contributed to fragility, with unemployment, poverty, and food insecurity remaining high, and facilitating recruitment for jihadist armed groups.
  - Security constraints:
    - Burkina Faso is at the epicenter of cross-border incursions by armed jihadist groups, causing thousands of casualties, internal displacement of over 2 million individuals, and the loss of state presence in many conflict zones.
  - Weapons proliferation and illicit trade:
    - Porous borders facilitate illicit trans-Sahara trade and make weapons easily accessible.
    - Illicit trade, including artisanal gold mining, complements revenue sources for jihadist groups and other organized criminal networks.
  - Political instability and governance challenges:
    - Steps since 2015 to build institutions for tackling systemic corruption, including basic anti-money laundering laws, but effective enforcement remains a challenge given weak capacity.
  - Weakening human capital indicators (World Bank data):
    - Life expectancy at birth in 2021 remains at under 60 years.
    - Lower secondary-school attendance below 50 percent of the school-age population (2021).
    - Maternal mortality rate is high at 320 per 100,000 live births (2017).
  - Urban-rural gap of access to services and resources:
    - Deep urban-rural divide in access to electricity, sanitation, clean water, schooling, health, police presence, and the justice system.
  - Narrow economic base and lack of diversification:
    - Landlocked economy based on limited natural resources (including gold, cotton, livestock) and heavily dependent on external factors (e.g., rainfall, commodity prices).
    - Improvements in the business environment and infrastructure are key for private sector development and economic diversification.

### C. Past Fund Engagement
- 2018–2020 ECF arrangement objectives and outcomes:
  - Aimed to restore macroeconomic stability and promote sustainable and inclusive growth.
  - Key objectives included fostering fiscal discipline to achieve the WAEMU fiscal deficit target of 3 percent of GDP; creating fiscal space through revenue and spending measures (including the public sector wage bill); and improved public investment management.
  - Fiscal discipline improved: fiscal deficit declined from 7 percent of GDP in 2017 to just over 3 percent of GDP in 2019, despite a larger wage bill and the fiscal impact of the nascent security crisis.
  - The fiscal deficit subsequently widened again, reflecting fiscal support measures during the COVID-19 pandemic.
  - Long-standing operational inefficiencies in the energy sector remained.
- Continued policy dialogue and emergency support:
  - In 2020, Burkina Faso benefited from disbursement under the Rapid Credit Facility’s (RCF) exogenous shocks window of SDR 84.28 million (70 percent of quota) to respond to COVID-19, as well as from debt service relief under CCRT.
  - IMF engagement continued through staff visits and CD.
  - In March 2023 Burkina Faso received a disbursement of USD80.77 million (50 percent of Quota, SDR 60.2 million) under the RCF’s Food Shock Window to help address the food crisis.

### D. Engagement Strategy & Key Risks
- Proposed focus of a new ECF-supported program:
  - Strengthening resilience to security and climate shocks.
  - Reducing poverty and inequality.
  - Addressing food insecurity, including through enhanced social protection.
- Risk environment and implications:
  - Failure to address the security crisis may lead to further political instability, delay resumption of budget support from partners, increase dependence on the regional bond market, and delay achievement of WAEMU convergence criteria.
  - Risks related to adherence to the timeline for the elections, currently scheduled for July 2024, and possible changes in macroeconomic policy priorities under a new government.
  - Political instability in the broader region could affect Burkina Faso through security and donor sentiment channels.
- Operational principles given risks:
  - Program conditionalities should be parsimonious and realistic about what the authorities can achieve and the time required to implement reforms.
  - Leverage policy synergies: measures to address fragility (including food insecurity and access to infrastructure and government services) should be coordinated with measures addressing economic development challenges, political instability, and terrorism. Measures as part of the authorities’ food security plan, supported by the IMF’s FSW financing, are cited as a key example.
  - Reinforce outreach and communications to advance strategy objectives and build public support, especially for macroeconomic stability, fiscal sustainability, addressing the security crisis, and strengthening the social safety net.
  - Tailor capacity building to program objectives, ensure good sequencing, and draw on experience with past TA recommendations:
    - Current IMF technical assistance focuses on enhancing revenue mobilization, establishing the Treasury Single Account, promoting efficiency of government spending, improving management of natural resources, and upgrading macroeconomic statistics.
    - Key risks include limitations of absorption capacity.
  - Strengthen coordination and partnership with the World Bank, African Development Bank (AfDB), European Union, UN agencies and other partners to leverage mandates and expertise:
    - World Bank and AfDB are key partners for project financing for infrastructure development and resilience to poverty and environment.
    - The European Union has been an important provider of budget support; resumption of EU budget support would be a key element to an ECF-supported program.

*Source: Annex I. Country Engagement Strategy*

### 3.9 percent in 2021. Inflation has slowed since then, to -0.3 percent year on year in May 2023.

### 1bfaea2023002 - 3.9 percent in 2021. Inflation has slowed since then, to -0.3 percent year on year in May 2023.

### Macroeconomic performance and inflation
- Real GDP growth:
  - 2021: 3.9 percent.
  - 2022: 1.5 percent.
  - 2023 (projected): 4.4 percent.
- Sectoral growth projections for 2023:
  - Tertiary: +4.5 percent.
  - Secondary: +5.0 percent.
  - Primary: +2.4 percent.
- Inflation:
  - Slowed to -0.3 percent year on year in May 2023.

### External sector and trade
- Current account balance:
  - 2021: 0.4 percent of GDP.
  - 2022: -5.7 percent of GDP.
- Goods balance:
  - Surplus of CFAF 698.1 billion in 2021.
  - Surplus of CFAF 9.4 billion in 2022.
- Trade volumes:
  - Imports growth in 2022: +30.7 percent.
  - Exports growth in 2022: +2.0 percent.
- Main drivers of deterioration: rise in average international oil prices, U.S. dollar appreciation, and drop in gold production.

### Monetary developments
- Between end-December 2021 and end-December 2022:
  - Net foreign assets (NFA): -25.2 percent.
  - Domestic claims: +26.1 percent.
  - Monetary base reduction: CFAF 210.8 billion (-14.3 percent).
  - Deposit-taking institutions' non-monetary liabilities: -CFAF 223.0 billion (-43.1 percent).
  - Currency in circulation: +CFAF 13.7 billion (+1.4 percent).

### Public finances and fiscal operations
- Revenue mobilization:
  - Total mobilization of budget resources in 2022: 20.6 percent of GDP (up from 19.7 percent of GDP in 2021), an increase of 14.8 percent in nominal terms relative to 2021.
  - Tax revenue increase in 2022 vs 2021: +21.6 percent.
  - Components of tax revenue growth in 2022:
    - Taxes on international trade and transactions: +37.3 percent.
    - Income and corporate taxes: +26.3 percent.
    - Goods and services taxes: +15.6 percent.
- Expenditure:
  - Expenditure execution in 2022: 32.2 percent of GDP (vs 27.8 percent of GDP in 2021).
  - Drivers of spending increases:
    - Investments executed from own resources: +68.0 percent.
    - Employee compensation: +6.3 percent.
    - Interest on the debt: +19.1 percent.
    - Current transfers: +56.1 percent.
  - Increased interest attributable to:
    - Domestic debt expense: +19.0 percent.
    - External debt expense: +19.5 percent.
- Financing requirement:
  - 2021: 7.5 percent of GDP.
  - 2022: 10.6 percent of GDP.
  - Financed primarily by net domestic financing equivalent to 6.1 percent of GDP in 2022.

### Wage bill control and public sector reforms
- Measures to control wage bill growth in 2023:
  - Control of attendance and compensation components for employees in SIGASPE; partial results identify potentially improper payments of CFAF 8.5 billion to be recovered.
  - Functional review of four ministries representing roughly 70 percent of the civil service (Civil Service, Education, Health, Justice).
  - Institution of human resources management tools, including job descriptions.

### Fuel pricing and subsidies
- Fuel price adjustment mechanism: not fully implemented as of end-2022.
- Losses on fuel sales:
  - At December 31, 2022: CFAF 457.6 billion total losses; CFAF 275.5 billion covered in 2022.
- Petroleum prices and exchange rate (first quarter 2023):
  - Price per barrel of Brent: US$810 (average during the first quarter).
  - Exchange rate: CFAF 614.1 (average vis-à-vis the dollar during the first quarter).
- Accumulated fuel sales losses (January 1–May 31, 2023): CFAF 55.2 billion (compared with CFAF 151.7 billion for same period in 2022).
- Price adjustment action: CFAF 100 increase in the price per liter of Super 91 in February 2023.

### Public debt and debt service
- Stock of public debt (non-consolidated) as of December 31, 2022:
  - CFAF 6,792.19 billion (central government, subnational governments, and public institutions), or 54.3 percent of GDP.
  - Composition: 45.0 percent external debt and 55.0 percent domestic debt.
- Medium-term debt strategy: 2022-2024 MTDS prepared and launched.
- Legal framework: Decree No. 2022-0273/PRES-TRANS/PM/MEFP of May 31, 2022, adopted for public borrowing and debt management.
- Public debt service (excluding Treasury bills):
  - End-2021: CFAF 807.0 billion.
  - End-2022: CFAF 709.3 billion.
  - Breakdown end-2022:
    - External creditors: CFAF 145.9 billion (20.6 percent).
    - Domestic creditors: CFAF 563.3 billion (79.4 percent).
    - Principal repayment: CFAF 480.0 billion (67.7 percent).
    - Interest payments: CFAF 229.3 billion (32.3 percent).
- Provisional stock of public debt at end-March 2023:
  - CFAF 7,120.85 billion (increase of 4.8 percent from CFAF 6,792.19 billion on December 31, 2022).
  - Comparison with end-March 2022: CFAF 6,122.08 billion (increase of 16.3 percent year on year).
- Public debt service at end-March 2023: CFAF 293.36 billion (vs CFAF 105.74 billion for same period of 2022); increase of 177.4 percent (+ CFAF 187.62 billion).

### Quarter‑1 2023 budget execution and tax administration
- Budget resources raised by end-March 2023: CFAF 669.0 billion (vs CFAF 473.6 billion at end-March 2022), an increase of 41.2 percent.
  - Tax revenue: +20.3 percent.
  - Nontax revenue: +5.4 percent.
  - Grants: exceptional increase of +CFAF 102.8 billion (grants of CFAF 109.6 billion in Q1 2023 vs CFAF 6.8 billion in Q1 2022).
  - Tax revenue components growth for Q1 2023:
    - Income and corporate taxes: +17.4 percent.
    - Goods and services taxes: +19.5 percent.
    - Taxes on international trade and transactions: +27.0 percent.
- Drivers of improved domestic tax collection: digitization of tax procedures, wider use of standardized invoice, creation of a "non-determined" taxpayer category, efforts to stamp out fraud and corruption.
- Expenditures at end-March 2023: CFAF 851.5 billion (increase of 53.3 percent relative to first quarter 2022).
- VAT refunds and mining-related VAT suspension:
  - Decision No. 2020-0306/MINEFID/SG/DGI of July 7, 2020 (temporary suspension of VAT on goods imported by mining companies in development phase) was not renewed in 2022.
  - End-December 2022: 249 tax refund certificates approved and paid, total CFAF 99.41 billion.
  - End-June 2023: 86 tax refund certificates approved and paid, total CFAF 50.4 billion from CAST account.

