## _cr0984

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---

### Overview and Decision Point Background
- In August 2005 the Boards of Executive Directors of IDA and the IMF agreed that Burundi had met the requirements for reaching the decision point under the enhanced HIPC Initiative.
- Amount of debt relief committed at the decision point: US$826 million in NPV terms (US$1,495 million of debt relief in nominal terms over time), calculated to reduce the NPV of debt to 150 percent of exports at end-2004.
- The decision-point relief represented a common reduction factor of 91.5 percent for all creditors.
- Interim debt relief was granted by IDA and the IMF until the country reached its floating completion point; interim assistance was also provided by AfDB Group, the EU, the Paris Club, and other multilateral creditors.

### Progress Toward the Completion Point (Summary Findings)
- Staff view: Burundi has made satisfactory progress in meeting the requirements for reaching the completion point.
- PRSP: First full PRSP presented in March 2007; implementation judged satisfactory by JSAN and the first APR.
- PRGF: First review under new PRGF arrangement to be presented with the completion point document and APR/JSAN; IMF staff will recommend completion of the first review given satisfactory program implementation in 2008.
- Trigger implementation: Authorities implemented six out of nine triggers and requested waivers for the remaining three.
- Triggers not fully implemented: demobilization, the coffee sector, and the social sectors — satisfactory progress recorded, corrective actions underway and substantive achievements in several areas.

### Specific Trigger Assessments and Implementation Notes
- Demobilization
  - Status: Substantially implemented.
  - Key figures:
    - 23,022 adult personnel discharged and demobilized.
    - 22,024 adults received socio-economic reintegration support.
    - 3,261 children released from armed groups; 3,015 received a reinsertion allowance.
    - 28,379 Gardiens de la paix and Militants combatants received reinsertion allowances.
    - Final assessed sizes: 26,588 active duty army personnel and 17,161 police members (targets: 25,000 and 15,000).
  - Note: FNL ceasefire signed late; power-sharing agreement reached in December 2008.
- Coffee sector
  - Status: Substantially implemented; divestiture decision adopted in December 2008 with implementation expected in 2009.
  - Actions: November 2006 action plan; liberalization of marketing in May 2008; regulation for 2008–09 season in April 2008.
  - Divestiture approach: divide 133 washing stations into 29 lots; 75 percent private sale, 25 percent to farmer organizations (with interim institutional holders).
- Social sectors (Education and Health)
  - Status: Partially implemented (national education progress satisfactory; immunization target not met).
  - Education figures:
    - Gross primary school enrollment: estimated 80 percent in 2003/04 to 114 percent in 2006/07.
    - Gross secondary enrollment: 12 percent in 2003/04 to 16 percent in 2006/07.
    - Gender parity index: 0.75 in 2003/04 to 0.87 in 2006/07.
    - Repetition rates: around 30 percent in 2007; survival rate: 67 percent.
  - Health (Immunization) figures (administrative projections for 2008):
    - BCG 91 percent; DTC-HepB-Hib3 81 percent; VAR 78 percent; Polio 79 percent; VAT 70 percent.
    - Only one out of five immunization rates projected to reach 85 percent target.
  - Government 2009 commitments:
    - Include vaccination services in the improved “free-services" package.
    - Commit additional resources to statistics to improve data reliability.
- Public financial management (PFM)
  - SIGEFI computerized expenditure management system in place since January 2006; new budgetary nomenclature; quarterly budget execution reports since mid-2006.
  - New procurement and customs codes adopted; new budget organic law promulgated November 2008.
  - Ministry of Finance granted exclusive right to negotiate and sign external loans.
  - Computerized foreign debt management system installed; monthly external debt reports produced.
  - National Audit Office completed audit of 2006 accounts in 2007; two independent audits of HIPC funds in 2005–07 completed in 2008.
- Use of HIPC interim funds
  - Since 2006 more than half of HIPC resources allocated to education, public health and fight against AIDS.
  - HIPC Independent Oversight Committee reactivated mid-2007; two audits in May and August 2008; Committee adopted measures in November 2008.

### Debt Reconciliation and Creditor Participation
- Updated reconciliation:
  - Upward revision of end-2004 NPV of debt after traditional debt relief: from US$902.0 million to US$908.8 million (nominal debt stock revised from US$1,384.1 million to US$1,386.6 million).
  - Implied increase in HIPC debt relief in NPV terms: from US$825.7 million to US$832.6 million.
  - Implied common reduction factor at decision point: from 91.54 percent to 91.62 percent.
- Creditor participation:
  - Creditors accounting for 96 percent of total HIPC assistance in NPV terms have given satisfactory assurances of participation.
  - IDA decision point assistance: US$425.2 million in NPV terms; interim delivery US$68.5 million; completion point remaining US$356.7 million (90 percent reduction modality).
  - IMF decision point commitment: SDR19.262 million (US$27.84 million) revised to SDR19.28 million (US$27.9 million) in NPV terms; completion point stock-of-debt operation estimated at SDR21.9 million.
  - AfDB Group HIPC relief amount: US$150.2 million in NPV terms; interim delivery US$26.3 million arrears clearance and US$20.7 million HIPC interim relief; completion point assumed remaining US$103.2 million.