### Public‑private partnerships, infrastructure, and sectoral developments
- PPPs:
  - Legal and institutional revisions adopted, including rigorous project planning, control of unsolicited bids, involvement of sector regulators, establishment of a PPP unit within the Ministry of Finance.
  - 2022: PPP contract concluded for a large-scale solar backup project; new PPP program pending Council of Ministers approval.
- Infrastructure and public works in 2022:
  - Hydraulic: rehabilitation of six deteriorating dams and construction of two new dams.
  - Roads: paving of 108.1 kilometers of new roads; improvement of 413 kilometers of new rural roads; improvement of 58.3 kilometers of primary and secondary streets.
  - Electrification: 33,600 additional households connected to national electricity network; 7,152 streetlights installed.
- Mining and industry:
  - Recovery and production at mines: SOMISA (Sanbrado), WAHGNION GOLD OPERATION (Niankorodougou), SEMAFO BOUNGOU (Boungou), RIVERSTONE KARMA (Karma), BISSA GOLD SA (Bissa); start of production at NORD GOLD YIMIOUGOU SA (Yimiougou) expected to support 2023 performance.
  - Anti-fraud action: seizure of 22.3 kilograms of gold.
- Agriculture and rural development:
  - Subsidies for agricultural inputs (fertilizer and seeds) provided to 734,214 producers; equipment for 2,361 producers.
  - Development of 2,824.6 hectares of improved wetlands and plains.
  - Provision of 5,266 pieces of irrigation equipment and 82 AIRP models.
- Industry and artisanal trades:
  - Credits totaling CFAF 900.7 million for artisans.
  - 45 percent progress toward launch of Burkina textile incubator; upgrade of 34 firms; construction of two sections of Bobo-Dioulasso artisanal village.
- Social and human development:
  - Health: construction of 27 CSPS and upgrade of 17 to meet standards; vaccination coverage improvements.
  - Education: development of four curricula for English instruction (CE and CM cycles); training curricula for senior laboratory and workshop technicians; availability of 37 interdisciplinary reference modules and 27 teaching modules.
  - Jobs and social protection:
    - Adoption of 14 regulations implementing laws Nos. 004/2021 and 003/2021 on social security regimes.
    - Care provided to 81.2 percent of child victims of violence.
  - Social register creation to identify most vulnerable households for cash transfers.
- Culture and tourism:
  - Creation of 13 tourism development initiatives and financing for 200 cultural and tourist operators.
  - Implementation of national culture and tourism strategy.

### Governance, security, and humanitarian response
- National development policy implementation anchored in the Action Plan for Stabilization and Development (PA-SD) of January 25, 2023, with four pillars: (i) fight against terrorism and restoration of territorial integrity; (ii) response to the humanitarian crisis; (iii) reform of the public sector and strengthened governance; (iv) national reconciliation and social cohesion.
- Security and justice:
  - Diversification of defense and security partnerships and signature of new accords.
  - Strengthening of defense and security operational capacities.
  - Launch of Special Judiciary Units (USJ) in regional courts (TGI) and provision of security equipment for penitentiary institutions.
- Humanitarian actions in 2022:
  - Food assistance to roughly 3 million internally displaced persons (IDPs) and victims of climate disasters.
  - Direct cash transfers and psychosocial support reached 2.2 million persons from PDI and host populations.
  - Support for voluntary return, local integration, relocation, and safety guarantees for displaced persons.
- Social cohesion:
  - Outreach to over 150,000 persons during National Citizenship Week (SENAC) and 1,000 persons in school settings.
  - Systematic sanctioning of hate speech and stigmatization; adoption of decree creating national coordinating office for local committees on dialog; development of action plan to implement National Reconciliation Strategy (PA-SNR).

### Macro outlook drivers and risks for remainder of 2023
- Growth drivers for 2023:
  - Buoyancy of tertiary sector (domestic tourism and major events such as SIAO, FESPACO, SNC, Tour du Faso, SITHO, SAMAO, NAK).
  - Recovery of production at major mines (SOMISA, WAHGNION, SEMAFO BOUNGOU, RIVERSTONE KARMA, BISSA GOLD SA) and start of production at NORD GOLD YIMIOUGOU SA (Yimiougou).
  - Growth of cash crop farming, notably seed cotton production.
- External and domestic risk factors highlighted:
  - Russia-Ukraine crisis, geopolitical tension, disruption of commodity supply chains, and continuing effects of COVID-19.
  - Domestic risks: difficult security situation, transitional sociopolitical context, and the process of reclaiming national territory.

*International Monetary Fund — Burkina Faso country report content unit.*

### 41.      Average annual inflation is projected at 1.4 percent in 2023, boosted by the favorable 2022-

### 41.      Average annual inflation is projected at 1.4 percent in 2023, boosted by the favorable 2022-

### Macroeconomic outlook and inflation
- Average annual inflation is projected at 1.4 percent in 2023, boosted by the favorable 2022-2023 harvest and assuming continuation of the government's measures to mitigate the high cost of living.
- Government projection for real GDP growth in 2022: about 4.4 percent, with sectoral contributions:
  - Secondary sector: 5.0 percent
  - Tertiary sector: 4.3 percent
  - Primary sector: 2.4 percent
- Growth during 2024-2027 is expected to average 5.8 percent, driven by recovery of production at existing mines and commissioning of new mines.
- Average annual inflation is projected to stabilize slightly above 2 percent over the 2024-2027 period, assuming favorable harvests and stable international commodity prices.

### External sector and current account
- Current account deficit:
  - 2022: -6.2 percent of GDP
  - Projected 2023: -4.7 percent of GDP (mitigated relative to 2022)
- Goods balance in 2023 is expected to post a surplus equivalent to 0.9 percent of GDP.
- 2023 external transactions environment: reduction of average international oil prices and an increase in the price of gold relative to 2022.
- 2024-2027 external outlook:
  - Current account balance: average of -2.8 percent of GDP over the period
  - Trade balance: average surplus of 2.0 percent of GDP
  - Exports of non-monetary gold: 77.6 tons in 2024, about 86.5 tons by 2027
  - Foreign direct investment: expected to stand at -0.6 percent of GDP (nearly stable compared with 2023 levels)
  - Overall balance of external payments: average deficit of -0.4 percent of GDP

### Fiscal resources and budget outcomes (2023)
- Mobilization of own revenue (net of VAT refunds) projected at CFAF 2,374.3 billion at end-December 2023, or 19.0 percent of GDP.
- Grants projected at CFAF 244.0 billion (1.9 percent of GDP).
- Relative to 2022, budget resources will increase by 3.8 percent, driven by:
  - Tax revenue: +2.2 percent
  - Nontax revenue: +17.8 percent
- Expenditure projected at CFAF 3,445 billion, representing 27.5 percent of GDP.
  - Expenditure decrease of 9.4 percent compared to 2022
  - Current expenditure: -14.3 percent
  - Capital expenditure: -0.5 percent
- Fiscal balance: deficit of 6.6 percent of GDP in 2023, an improvement of 4 percentage points relative to 2022.

### VAT refunds and CAST account
- Authorized CAST account to pay refunds of VAT credits: up to CFAF 100 billion for 2023 (CAST account ceiling).
- Government will discuss with the legislature measures to improve the VAT refund process to improve VAT performance and avoid accumulating arrears or borrowing to refund VAT credits.
- Structural benchmark: request the legislature to raise the ceiling on VAT credit refunds from the CAST account to at least CFAF 125 billion to avoid accumulation of arrears by end-June 2024.

### Petroleum pricing and subsidies
- Efforts to contain losses on fuel sales for remainder of 2023 to a maximum of CFAF 65.4 billion, or less than 15 percent of the accumulated losses at December 31, 2022.
- Ongoing communications to improve public understanding of the fuel price adjustment mechanism with the objective of gradually reducing government subsidies on petroleum product sales.
- Discussions under way expected to lead to a review of energy subsidies and an assessment of the price-setting mechanism's effectiveness (structural benchmark).

### Public-Private Partnerships (PPPs)
- Actions to improve PPP implementation include:
  - Continued implementation of the new legal and institutional PPP framework through drafting and adoption of implementing regulations and tools, including:
    - Decision on the authorities, composition, and functioning of the committee charged with selecting private partners to implement PPP projects
    - Decree establishing terms and conditions applicable to subnational governments in implementing PPPs
    - Decree on national firms' participation in PPP projects
    - Charter on responsibilities of PPP stakeholders
  - Ensure functioning of the PPP Committee through regular meetings to validate the PPP Program and ensure readiness and planning of PPP projects.
  - Institute procedures to ensure fiscal sustainability analyses for all projects to be implemented as PPPs (structural benchmark).

### Public debt stock and service (2023 and medium term)
- Total stock of public debt (central government, subnational governments, and public institutions) projected at CFAF 7,700 billion (61.5 percent of nominal GDP) at end-December 2023, compared to CFAF 6,872 billion at end-December 2022 — an 11 percent increase.
  - Domestic debt: CFAF 4,558 billion (59.2 percent of total stock)
  - External debt: CFAF 3,142 billion (40.8 percent of total stock)
- Public debt service at end-December 2023: CFAF 1,216.9 billion compared to CFAF 709.3 billion one year earlier — increase of CFAF 507.6 billion.
  - Composition of 2023 debt service: 83.7 percent domestic debt and 16.3 percent external debt.
- Projections:
  - Stock of public debt projected at CFAF 8.470 billion in 2024, or 61.6 percent of GDP (increase of 9 percent).
  - Domestic debt expected to represent 60 percent of total stock in 2024.
  - 2025 projected stock: CFAF 9.185 billion; debt ratio 61.8 percent.
  - 2026 projected stock: CFAF 9.799 billion; debt ratio 61.2 percent.
  - These projections comply with the community maximum of 70 percent.

### Financing requirement and fiscal trajectory (2024-2027)
- Financing requirement as proportion of GDP: decreases from 5.6 percent in 2024 to 3.0 percent in 2027.
- Revenue growth: average annual rate of 10.0 percent over the period.
- Expenditure growth: 5.7 percent per year on average.
- Revenue as percent of GDP:
  - 2024: 20.9 percent
  - 2025: 21.3 percent
  - 2026: 21.7 percent
  - 2027: 22.2 percent
- Budget receipts over 2024-2027:
  - Annual average increase of 10.1 percent
  - Ordinary revenue: +10.4 percent annual average
  - Extraordinary revenue: +5.2 percent annual average
  - Tax revenue annual average: +10.6 percent
  - Nontax revenue annual average: +8.5 percent
- Expenditure as percent of GDP:
  - 2024: 26.5 percent
  - 2025: 26.0 percent
  - 2026: 25.6 percent
  - 2027: 25.2 percent
- Emphasis on prioritizing defense and security spending while balancing development and social expenditures, including social protections, gender, children's rights, and climate change.

### Debt policy and management actions
- Implement 2023-2025 MTDS and 2023 financing plan to maintain debt sustainability despite security and humanitarian context.
- Strategy elements:
  - Continue use of concessional resources
  - Extend maturities of instruments issued on the domestic market
  - Borrow domestically and/or externally to restructure domestic debt to improve average maturity based on cost-risk analysis
- Government plans to define a new national policy on public borrowing and public debt management, including:
  - Develop and implement a 2024-2026 borrowing strategy
  - Institute use of tools (new debt sustainability framework, new model MTDS, etc.)
  - Strengthen stakeholders' capacities regarding developments in the international financial environment

### Revenue mobilization measures and tax policy (selected)
- Net collection objectives during the program period:
  - 2023: CFAF 2,490 billion (19.9 percent of GDP)
  - 2024: CFAF 2,802 billion (20.4 percent of GDP)
  - 2025: CFAF 3,163 billion (21.3 percent of GDP)
  - 2026: CFAF 3,479,4 billion (21,7 percent of GDP)
  - 2027: CFAF 3,817,4 billion (22.2 percent of GDP)
- Planned measures (in addition to paragraph 55 measures):
  - Rationalization of tax expenditures, including producing a report evaluating the impact of tax expenditures for 2018-2021 (structural benchmark).
  - Strengthening mining tax: accelerate revision of texts applicable to mining sector, specifically the decree on mining subsidies and taxes to improve government cash flow.
  - Improving land tax: digitize workflow (SYC@D and e-cadastre) and create a cadastral database to improve real property tax efficiency.
  - Reform VAT credit refund system: streamline process, reduce processing times, automate processing cycle, systematize ex post VAT audits.
  - Digitization of tax and customs procedures, including:
    - Implement eDouane platform
    - Interconnect customs information systems with neighboring countries
    - Develop interface between SYLVIE and ASYCUDA
    - Establish customs valuation system
    - Develop e-CME module
    - Institute electronic certified invoicing
    - Automate customs revenue collection systems
    - Improve interconnection of customs and tax information systems
  - Vehicle tax: reduce exemptions to include two (2), three (3) wheels and quadricycles.
  - Obligation to withhold VAT at source in certain cases to improve traceability and protect the treasury.
  - Establish "non-determined regime" for entities not fitting existing tax regimes (CME, RSI, RNI) with withholding tax on sums received for sales/provision of services.
  - Increase excise tax rates on beverages:
    - Beer: from 15 percent to 30 percent if alcohol content less than 8° and to 40 percent above that threshold
    - Wine: from 35 percent to 70 percent
    - Other alcoholic beverages with alcohol content less than 35°: from 35 to 50 percent
    - Non-alcoholic energy drinks: from 15 to 50 percent
  - Increase tax rate on tobacco, cigars, cigarettes, and cigarillos to harmonize with Member States.
  - Control tax arrears (RAR) and clearance actions: establish tax arrears clearance committee and strengthen processing/targeting of RARs.
  - Develop e-CME module to add an average of 1,000 micro-enterprises per year to the formal regime of real simplified taxation (RSI).
  - Combat fraud and counterfeiting via interoperability of DGI systems, digitalization of contract registration, platform for source data recovery for tax purposes, and certified electronic invoicing.

### Wage bill and public expenditure management
- Government committed to reduce the wage bill to less than 45 percent of tax revenue by 2027 (structural benchmark).
- Measures to achieve wage bill target:
  - Refrain from concluding new accords outside the security sector that could increase the wage bill path above 45 percent of tax revenue in 2027 (continuous structural benchmark).
  - Control growth of personnel expenditures and reduce average annual pace of growth of the total 2024-2027 wage bill to 6.2 percent.
  - Present alternating annual reconciliations between personnel registers and payroll registers covering around 50% of civil service workforce by Ministry of Education and other ministries (excluding security sector) or, alternately, Ministry of Health and remaining ministries (Structural benchmark).
  - Audit the SIGASPE payroll component to identify problems and consider other HR management tools.
  - Conduct a full census of civil service employees and publish a report of the results (structural benchmark).
- Modernization of public expenditure procedures: complete program budget reforms, accelerate digitization of public expenditure cycle, and rationalize expenditure.

*International Monetary Fund — BURKINA FASO (extracted content unit)*

### 71.      The government also agrees to consult IMF staff if, at the end of each quarter of the

### Improving Efficiency in the Energy Sector

### Wage bill consultations
- The government agrees to consult IMF staff if, at the end of each quarter of the program period, the observed annual increase in the wage bill is greater than the rate of increase projected for each year of the program macroeconomic framework (see paragraph 29 and Table 2 of the technical memorandum of understanding).
- During consultations the government will:
  - explain causes of the difference between the observed wage bill increase and the growth rate provided in the macroeconomic framework; and
  - discuss the corrective measures that will be implemented.

### Fuel prices and petroleum subsidies (rest of 2023)
- Target to contain losses on fuel sales to a maximum of CFAF 65.5 billion, or less than 1/5 of the level as of December 31, 2022.
- Actions to strengthen appropriation of the fuel price adjustment mechanism:
  - continuation of communication and outreach vis-à-vis the populations;
  - publications in the media and organization of specific workshops, particularly targeting consumer associations.
- Discussions on the sustainability of Burkina Faso's petroleum sourcing plan are ongoing to generate lasting solutions to better organize and restore financial balance in the subsector.
- Expected outcomes:
  - considerable reduction in the amount of subsidies on hydrocarbon sales;
  - increase in budget resources available to strengthen social protection.

### Electricity system and energy reforms
- Demand growth: rapid growth of demand on the order of 13 percent per year.
- Strategy emphasizes promotion of solar generation for large-scale electricity production.
- Government intends to prepare multiyear performance contracts with SONABHY and SONABEL by the end of 2023.
- Reforms and milestones:
  - Conduct a review of energy subsidies and an assessment of the price-setting mechanism's effectiveness to focus on reducing subsidies over the program period in 2024 (structural benchmark).
  - Sign multiyear performance contracts (“Contracts-Plans") with SONABHY and SONABEL and a tripartite contract between the government and SONABHY and SONABEL (structural benchmark).
  - Adopt a plan to reform SONABEL tariffs by end-2024: the plan will serve as the basis for a multiyear electricity tariff schedule, with periodic adjustments to reflect variable costs such as the exchange rate, inflation, fuel prices, etc., based on a clear and transparent pricing methodology.
  - Accelerate commissioning of solar plants: projects under development will provide additional exploitable power of 186 MW in 2024 to total 455 MW in 2027.
    - Anticipated contributions: development of energy storage projects, improvement of the energy mix, relative reduction of the government fuel subsidy, and potentially lower electricity costs.
    - Caveat: impact remains unclear due to rising demand.
  - Conduct an organizational, operational, financial, and accounting audit of SONABEL and SONABHY no later than end-December 2023 to inform reforms.

### Strengthening Resilience to Shocks and Social Protection
- Government commitment to attack principal vulnerabilities to resolve the security crisis, promote social cohesion, and strengthen resilience to climate shocks.

- Priority social protection and resilience reforms (four):
  1. continued work on the creation of a single social register (RSU) of vulnerable individuals;
  2. revision of the National Social Protection Policy;
  3. introduction of the national response program to address the needs of vulnerable persons;
  4. measures to improve resilience through digitization and actions to address climate change.

### Security measures
- Pursue the national security network and strengthen local governance in context of decentralization.
- Reforms to improve protection of persons and property:
  - institution of a system to support families of defense and security forces victimized by terrorism and development of a system of social safety nets appropriate to the defense and security sector;
  - adoption of a law on the general organization of national security;
  - development of the national domestic security strategy;
  - implementation of the national anti-terrorism strategy, including measures to block sources of terrorism financing.

### Climate-related resilience and budgeting
- 2025 budget will include an annex detailing plans to combat climate change and climate-related budget appropriations based on an agreed climate budget tagging methodology (indicative structural benchmark).
- Aim: 2026 budget preparations to include an ex-post assessment on the use of the climate budget tagging methodology in the 2025 budget year.

### Extension of social protection to the most vulnerable
- Documentation and transparency:
  - publication of semi-annual reports and audits of the implementation of cash transfer programs and all food emergency expenditures on the Ministry of Finance’s website (structural benchmark).
  - audits to be conducted by the National Government Oversight and Anticorruption Authority (ASCE-LC) and to include review of procedures and protocols guaranteeing payments reach appropriate beneficiaries.
  - Beneficial ownership information on entities awarded government contracts to alleviate food insecurity to be published on the Ministry of Economy, Finance and Perspective’s website on a quarterly basis the quarter after the contract is awarded (continuous structural benchmark).
- RSU details:
  - A household with annual consumption expenditure below the absolute monetary poverty line of CFAF 194,629 per year per adult (as defined by INSD) is considered poor.
  - An automated information and management system (SIG-RSU) has been implemented.
  - Pilot phase: targeting and collecting data on at least 120,000 persons in households living in poverty and vulnerability; expected completion by end-August 2023.
  - Deployment schedule:
    - pilot phase in seven provinces (Centre-Ouest and Centre-Est regions);
    - RSU deployed in 11 additional provinces in 2023;
    - nationwide deployment in the second half of 2023 planned to be completed in 2025;
    - RSU deployment plan: 12 provinces in 2024 and 15 provinces in 2025.
  - Government will provide a status report on RSU implementation to IMF staff by end-June 2025 (indicative structural benchmark).
- Cash transfer expansion:
  - Expect to begin expansion of the national cash transfer program in 2023 with objective of covering 180,000 of the poorest households by end-December 2025 (indicative structural benchmark), in addition to donor coverage through 2025.

### Strengthening Governance and Combating Money Laundering and Terrorism Financing

### Public financial management and governance reforms
- Key planned actions:
  - Submit to Parliament the revised 2023 budget in accordance with program objectives (prior action).
  - Formally direct the ASCE-LC to conduct an audit of all government arrears and floating debt (prior action).
  - Publish the audit of all government arrears and floating debt on the Ministry of Economy, Finance and Perspective’s website (structural benchmark).
  - Prepare and implement a strategy to clear government arrears (structural benchmark).
  - Include a "CAST - Patriotic support fund (FSP)" account in the 2024 budget (budget program); the 2024 budget should also include an annex detailing the arrangements for FSP financing (structural benchmark).
  - Conduct and publish on the Ministry of Economy, Finance and Perspective’s website a governance diagnostic, with IMF support, by end-December 2025 (indicative structural benchmark). The assessment will provide prioritized policy recommendations and the basis for an action plan (indicative structural benchmark).
  - Optimize available cash and liquid assets to minimize borrowing needs while improving budget projections, execution, and reports (quarterly and year-end reports on budget execution, annual reports on program managers' performance, accounting officers' revenue and expenditure reports, government financial statements) (continuous structural benchmark).
  - Improve predictability of cash flow requirements and commitment control plans by reducing deviations between actual and projected expenditures and results.
  - Improve production times and reliability of annual financial statements and begin publishing regular interim financial statements.
  - Improve accounting function and practices by revenue-collecting authorities and transition to accrual accounting.
  - Publish an evaluation report on tax expenditures for the period 2017-2021, including analysis of economic and social impact, by end-December 2024 (structural benchmark).

### Anti-corruption measures
- ASCE-LC will:
  - organize corruption-prevention activities and outreach campaigns (educational talks in schools, graduate schools that train civil servants, the police academy, etc.);
  - run information campaigns to ensure broad dissemination of the anti-corruption law and promote knowledge of the pernicious effects of corruption.
- Government plans to prepare a national anti-corruption strategy considering results of the 2012-2016 national policy and thematic ASCE-LC studies in sectors with highest systemic corruption risks: police, education, sanitation, health, transport, customs, taxes, and government contracting.

### Further governance and transparency measures
- Planned actions:
  - Publish on the Ministry of Economy, Finance and Perspective’s website annual (and to the extent possible, quarterly) reports on budget execution, including information on use of funds disbursed in the context of the Food Shock Window (FSW) (continuous structural benchmark).
  - Publish statistics on corruption and embezzlement cases investigated and punished.
  - Implement conclusions of the study on the impact of closing public accounts and the Council of Ministers' recommendations on centralization of public funds in the Treasury single account (indicative structural benchmark).
  - Improve evaluation, quantification, and monitoring of fiscal risks regularly, focusing on PPPs and traditional investment projects; continue implementing recommendations of the PIMA (indicative structural benchmark).
    - Institute fiscal sustainability analyses of PPPs and a secure database for monitoring PPP contracts.
    - Develop a standard financial model, a PPP guide, and a procedures manual for the PPP Unit.
    - Conduct cost-benefit analyses of public investment projects.
    - Provide authorities responsible for awarding contracts with access to information on beneficial owners and create databases on guarantees.
  - Establish a register of beneficial owners directly and freely accessible to competent government authorities and to financial institutions subject to customer vigilance obligations (indicative structural benchmark).
  - Publish information on beneficial owners of entities awarded government contracts to combat food insecurity, improve drinking water supplies, or supply agricultural inputs or subsidized foodstuffs (indicative structural benchmark).

### AML/TF actions
- Measures adopted to remove Burkina Faso from the Financial Action Task Force (FATF) list of countries under increased monitoring; a timetable for implementation of those measures was defined.
- Short-term technical staff actions under the action plan to exit the FATF grey list and the 2020-2024 action plan under the national AML/TF strategy:
  - (i) conduct exchanges with Burkina Faso's technical and financial partners, particularly diplomatic missions disposed to provide financial support; and
  - (ii) issue communications to national parties concerned by the aforementioned actions.

### Risks to the Program and Mitigating Measures

### Risk categories
- Three main categories identified:
  1. macroeconomic risks;
  2. risks relating to public debt;
  3. other risks.

### Macroeconomic risks
- Domestic risks: continuation of the security crisis, poor rainfall, and invasive pests that threaten crops.
- External risks: volatility of the exchange rate and global commodity prices, occurrence of pandemics, and uncertainty of external financing.

### Risks relating to public debt
- Risks identified in the 2023-2025 medium-term debt strategy (MTDS):
  - (i) refinancing risk;
  - (ii) exchange rate risk;
  - (iii) interest rate risk.

### Other risks
- PPPs and government instrumentalities:
  - PPP contractual provisions could create financial and/or fiscal liabilities for the government, generating payment arrears and increased public debt and budget expenditures.
  - Risks from government instrumentalities (state owned corporations, national funds, social security agencies and subnational governments) arise from inability to honor commitments, potentially requiring budget transfers to avoid payment delays or default.

### Mitigating measures
- Identified measures to minimize impact on economic and financial results:
  - diversify sources of fuel supply, select competitive prices, and institute forward purchases;
  - strengthen political governance and institutional reforms, with emphasis on mobilizing internal resources by accelerating modernization of collection procedures and continued action against fraud, forgery, and corruption;
  - focus on strengthening operational capacities of defense and security forces, social cohesion, good governance, increased citizen participation, and strengthened regional and international cooperation in fighting terrorism and securing major production areas (agricultural, mining, etc.);
  - continue actions to modernize agriculture, including constructing water storage facilities to support irrigation, increased support and advisory services, training arrangements, and strengthened research and development in the agriculture sector;
  - give preference to lands denominated in fixed-parity currencies and use concessional resources to finance needs of the economy.

*BURKINA FASO INTERNATIONAL MONETARY FUND*

### 92.      The new ECF-supported program will cover the next four years with semiannual reviews. The

### The new ECF-supported program will cover the next four years with semiannual reviews.

### Program timing and evaluation
- The program will cover the next four years with semiannual reviews.
- The first two reviews will take place no earlier than March 15, 2024, and September 15, 2024.
- The program will be evaluated based on Tables 1 and 2 in accordance with the technical memorandum of understanding, which defines the quantitative performance criteria, prior actions and structural benchmarks as well as requirements in terms of information reporting to IMF staff.

### Quantitative performance criteria and indicative targets (Table 1)
- Notes:
  - 1/ March (and September) figures are indicative targets, except for continuous performance criteria. June and December figures are performance criteria.
  - 2/ Cumulative from beginning of the year.
  - 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 unpaid VAT refunds by end-December 2023, up to a maximum of CFAF 85 billion, as specified in the TMU.
  - 5/ The ceiling on the amount of external debt contracted or guaranteed by the government (in PV terms) will be adjusted upward by the present value of the full amount of loans 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 loan used for debt management purposes as specified in the TMU.
  - 8/ To be observed continuously.
  - 9/ Primary current expenditure includes spending on the wage bill, goods and services, energy subsidies and excludes interest payments.
- Quantitative performance criteria (four-period values shown as presented):
  - Ceiling on net domestic financing of the government 2/ 3/ 4/: 739.9; 143.1; 286.3; 429.4
  - Ceiling on the amount of external debt contracted or guaranteed by the government (PV) 2/ 5/ 6/ 7/: 410.0; 410.0; 410.0; 410.0
  - Ceiling on the accumulation of external payment arrears by the government 8/: -; -; -; -
  - Ceiling on the guaranteeing of new domestic loans to suppliers and contractors by the government 8/: -; -; -; -
  - Ceiling on government guarantees of new bank pre-financing for public investments 8/: -; -; -; -
  - Ceiling on the primary fiscal deficit including grants 2/: 560.0; 104.7; 209.5; 314.2
- Indicative targets:
  - Ceiling on the accumulation of domestic arrears by the government 8/: -; -; -; -
  - Floor on government revenue 2/: 2,374.3; 657.1; 1,314.3; 1,971.4
  - Floor on poverty-reducing current social expenditures 2/: 296.2; 75.9; 151.7; 227.6
  - Ceiling on the stock of certified and unpaid VAT refunds older than 30 days: 40.0; 40.0; 40.0; 40.0
  - Ceiling on primary current expenditure 2/ 9/: 1,906.5; 503.9; 1,007.8; 1,511.7
  - Ceiling on the value of PPPs contracted 2/: 200.0; 200.0; 200.0; 200.0

### Prior actions and structural benchmarks (Table 2) — selected items by review and completion dates
- Initial prior actions (2023):
  - Submit to Parliament the revised 2023 budget in line with program objectives. Objective: Reduce fiscal risks. Completion Date: 2023.
  - Formally instruct ASCE-LC to launch an audit of all the government’s arrears and floating debts. Objective: Improve fiscal transparency and governance. Prior action.
  - Do not grant any new wage agreement (except for the security sector) that could impact the wage bill trajectory and push it beyond 45% of tax revenues by 2027. Objective: Wage bill control. Continuous structural benchmark.
  - Publish information on the beneficial owners of entities awarded public procurement contracts to address food insecurity on the Ministry of the Economy, Finance and Perspective’s website on a quarterly basis the quarter after the contract is awarded. Objective: Improve fiscal transparency and governance. Continuous structural benchmark.
  - Publish on the Ministry of the Economy, Finance and Perspective’s website annual (and to the extent possible, quarterly) budget execution reports which will also include information on the use of funds disbursed under the FSW. Objective: Improve fiscal transparency and governance. Continuous structural benchmark.
- First Review (End-December 2023):
  - Submit draft 2024 budget, which must include a “CAST-Patriotic Support Fund (PSF)”; the budget must also include an appendix detailing the funding arrangement for the PSF. Objective: Reduce fiscal risks. Completion Date: End-December 2023.
  - Contain wage bill growth to ensure that the wage bill to tax revenue ratio is below 52.3 percent. Objective: Wage bill control. Completion Date: End-December 2023.
  - Present to IMF staff alternating annual reconciliations between personnel registers and payroll registers covering around 50% of the civil service workforce (excluding the security sector) at either Ministry of Education (and other ministries) or Ministry of Health (and other ministries). Objective: Wage bill control. Completion Date: End-December 2023.
  - Publish audits of the implementation of cash transfer programs and all emergency food expenditure on the Ministry of Economy, Finance and Perspective’s website. Objective: Improve fiscal transparency and governance. Completion Date: End-December 2023.
  - Adopt performance contracts with SONABHY and SONABEL, as well as the tripartite contract between the government, SONABHY and SONABEL. Objective: Improve efficiency in the energy sector. Completion Date: End-December 2023.
- Second Review (End-June 2024):
  - Conduct a review of energy subsidies and an assessment of the application of the price-setting mechanism, to move towards a reduction in subsidies over the program period. Objective: Improve efficiency in the energy sector. Completion Date: End-June 2024.
  - Prepare and implement a strategy for clearing government’s arrears. Objective: Improve fiscal transparency and governance. Completion Date: End-June 2024.
  - Raise the ceiling on VAT credit reimbursements to the CAST account to level consistent to avoid accumulation of arrears. Objective: Reduce fiscal risks. Completion Date: End-June 2024.
- Third Review (indicative):
  - Submit the draft budget for the next fiscal year in line with program objectives, including a budget document or annex detailing plans to combat climate change and climate-related budget appropriations based on an agreed climate budget tagging methodology. Completion Date: (indicative).
  - Adopt a new strategic plan for revenue mobilization for the period 2024-27, based on the 2021 self-assessment. Completion Date: (indicative).
  - Publish an audit of all the government’s arrears and floating spending on the Ministry of Economy, Finance and Perspective’s website. Completion Date: (indicative).
  - Contain wage bill growth to ensure that the wage bill to tax revenue ratio is below 51.8 percent. Completion Date: (indicative).
  - Continue presenting alternating annual reconciliations between personnel registers and payroll registers covering around 50% of the civil service workforce. Completion Date: (indicative).
- Fourth Review (End-June 2025):
  - Put in place a beneficial ownership registry accessible to government authorities and financial institutions with customer due diligence obligations. Objective: Improve governance and the fight against money laundering and terrorism financing. Completion Date: End-June 2025.
  - Submit a progress report on the implementation of the Unique Social Registry. Objective: Extend social protection. Completion Date: End-June 2025.
  - Publish a report assessing the impact of tax expenditure on the Burkina Faso economy over the period 2018-2021. Objective: Improve management of fiscal risks. Completion Date: End-June 2025.
- Fifth Review (End-December 2025):
  - Prepare and publish a report on the governance diagnostic on the Ministry of Economy, Finance and Perspective’s website. Objective: Improve governance and fiscal transparency. Completion Date: End-December 2025.
  - Ensure that cash transfers from the Social Safety Net Program (PFS) cover at least 180,000 of the poorest households, in addition to what covered by donors. Objective: Extend social protection. Completion Date: End-December 2025.
  - Conduct a complete census of the civil service workforce and publish a report on the results. Objective: Wage bill control. Completion Date: End-December 2025.
  - Contain wage bill growth to ensure that the wage bill to tax revenue ratio is below 49.5 percent. Objective: Wage bill control. Completion Date: End-December 2025.
  - Continue presenting alternating annual reconciliations between personnel registers and payroll registers covering around 50% of the civil service workforce. Objective: Wage bill control. Completion Date: End-December 2025.
- Sixth Review (End-June 2026):
  - Publish a governance action plan to be implemented over the remaining program period. Objective: Improve governance and fiscal discipline. Completion Date: End-June 2026.
  - Prepare a roadmap to strengthen assessment, quantification and monitoring of public investment budgetary risks, ensure that all PPP projects undergo fiscal sustainability analysis, and continue to fully implement the PIMA recommendations. Objective: Reduce fiscal risks. Completion Date: End-June 2026.
  - Implement conclusions of the study on the impact of the closure of public accounts and recommendations of the Council of Ministers on the centralization of public funds to continue implementing the Treasury Single Account. Objective: Reduce fiscal risks. Completion Date: End-June 2026.
- Seventh Review (End-December 2026):
  - Strengthen the capacity of revenue authorities to collect mining revenues. Objective: Improve domestic revenues mobilization. Completion Date: End-December 2026.
  - Contain wage bill growth to ensure that the wage bill to tax revenue ratio is below 47.1 percent. Objective: Wage bill control. Completion Date: End-December 2026.
  - Continue presenting alternating annual reconciliations between personnel registers and payroll registers covering around 50% of the civil service workforce. Objective: Wage bill control. Completion Date: End-December 2026.

### Technical Memorandum of Understanding — definitions and conditionality (Attachment II)
- Purpose:
  - The TMU defines the quantitative performance criteria, indicative targets and structural benchmarks that will serve to assess performance under the program supported by the Extended Credit Facility (ECF). It also sets the framework and deadlines for the submission of data to IMF staff for assessment of program implementation.
- Conditionality:
  - The quantitative performance criteria and indicative targets are shown in Table 1 of the MEFP. The program structural benchmarks are presented in Tables 2 of the MEFP.
- Definitions:
  - Government: Unless otherwise indicated, the term “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 government fiscal reporting table (TOFE).
  - Definition of debt: For program purposes, the definition of debt is consistent with paragraph 8(a) of the Guidelines on Public Debt Conditionality in Fund Arrangements attached to IMF Executive Board Decision No.16919-(20/103), adopted October 28, 2020. Debt means all current, i.e., not contingent, liabilities created under a contractual arrangement through the provision of value in the form of assets (including currency) or services, which require the obligor to make one or more payments in the form of assets (including currency) or services at some future point(s) in time; these payments will discharge the principal and/or interest liabilities incurred under the contract.
  - Primary forms of debt include:
    - (i) loans, including deposits, bonds (including Treasury bills), debentures, commercial loans and buyers’ credits, and temporary exchanges of assets equivalent to fully collateralized loans (e.g., repurchase agreements and official swap arrangements);
    - (ii) suppliers’ credits, i.e., contracts where the supplier permits the obligor to defer payments until some time after delivery; and
    - (iii) leases, where debt is the present value (at the inception of the lease) of all lease payments expected to be made during the period of the agreement excluding payments that cover operation, repair, or maintenance of the property.
  - Arrears, penalties, and judicially awarded damages and interest arising from failure to make payment under a contractual obligation that constitutes debt are debt. Failure to make payment on a contractual obligation that is not considered debt under this definition (e.g., payment on delivery) will not give rise to debt.
  - Debt guarantees: A government debt guarantee means an explicit legal obligation to service the debt in the event of nonpayment by the borrower (through payment in cash or in kind).
  - Debt concessionality: A debt is considered concessional if it includes a grant element of at least 35 percent. The present value (PV) of debt at the time it is contracted is calculated by discounting the borrower’s future debt service payments on the debt. The discount rate used is 5 percent.
  - External debt: External debt is defined as debt contracted or serviced in a currency other than the CFA franc.
- Quantitative performance criteria (listed in the TMU):
  - (i) a ceiling on net domestic financing of the government;
  - (ii) a ceiling on the PV of external debt contracted or guaranteed by the government;
  - (iii) a ceiling on external debt service payments arrears;
  - (iv) a ceiling on guaranteed domestic loans to suppliers or contractors;
  - (v) a ceiling on government guarantees of bank pre-financing of public investments; and
  - (vi) a ceiling on the primary fiscal deficit (commitment basis), including grants.

*Source: IMF staff and Burkinabè authorities (Tables and Attachment II as presented in the MEFP).*

### 10. Net domestic financing of the government is defined as the sum of (i) net bank credit to the

### 1bfaea2023002 - 10. Net domestic financing of the government is defined as the sum of (i) net bank credit to the

### Definition: Net domestic financing of the government
- Net domestic financing is defined as the sum of:
  - (i) net bank credit to the government, including net bank credit to the government as defined below vis‑à‑vis the national banking institutions;
  - (ii) the stock of unredeemed Treasury bills and bonds (including syndicated issuances) held outside national commercial banks;
  - (iii) privatization receipts and other government claims and debts vis‑à‑vis national non‑bank institutions;
  - (iv) securitized debt;
  - (v) VAT refunds;
  - (vi) any other arrears and floating debt.
- Net bank credit to the government = balance of the government’s claims and debts vis‑à‑vis national banking institutions.
  - Government claims include: cash holdings of the Burkinabè government, deposits with the central bank, deposits with commercial banks, customs duty bills, and government deposits in postal checking accounts (CCP).
  - Government debt to the banking system includes: central bank financing (including statutory advances, consolidated advances, and refinancing of customs duty bills), 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 data contained in the TOFE (government budget execution report prepared monthly by the Ministry of Economy, Finance and Planning).

### Adjustor to the cumulative ceiling on net domestic financing
- The cumulative ceiling on net domestic financing will be adjusted upward by the amount by which actual external program support falls short of the projected amount, up to a maximum of CFAF 75 billion.
  - The shortfall is calculated relative to the projections in Table 1.
  - The ceiling will not be adjusted downward if external program assistance is higher than programmed.
- In addition, the cumulative ceiling on net domestic financing by end‑December 2023 will be adjusted upward by the amount by which VAT refunds in arrears are securitized, up to CFAF 85 billion.
- The Ministry of Economy, Finance and Perspective will forward data on net domestic financing to the IMF within six weeks of the end of each quarter.

### New non‑concessional external debt contracted or guaranteed by the government (performance criterion)
- Applies to external debt as defined in paragraph 4 and uses concessionality concept in paragraph 7.
- Applies to private debt guaranteed by the government that constitutes a contingent liability as defined in paragraphs 4 to 7.
- “Government” includes central government, public enterprises receiving transfers, local governments, and other public sector entities (public administrative, professional, scientific and technical agencies).
- Exclusions: Treasury bills and bonds issued in CFA francs on the WAEMU regional market; normal import‑related commercial debts with term < 1 year; IMF loans.
- Measured cumulatively from the IMF Executive Board approval date of the ECF arrangement; no adjustor applies.
- For 2023 and 2024: government undertakes not to contract or guarantee external debt (concessional or non‑concessional) with a total PV in excess of the ceiling indicated in Table 1 of the MEFP, measured cumulatively from January 1 of each year.
  - In case of a loan for debt reprofiling, the ceiling may be raised by the PV of the full amount if the reprofiling constitutes an improvement in the overall debt profile as determined by IMF staff; authorities will consult IMF staff in advance.
- Reporting deadline: details on any loan contracted by the government must be reported within four weeks of the end of each month; same for guarantees.

### Non‑accumulation of new external debt service payment arrears
- External debt service payment arrears = external debt service payments due but unpaid on contractual due date.
- Government agrees not to accumulate external payments arrears on its debt, except arrears arising from obligations being renegotiated with creditors (including bilateral non‑Paris Club creditors).
- This is a continuous performance criterion.

### Government guarantees of new domestic loans and bank pre‑financing
- Government undertakes not to provide new guarantees for domestic loans to suppliers or contractors. This is continuous.
  - “Government” for this purpose includes central government, EPICs, EPAs, public scientific/technical/professional establishments, public health agencies, local governments, public enterprises, government corporations, semi‑public corporations (government holds ≥ 50 percent), and government agencies.
- Government undertakes not to guarantee new bank pre‑financing for public investments. This is continuous.
  - Pre‑financing arrangement definition: private company with public works contract obtains loan from domestic commercial bank(s); Ministry of Finance guarantees the loan and signs unconditional and irrevocable substitution of debtor agreement.

### Basic primary fiscal deficit, including grants (definition and adjustor)
- Domestic primary fiscal balance (program purposes) is on a commitment basis.
  - Defined as: domestic revenues (including grants) − public expenditures, less interest payments and externally financed capital expenditures.
  - Arrears’ payments are not included in the primary domestic balance.
- Adjustor: ceiling on the primary fiscal balance will be adjusted upward by the difference between actual program external grants and projected amount, up to CFAF 75f billion (difference calculated vis‑à‑vis projections in Table 1).
  - Ceiling will not be adjusted downward if actual program external grants are higher than projected.

### Quantitative indicative targets (program)
- The program includes the following quantitative indicative targets:
  - (i) a ceiling on the accumulation of domestic arrears;
  - (ii) a floor for total government revenues;
  - (iii) a floor for poverty‑reducing current social expenditures;
  - (iv) a ceiling on the stock of VAT refunds that have been certified and not paid for more than 30 days;
  - (v) a ceiling on current primary expenditure;
  - (vi) a ceiling on public‑private partnerships.

### Amounts payable, domestic payment arrears, and floating debt (definitions)
- “Amounts payable” (or “outstanding balances”) include domestic arrears and floating debt; represent overdue obligations accepted by the public accountant but not yet paid.
  - For program purposes: include (i) public and private nonfinancial enterprise invoices due and unpaid, including VAT refunds; and (ii) domestic debt service.
- Domestic payment arrears:
  - Arrears to suppliers = overdue obligations to public and private nonfinancial enterprises that are more than the regulatory 90 days overdue.
  - Arrears on domestic debt service = debt service obligations more than 30 days past due date stipulated in agreements, including any applicable grace period.
- Floating debt = amounts unpaid for less than the regulatory period (90 days for debt to nonfinancial corporations; 30 days for debt service).
- Ceiling on accumulation of new domestic payments arrears = zero. This indicative target is subject to continuous monitoring and any breach must be immediately reported to IMF staff.

### Government revenues (definition)
- Government revenues are calculated on a cash basis.
- Include all tax revenues collected by the General Directorate of Taxation, the General Directorate of Customs, the Burkinabè Treasury, and other revenue collection units.
- Include revenues from Treasury checks.

### Poverty‑reducing current social spending (definition)
- Social spending = sum of current expenditure included in the social spending program as defined in the budget law.
- Social spending program = sum of budget programs or parts that target poor households and:
  - (i) ensure access to basic social services;
  - (ii) facilitate access to health services and nutrition programs;
  - (iii) fight against HIV/AIDS;
  - (iv) facilitate access to safe drinking water;
  - (v) improve living conditions, including environment and sanitation;
  - (vi) ensure social protection.
- Within these programs, only budget lines classified as social spending are retained.

### Certified VAT refunds more than 30 days overdue (definition)
- Stock of VAT refund claims that have been certified but remain unpaid for more than 30 days = signed tax refund amounts.
- The 30‑day period starts from the date of signing of the tax refund certificate by the Director General of Taxation.

### Current primary expenditure (definition) and wage bill consultation clause
- Current primary expenditure = wage bill expenditure + expenditure on goods and services + current transfers, net of interest payments.
- Consultation clause on the wage bill:
  - At end of each quarter (March 31, June 30, September 30, December 31), if observed annual growth of the wage bill (12‑month sliding growth rate) exceeds the wage bill growth rate projected for the year in the macroeconomic framework (see Table 2), authorities must consult with IMF staff.
  - During consultation, authorities must explain discrepancy and corrective measures.

- Table 2. Burkina Faso: Annual Wage Bill Growth Projections (Percentage)
  - 2023: 8.7
  - 2024: 9.6
  - 2025: 6.0
  - 2026: 5.3
  - 2027: 4.3

### Public‑Private Partnerships (definition)
- PPP = 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.

### Additional information for program monitoring — data reporting requirements (summary)
- Authorities agree to submit specified data to IMF staff in hard copy and/or MS Excel electronic files with frequencies and deadlines as specified.
- Selected reporting requirements and frequencies (responsible institution — data frequency — reporting frequency):
  - Government’s fiscal reporting table (TOFE) and customary annexed tables — MEFP/DGTCP — Monthly — 6 weeks.
  - Domestic financing of the budget (net bank credit to the government and stock of unredeemed Treasury bonds and bills) — MEFP/DGTCP and BCEAO — Monthly — 6 weeks.
  - Monthly data on customs post performance relative to monthly forecasts — MEFP/DGD — Monthly — 6 weeks.
  - Quarterly report on supervision/audit actions using single taxpayer identification (starting with large taxpayers) — MEFP/DGI — Quarterly — 6 weeks.
  - Data on implementation of public investment program, including financing sources — MEFP/DGEP — Weekly — 6 weeks.
  - Stock of external debt, external debt service, contracted external debt, and external debt repayment — MEFP/DGTCP — Quarterly — 6 weeks.
  - Poverty‑reducing social spending in table format — MEFP/DGB — Monthly — 6 weeks.
  - Petroleum product prices, consumption and taxes (detailed price structure, volumes, tax breakdown) — CIDPH, MEFP/DGD/DGTCP, SONABHY — Monthly — 4 weeks.
  - Quarterly report (including monthly data) on SONABHY accounts, cash flow, income statements, subsidies, and government securities issued/sold — SONABHY — Quarterly — 6 weeks.
  - Quarterly report (including monthly data) on SONABEL accounts — SONABEL — Quarterly — 6 weeks.
  - Monthly statement of accounts with the Treasury, broken down by major category — MEFP/DGTCP — Monthly — 6 weeks.
  - Quarterly activity report from Investigation and Intelligence Directorate including taxpayer audits across DGI and DGD — MEFP/DGI/DGD — Quarterly — 6 weeks.
  - Monthly projections of annual customs revenues by customs post, and monthly performance report — MEFP/DGD — Monthly — 6 weeks.
  - Monthly DGI revenue projections (annualized) by type and monthly performance report — MEFP/DGI — Monthly — 3 months.
  - Monthly DGTCP revenue projections (annualized) by type and monthly performance report — MEFP/DGTCP — Monthly — 3 months.
  - Quarterly report on VAT refunds (transfers from ACCT, cumulative amount paid, stock of certified refund claims, total VAT refund claims handled) — MEFP/DGI — Quarterly — 3 months.
  - Monthly update of PPP and sovereign guarantee databases — MEFP/UPPP — Monthly — 4 weeks.
  - Monthly statement of the implicit pump price subsidy — CIDPH — Monthly — 4 weeks.
  - Monthly data on new domestic debt contracted and amortized (including bank credit, all sovereign debt issuances and securitizations) — MEFP/DGTCP — Monthly — 6 weeks.
  - Consolidated balance sheet of monetary institutions — BCEAO National Directors — Monthly — 6 weeks.
  - Monetary survey provisional and final data; lending and borrowing interest rates; standard bank supervision indicators — BCEAO — Monthly — 6 weeks.
  - Preliminary annual balance of payments data — BCEAO — Annual — 9 months.
  - Foreign trade statistics — MEFP/INSD — Monthly — 3 months.
  - Revisions of balance of payments data when revised — BCEAO — When revised — 2 weeks.
  - Provisional national accounts and revisions — MEFP/INSD — Annual — 6 months.
  - Quarterly national accounts and revisions — MEFP/INSD — Quarterly — 3 months.
  - Monthly disaggregated consumer price indices — MEFP/INSD — Monthly — 4 weeks.
  - Monthly performance and projections through end‑December 2023 of mining and ore production and exports (volume and value); statement of mines and mines under construction — MEFP/DGD and MEMC/DGMG/DGESS — Monthly — 3 months.
  - Any study or official report on Burkina Faso’s economy — MEFP/DGEP — On date published or date of entry into force.
  - Any decision/order/law/decree/ordinance/circular with economic or financial implications — MEFP/SG — On date published or date of entry into force.
  - Any study or official report on measures taken to combat corruption — ASCE‑LC — On date published or date of entry into force.

### Projected external program assistance (excerpt from Table 1)
- Program grants and loans (of which: program grants):
  - End‑December 2023: 0
  - End‑June 2024: 56.3
  - (Additional isolated numbers in table: 0; 0; 56.3; 0)

*BURKINA FASO INTERNATIONAL MONETARY FUND*

### Annex to the 2025 budget detailing plans to

### Annex to the 2025 budget detailing plans to combat climate change (including resource allocations and assessment of the fiscal latitude for climate friendly infrastructure)

### Debt sustainability assessment and risk ratings
- Risk of external debt distress: Moderate.
- Overall risk of debt distress: Moderate.
- Granularity in the risk rating: "Some, but limited, space to absorb shocks."
- Application of judgement: Yes — "risk of external debt distress increased based on high macroeconomic uncertainty, uncertainty regarding concessional finance from donors."
- Debt-carrying capacity classification: "medium" (Burkina Faso’s Composite Indicator (CI) is 2.93 based on the April 2023 WEO and the 2021 CPIA).
- Key vulnerabilities to debt sustainability:
  - Expenditures required to address food insecurity and the humanitarian crisis.
  - Expenditures required to contain the security crisis.
  - Increased refinancing risks due to limited donor support and a large proportion of the debt portfolio having relatively short maturities.
  - Increased reliance on the expensive WAEMU regional bond market.
  - Undiversified export base with high vulnerability to external price shocks.

### Public debt coverage and contingent liabilities
- Public debt coverage includes: central government debt, guarantees, local government debt, and non-guaranteed SOE debt.
- With World Bank SDFP support, Burkina Faso meets the "full disclosure" rating for all categories on the World Bank’s Debt Transparency Heat Map (as the only IDA country).
- Contingent liabilities (end-2021): around 10 percent of public and publicly guaranteed (PPG) debt and 5 percent of GDP.
- Contingent liability stress test applied as a precaution; combined contingent liability shock used in DSA: 8.5 percent of GDP, composed of:
  - 1.5 percent of GDP for guarantees to the private sector;
  - 2 percent of GDP standard SOE debt shock;
  - 0.0 percent of GDP for PPPs (stock less than 5 percent of GDP);
  - 5 percent of GDP for the financial sector (default value).

### Background on debt levels, composition, and market financing
- Nominal public debt stock (end-2022): 58.3 percent of GDP.
- Public debt projected to increase to 60.9 percent of GDP in 2023.
- External debt share of total debt (end-2022): 44.5 percent of the total debt stock (down by over 10 percentage points since 2018).
- From January 2018 to July 2023:
  - Cumulative government issuance: about CFAF 4,660 billion.
  - Treasury Bills raised: CFAF 1,426 billion (mostly 12-month maturities).
  - Government bonds issued: CFAF 3,236 billion (maturities between 3 and 10 years).
- Domestic debt defined as debt denominated in CFAF; borrowing from BOAD classified as external by residency criteria despite CFAF denomination.
- Increasing reliance on the WAEMU regional bond market to finance deficits:
  - Average annual issuance during 2018-2022: 7.8 percent of GDP.
  - Average budget deficit during 2018-2022: 6 percent of GDP.
- Market developments (2022–2023):
  - Issuance in 2022: CFAF 773 billion (declined vs 2021 but remained elevated).
  - Yield curve began shifting upwards since February 2023; one-year interest rates breached 8 percent.
  - May 2023 issuance: CFAF 60 billion; June 2023: CFAF 204 billion; July 2023: CFAF 28 billion.
  - Plan to increase syndicated bond issuances to raise larger volumes at longer maturities; syndicated bonds mainly held by WAEMU regional banks.
  - Example syndicated bond interest rate reported: 6.40 percent on a 12-year bond (most recently available information).
- Debt service (end-December 2022): more than CFAF 1,100 billion total; CFAF 965 billion (86.9 percent) to domestic creditors.
  - Around 80 percent of debt service was used for principal payments; around half used to amortize Treasury Bills.

### Macroeconomic baseline, projections, and program anchors
- Recent macro developments:
  - Real GDP growth (2022): 1.5 percent (revised down from earlier projections).
  - Real GDP growth (current forecast): 4.4 percent in 2023; 6.4 percent in 2024; medium-term stabilization "around 5.3 percent."
  - GDP growth history/projections table excerpts (selected):
    - 2021: 6.9 percent
    - 2022 (est.): 1.5 percent
    - 2023 (proj.): 4.4 percent
    - 2024 (proj.): 6.4 percent
  - Overall fiscal balance (selected): -7.5% (2021), -10.6% (2022), -6.6% (2023).
  - Current account: projected 4.9 percent of GDP in 2023 (compared to 5.2 percent in previous vintage).
  - Inflation: "After peaking at 14.1 percent in 2022, the annual average inflation rate is forecasted to slow down sharply to" (text truncated).
- ECF program request and fiscal anchor:
  - Burkina Faso requested a Four-Year Arrangement at 190 percent of quota under the Extended Credit Facility (ECF).
  - Program pillars: (1) creating fiscal space for priority spending; (2) strengthening resilience to shocks and reducing poverty and inequality; (3) reinforcing fiscal discipline, transparency, and governance.
  - Fiscal anchor targets and measures:
    - Reduce deficit-to-GDP ratio to 3 percent by 2027 (aligned with WAEMU convergence criteria).
    - Reduce wage-bill-to-revenues ratio to 45 percent by 2027 (from over 50 percent currently).
    - Raise the tax revenue-to-GDP ratio by 1.5 percentage points relative to a baseline without reforms.
    - Energy sector reforms including limiting subsidies and adopting performance-based contracts with state-owned firms in the energy sector.
    - Measures to control wage bill growth include annual reconciliations between personnel and payroll registries and limiting new recruitment to essential service needs.
    - Broadening of tax base via reductions in exemptions for VAT and vehicle tax and incorporating firms previously outside the tax code.
- Realism and credibility checks:
  - Baseline scenario judged credible relative to cross-country experiences and Burkina Faso’s historical experience.
  - Planned fiscal adjustment over the next three years: around 1.5 percent of GDP.
  - Estimated economic growth in 2023 (4.4 percent) is within plausible ranges given fiscal multipliers (0.2 to 0.8 percent); 2024 growth estimate at 6.4 percent "substantially higher than the level suggested by plausible multipliers" and relies on improved security and reprioritized expenditures.
  - External-debt-creation driven largely by current account and FDI dynamics; external debt dynamics partly reflect non-identified debt-creating flows due to currency-based external debt definition.

### Downside risks and policy implications
- Main downside risks:
  - Security disruptions increasing social and political uncertainty.
  - Difficulties in revenue mobilization.
  - Pressures on spending including security and public sector wages.
  - Exacerbation of food insecurity and increased internal displacement (about 8 percent of the population displaced in 2022).
  - Continued donor suspension or reduced concessional financing, implying greater reliance on regional bond market and higher debt service costs.
  - Closure of mines and interruptions to investment could undermine the current account and growth.
- Policy implications highlighted in the DSA:
  - Need to mobilize concessional financing and donor support to ease refinancing risk.
  - Prioritize measures that create fiscal space for essential social and security spending while restoring fiscal discipline.
  - Strengthen revenue mobilization through tax administration reforms and base broadening.
  - Pursue energy sector reforms to limit subsidies and improve SOE performance.
  - Extend domestic debt maturity via longer-term syndicated issuances where feasible to reduce rollover risk.

*Prepared jointly by the staffs of the International Monetary Fund (IMF) and the International Development Association (IDA) September 7, 2023*

### 1.4 percent in 2023, and recover to 3 percent in 2024, within the WAEMU inflation target range.

### 1.4 percent in 2023, and recover to 3 percent in 2024, within the WAEMU inflation target range.

### Fiscal outlook and program anchor
- Fiscal deficit rose to 10.6 percent of GDP in 2022.
- The ECF program is anchored by a gradual decline of the fiscal deficit, in line with WAEMU criteria, to ensure debt sustainability and remain at a moderate risk of debt distress while limiting the growth impact.
- A deficit reduction of 7.7 percent of GDP during 2023-2027 to reach the WAEMU target of 3 percent of GDP would be achieved by a mix of revenue and expenditure measures and more favorable financing.
- The remainder of the deficit is assumed to be financed via external debt, on gradually less generous terms to reflect additional non-concessional financing and conservative assumptions about concessional financing availability.

### Debt projections and public debt dynamics
- Debt levels are projected to rise to 60.9 percent of GDP in 2023, compared to 58.3 percent of GDP in 2022.
- Under the program, debt levels rise slightly till 2025, and then decline to 60.2 percent of GDP in 2027, remaining throughout at a moderate risk of debt distress.
- The baseline scenario projects an increase of PPG public debt reaching a peak of 61.2 percent of GDP projected for end 2025.
- Over the medium term, planned fiscal adjustment allows the debt ratio to be under control, with public debt reaching 53.3 percent of GDP in 2033.
- The PV of public debt-to-GDP ratio declines from 53.5 percent of GDP in 2023 to 51.6 percent of GDP in 2027.
- The PV of debt-to-revenue and grants ratio is expected to peak in 2023 at 256.5 percent and then gradually decrease to 191.0 percent by 2033.
- The PV of debt service-to-revenue and grants ratio escalates from 42.8 percent in 2023 to 74.4 percent by 2026, reflecting relatively short maturity of domestic financing.

### Financing assumptions and interest-rate environment
- Short-term (2023 and 2024) interest rates revised in line with regional bond market developments:
  - T-bills: average interest rate of 8.5 percent (previously 5.4 percent).
  - Bonds up to 3 years: 8.5 percent (previously 6.7 percent).
  - 3 to 7-year bonds: 8 percent (previously 7.7 percent).
  - Long-term bonds: 7.7 percent (as earlier).
- In the medium term, interest rates are assumed to return to their historical averages.
- Composition of domestic financing assumed comparable to previous DSA:
  - about 45 percent in T-bills,
  - 30 percent in 3 to 7-year bonds,
  - 25 percent in 8-year bonds.
- Beyond the medium term, authorities are assumed to mobilize greater amounts from longer maturity instruments as the regional financial market develops.
- IDA-20 financing from the World Bank is assumed to resume in 2024 and is projected to average about US$370 million per year over the medium term.
- The DSA assumes an increase of non-concessional financing over the forecast horizon; non-concessional borrowing will expand to an average of around 35 percent of total external borrowing over time.
- The grant element of new borrowing is assumed to decrease gradually over the forecast horizon.

### External sector, current account, and balance of payments
- Supported by high gold prices, the current account deficit is expected to decline to 4.9 percent of GDP in 2023, from 6.2 percent in 2022, and further improve thereafter, reaching 4.3 percent of GDP in 2025.
- Recent mine closures continue to impact gold exports; absent a credible policy framework and improved security conditions, the deficit will likely remain substantial.
- Political uncertainty discourages private capital flows, contributing to a BoP financing gap of CFAF 69 billion in 2023, expanding to CFAF 82 billion in 2024 and narrowing thereafter to around CFAF 80 billion in 2027.

### Debt-carrying capacity and thresholds
- Burkina Faso’s current debt-carrying capacity classification: ‘medium’.
- Composite Indicator (CI) index: 2.93 (below the threshold of 3.05 for “strong”).
- Indicative thresholds for the ‘medium’ category:
  - PV of external debt-to-GDP ratio: 40 percent.
  - PV of debt-to-exports ratio: 180 percent.
  - Debt service-to-exports ratio: 15 percent.
  - Debt service-to-revenue ratio: 18 percent.
  - Benchmark for PV of total public debt: 55 percent of GDP.

### Debt sustainability analysis (DSA) results
- Under the baseline scenario, all external PPG debt indicators remain below policy-relevant thresholds for the next ten years.
- PV of external debt-to-GDP ratio expected to remain around 16 percent over the projection horizon; decreases from 17.3 percent in 2023 to 12.0 percent in 2033.
- PV of external debt-to-exports ratio projected to decline from 62.3 percent in 2022 to 50.9 percent in 2033, well below the 180 percent threshold.
- PV of debt service-to-exports ratio remains around 5 percent for the next 10 years.
- Debt service-to-revenue ratio (excluding grants) peaks at 7.4 percent in 2023, then decreases to 4.4 percent in 2033.
- Standardized stress tests:
  - Export shock has the largest negative impact on debt trajectory but does not trigger breach of external PPG debt indicators.
  - PV of debt-to-exports ratio significantly impacted by export shock but remains below 180 percent.
  - Other shocks (real GDP growth, primary balance, one-time 30 percent depreciation of the CFAF) and tailored tests (contingent liabilities, commodity prices) do not lead to breaches of debt thresholds under projection period.
- Public debt sensitivity:
  - Under the most extreme shock — a shock to commodity prices — the PV of public debt-to-GDP ratio remains above the benchmark through the projection period.
  - The commodity price shock is the most extreme shock for PV of debt-to-revenue ratio and debt service-to-revenue ratio.

### Risks, vulnerabilities, and structural issues
- Staff judgment: risk of external debt distress assessed as moderate, as in the previous DSA update of March 2023.
- Key risks that could worsen debt dynamics:
  - Further escalation of the security crisis leading to considerable fall in GDP and a sharp decline in gold production, adversely affecting export receipts.
  - Increased military spending and rising costs of food, energy, and fertilizer imports.
  - Reduced donor support, potentially increasing reliance on expensive domestic financing.
- Portfolio characteristics and liquidity risks:
  - Burkina Faso’s debt portfolio average maturity: 7.5 years.
  - Average maturity of domestic debt: 4.5 years.
  - Large volume of short-term maturing debt and uncertainty regarding donor budget support expose the portfolio to rollover and liquidity risks.
  - Cash flow management issues, short maturities, rollover risks, and a shallow domestic market exacerbate liquidity concerns.
- Export concentration and vulnerability:
  - Commodities constitute around 80 percent of total exports.
  - For three out of four external debt indicators, the most extreme shock is an export shock; for all public debt indicators, the most extreme shock is a commodity price shock.
  - Exports are mainly gold and, to a much lesser extent, cotton; diversification is needed to reduce vulnerability to external price shocks.

*Source: IMF country DSA chapter content.*

### CONCLUSIONS

### CONCLUSIONS

### Assessment of debt distress
- Staff assesses Burkina Faso’s risk of external debt distress and overall debt distress as “moderate.”
- Baseline scenario: no breach of debt distress thresholds for any debt and debt service indicators for both external and public debt.
- PV of debt-to-GDP ratio is breached only in the commodity stress test, illustrating vulnerability to export price developments.
- Granularity: some, but limited, space to absorb shocks on external and public debt; no downgrade to “high” risk under the median observed shock scenario, though short-term increases in debt service-to-exports and service-to-revenue ratios reduce the available space.

### Key risks and vulnerabilities
- Continued assessment of “moderate” external debt distress risk reflects high macroeconomic uncertainty that could:
  - lead to sharp declines in GDP;
  - trigger usage of non-concessional external debt or greater reliance on expensive domestic debt.
- Specific risks highlighted:
  - expenditures required to address food insecurity and the humanitarian crisis;
  - expenditures required to contain the security crisis;
  - risks from limited donor support and a large proportion of the debt portfolio with relatively short maturities (rollover and liquidity risks);
  - increased reliance on expensive domestic financing markets;
  - undiversified export base with high vulnerability to external price shocks.
- A Fund-supported program is expected to mitigate policy-direction uncertainties and catalyze donor finance.

### Debt sustainability and headline indicators (selected numbers preserved exactly as in source)
- External Debt (Nominal), percent of GDP: 2020: 21.4; 2021: 25.6; 2022: 25.9; 2023: 24.5; 2024: 23.9; 2025: 23.6; 2026: 23.4; 2027: 23.2; 2028: 22.7; 2033: 19.0; 2043: 12.1.
- Change in external debt (percent of GDP): 2020: -1.7; 2021: 4.2; 2022: 0.4; 2023: -1.4; 2024: -0.6; 2025: -0.3; 2026: -0.2; 2027: -0.2; 2028: -0.5; 2033: -0.9; 2043: -1.4.
- Identified net debt-creating flows (percent of GDP): 2020: -6.9; 2021: -2.5; 2022: 7.5; 2023: 3.9; 2024: 2.9; 2025: 2.7; 2026: 2.7; 2027: 2.6; 2028: 2.1; 2033: 0.8; 2043: 0.7.
- Non-interest current account deficit (percent of GDP): 2020: -4.3; 2021: -0.6; 2022: 5.9; 2023: 4.3; 2024: 3.8; 2025: 3.7; 2026: 3.6; 2027: 3.4; 2028: 2.9; 2033: 1.5; 2043: 1.3.
- Exports (percent of GDP): 2020: 29.9; 2021: 31.6; 2022: 29.2; 2023: 27.8; 2024: 27.3; 2025: 26.7; 2026: 25.9; 2027: 25.6; 2028: 25.6; 2033: 23.6; 2043: 20.3.
- Net FDI (negative = inflow, percent of GDP): 2020: -0.5; 2021: -0.2; 2022: 0.2; 2023: 0.2; 2024: 0.1; 2025: 0.0; 2026: 0.1; 2027: 0.1; 2028: 0.1; 2033: 0.0; 2043: 0.0.
- Endogenous debt dynamics (percent of GDP): 2020: -2.1; 2021: -1.7; 2022: 1.3; 2023: -0.6; 2024: -1.1; 2025: -1.0; 2026: -0.9; 2027: -0.9; 2028: -0.9; 2033: -0.8; 2043: -0.5.
- PPG Debt Service-to-exports Ratio (percent): 2020: 2.9; 2021: 3.1; 2022: 4.0; 2023: 5.0; 2024: 5.0; 2025: 5.1; 2026: 5.4; 2027: 4.9; 2028: 4.3; 2033: 4.1; 2043: 2.8.
- PPG Debt Service-to-revenue Ratio (percent): 2020: 5.4; 2021: 5.4; 2022: 6.0; 2023: 7.4; 2024: 7.2; 2025: 7.0; 2026: 7.0; 2027: 6.1; 2028: 5.3; 2033: 4.4; 2043: 2.5.
- PV of PPG External Debt-to-GDP Ratio (memorandum): 18.4; 17.3; 16.4; 15.8; 15.3; 15.0; 14.5; 12.0; 8.0 (years correspond to projection rows in table).
- PV of PPG External Debt-to-exports Ratio (memorandum): 63.0; 62.3; 60.0; 59.4; 59.2; 58.5; 56.7; 50.8; 39.3.
- Gross external financing need (Billion of U.S. dollars): 2020: -0.7; 2021: 0.0; 2022: 1.4; 2023: 1.2; 2024: 1.2; 2025: 1.3; 2026: 1.4; 2027: 1.4; 2028: 1.3; 2033: 1.1; 2043: 1.7.
- Key macro assumptions: Real GDP growth (percent): 2020: 1.9; 2021: 6.9; 2022: 1.5; 2023: 4.4; 2024: 6.4; 2025: 6.0; 2026: 5.6; 2027: 5.3; 2028: 5.3; 2033: 5.4; 2043: 5.3.
- Government revenues (excluding grants, percent of GDP): 2020: 16.1; 2021: 17.8; 2022: 19.4; 2023: 19.0; 2024: 19.1; 2025: 19.6; 2026: 20.0; 2027: 20.5; 2028: 20.9; 2033: 21.7; 2043: 23.3.
- Nominal GDP (Billion of US dollars): entries visible in table include 18, 20, 19, 21, 23, 25, 27, 29, 31, 44, 91 (as presented in table).

### Public sector debt dynamics (selected numbers)
- Public Sector Debt (percent of GDP): 2020: 43.3; 2021: 55.4; 2022: 58.3; 2023: 60.9; 2024: 61.0; 2025: 61.2; 2026: 60.7; 2027: 59.7; 2028: 58.5; 2033: 53.3; 2043: 46.9.
- Change in Public Sector Debt (percent of GDP): 2020: 1.8; 2021: 12.0; 2022: 2.9; 2023: 2.6; 2024: 0.1; 2025: 0.2; 2026: -0.5; 2027: -0.9; 2028: -1.2; 2033: -0.9; 2043: -1.5.
- Primary deficit (percent of GDP): 2020: 3.8; 2021: 5.7; 2022: 8.7; 2023: 4.5; 2024: 3.0; 2025: 2.0; 2026: 1.2; 2027: 0.4; 2028: 0.4; 2033: 0.6; 2043: 0.3.
- PV of Public Debt-to-GDP Ratio (memorandum): 50.7; 53.5; 53.4; 53.3; 52.6; 51.6; 50.4; 46.3; 42.8 (projection rows).
- Debt Service-to-revenue and Grants Ratio (percent): historical and projections include 38.8; 41.0; 41.2; 44.9; 61.1; 68.2; 74.4; 73.0; 71.0; 60.2; 48.1.
- Gross financing need (percent of GDP): 8.4; 9.7; 11.3; 13.4; 15.5; 16.5; 17.4; 16.6; 16.5; 15.2; 12.5.

### Qualification and stress-test outcomes
- Under the module qualifying the “moderate” category, Burkina Faso is assessed as having some space to absorb shocks, but limited: none of the indicators breach thresholds under a median observed shock scenario, but short-term increases in debt service ratios reduce space without causing a downgrade to “high” risk.
- Stress-test results: PV of debt-to-GDP breaches only in the commodity price stress test; the most extreme shock for several indicators is a one-time depreciation or commodity price shock (figures and tables present detailed scenario outcomes).

### Authorities’ views and actions (commitments and program design)
- Authorities share DSA conclusions and will pursue a medium-term debt management strategy to continue prudent public debt management and extend maturity of domestic debt.
- Authorities seek a 48-month ECF arrangement to help catalyze concessional financing and support priorities in the Action Plan for Stabilization and Development.
- Fiscal targets and commitments:
  - Gradual reduction of fiscal deficit from 7 percent to within the 3 percent regional target during the program period.
  - Revenue targets: 20 percent of GDP in 2023; 22.2 percent by 2027.
  - Plan to reduce wage bill from about 65 percent of revenue in recent years to below 47.1 percent over the program period.
  - Prioritization of security and social spending; improved targeting of subsidies and social outlays.
  - Commitment to rely on grants and concessional financing where possible and to strengthen debt management and donor engagement.
- Governance and transparency measures:
  - Publish budget execution reports quarterly and information on FSW disbursement use and beneficial owners of awarded public tenders.
  - Integrate Patriotic Support Fund into Budget Law and ring-fence expenses.
  - Prepare a governance diagnostic and action plan; audit of government arrears and floating debts; explore timing and scope of a Fiscal Safeguards Review (FSR).

### Emergency response, FSW disbursement, and implementation of RSPVP (selected factual figures)
- Response and Support Plan for Vulnerable Populations (RSPVP) estimated cost: US$114 million (CFAF 69 bn, 0.5 percent of GDP).
- Food Shock Window (FSW) emergency financing: SDR 60.2 million, US$81 million, CFAF 49 billion; disbursed on March 29, 2023.
- RSPVP implementation update (as of August 31, 2023):
  - Total expenditure on RSPVP: US$50 million (CFAF 30 billion) — equivalent to about 44 percent of the currently budgeted amount and about 61 percent of FSW emergency financing.
  - Implementation/execution rates (Table 1, in CFAF billion and percent execution):
    - Distribution of free food: Budgeted 7.2; Actual 7.2; Execution rate 100.0.
    - Cash transfers: Budgeted 15.6; Actual 2.7; Execution rate 17.4.
    - Sales of cereals at subsidized prices: Budgeted 7.7; Actual 7.7; Execution rate 100.0.
    - Improvement of water supply/distribution: Budgeted 34.1; Actual 8.4; Execution rate 24.6.
    - Distribution/sale of agricultural inputs (incl. fertilizers, seeds) at subsidized prices: Budgeted 2.9; Actual 2.9; Execution rate 100.0.
    - Support to livestock farming: Budgeted 1.4; Actual 1.3; Execution rate 92.4.
    - Total: Budgeted 68.8; Actual 30.2; Execution rate 43.8.
  - Authorities proceeding cautiously on cash transfers (about 17 percent of budgeted amounts) due to security conditions and to minimize misuse; expectation to shift emphasis over time to more structural measures and expand cash transfer systems under the proposed ECF program.
- FSW safeguards and reporting: authorities committed to semi-annual reports and a one-year audit of cash transfer programs and emergency food expenditures; audit is a structural benchmark under the proposed ECF-supported program.

### 2023 budget and program finances (selected numbers from Table 2)
- Program (proj.) versus Initial and Revised Budgets, 2023 (CFAF billion):
  - Total revenue and grants: Program 2,490.0; Initial Budget 2,631.3; Revised Budget 2,718.9; Revised Budget versus Program 228.8.
  - Total revenue: Program 2,374.3; Initial 2,347.8; Revised 2,479.3; Revised vs Program 105.0.
  - Tax revenue: Program 2,096.6; Initial 2,107.3; Revised 2,204.8; Revised vs Program 108.2.
  - Grants: Program 115.8; Initial 283.5; Revised 239.6; Revised vs Program 123.8.
  - Total Expenditure: Program 3,321.2; Initial 3,235.9; Revised 3,382.7; Revised vs Program 61.4.
  - Current expenditure: Program 2,177.6; Initial 2,074.6; Revised 2,115.8; Revised vs Program -61.8 (table sign convention preserved).
  - Investment expenditure: Program 1,143.6; Initial 1,161.3; Revised 1,266.8; Revised vs Program 123.2.
  - Domestically financed investment: Program 820.8; Initial 706.0; Revised 811.5; Revised vs Program -9.3.
  - Overall balance (commitment basis): Program -831.2; Initial -604.7; Revised -663.8; Revised vs Program 167.4.

### Macroeconomic developments and outlook (selected narrative and figures)
- Recent growth: 2021 real GDP growth 6.9 percent; 2022 real GDP growth 1.5 percent.
- Inflation: headline inflation peaked in 2022 at 18 percent; annual average inflation 14.1 percent in 2022.
- Outlook: growth expected to rebound in 2023 and gradually move toward a steady-state rate of 3 percent as security improves and activity normalizes; inflation expected to decelerate as commodity prices decline and domestic food production increases.
- Downside risks: domestic security conditions; spillovers of regional crises; disruptions from escalation of geopolitical tensions; tightening global financial conditions.

*Source: IMF staff report — “CONCLUSIONS” (Burkina Faso), including Tables and Figures in the provided chapter/section.*

### Conclusion

### Conclusion

### Summary
- "Considering the authorities’ strong commitment to reforms, robust program ownership as evidenced by the implementation of courageous prior actions, as well as their long-standing track record of satisfactory program performance, including under the Fund’s Food Shock Window, we call for and would greatly appreciate the Executive Board’s positive consideration of Burkina Faso’s request for an ECF arrangement."

### Key point
- Request: positive consideration of Burkina Faso’s request for an ECF arrangement.

### Contextual factors cited
- "strong commitment to reforms"
- "robust program ownership"
- "implementation of courageous prior actions"
- "long-standing track record of satisfactory program performance"
- Performance "including under the Fund’s Food Shock Window"

### Document detail
- Page: 5

*Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1bfaea2023002.pdf (1bfaea2023002 - Conclusion)*

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_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1bfaea2023002.pdf_