### Debt Burden Indicators and DSA Findings
- End-2007 outcomes (after full delivery of HIPC assistance)
  - NPV of external debt after full HIPC assistance at end-2007: US$175.4 million (195.7 percent of exports).
    - Owed to multilateral creditors: US$166.6 million.
    - Owed to Paris Club creditors: US$5.2 million.
  - Projected at decision point (after full HIPC delivery) for end-2007: 164.8 percent (methodological revision to 180.4 percent).
  - Actual vs revised projection difference: 15.2 percentage points.
  - After voluntary additional Paris Club relief, NPV of debt-to-exports ratio at end-2007 estimated at 190.3 percent.
- Drivers of deviation (unanticipated change = 15.2 percentage points)
  - Changes in parameters: 2.5 percentage points (16% of total increase)
    - o/w discount rates: -10.3 percentage points (-68% of total increase)
    - o/w exchange rates: 12.8 percentage points (84% of total increase)
  - Unanticipated new borrowing: 13.0 percentage points (85% of total increase)
    - o/w higher than expected disbursements: 12.7 percentage points (83% of total increase)
    - o/w lower concessionality: 0.3 percentage points (2% of total increase)
  - Changes in exports: -2.5 percentage points (-17% of total increase)
  - Changes in HIPC relief and other factors: 2.3 percentage points (15% of total increase)
- Staff view on exceptional topping-up:
  - Burundi does not meet requirements for exceptional topping-up under the enhanced HIPC Initiative.
  - Rationale: deterioration is fairly modest and not primarily attributable to exogenous shocks; main contributor (higher-than-expected new borrowing) not due to an exogenous shock.

### MDRI Implications and Delivery
- Qualification: Upon completion point, Burundi qualifies for MDRI relief covering eligible credit balances to IDA, AfDF and the IMF.
- MDRI amounts (nominal/net of HIPC assistance):
  - IDA: US$90.4 million (nominal reduction of debt owed to IDA); IDA MDRI relief amount in nominal terms: US$98.3 million; IDA debt stock reduction on eligible credits: 743.0 (World Bank table context) and remaining IDA credits after MDRI relief: 93.5.
  - IMF: SDR9.2 million (US$14.5 million).
  - AfDF: US$12.6 million (debt stock cancellation estimated at US$12.6 million; AfDF MDRI relief in nominal terms: US$13.9 million starting February 1, 2009).
- IDA delivery modality: irrevocably cancel credits disbursed before end-2003 and still outstanding on March 31, 2009.
- Nominal debt service relief in 2009: US$46.0 million (of which US$3.7 million relates to MDRI).

### Medium-Term Debt Path and Projections (post-HIPC and MDRI)
- Aggregate projections (selected)
  - Debt stock in NPV terms: US$911 million at end-2008 (before completion point relief).
  - Debt stock in NPV terms after full delivery at end-2009: US$150 million.
  - NPV of debt-to-exports ratio:
    - 967 percent at end-2007 (pre-assistance stated in text).
    - Expected to decline to 148 percent at end-2009 after HIPC and MDRI assistance.
    - Expected to rise to 169 percent by end-2011.
    - Projected to continue slow downward trend, reaching 75 percent by end of projection period.
  - NPV of debt-to-GDP ratio:
    - 89 percent at end-2007.
    - Expected to decline to 11 percent at end-2009 after HIPC and MDRI assistance.
    - Expected to reach 7 percent by end of projection period.
  - Debt service:
    - After HIPC assistance, projected at 3-4 percent of government revenues until 2011.
    - Debt-service-to-revenue ratio expected to increase during 2012–17 owing to large principal repayments, then decline to 2 percent by end of projection period.
    - After additional bilateral and MDRI relief, debt service would not exceed 5 percent of revenues throughout projection period.

### Sensitivity Analysis and Alternative Scenarios (2008–27)
- Scenario 1 — Terms-of-trade shock
  - Assumptions: permanent decline in coffee export price by 20 percent; permanent increase in oil import price by 17 percent.
  - Effects:
    - Reduction in nominal exports of about 8.4 percent in 2009, deteriorating to about 15 percent by end of projection period.
    - NPV of debt-to-exports ratio rises rapidly, reaching 217 percent by 2011.
    - By 2027 NPV of debt-to-exports ratio is more than 100 percentage points higher than baseline.
- Scenario 2 — Lower donor support (2009–15)
  - Assumption: foreign grants are cut by 25 percent during 2009–15.
  - Government response: additional borrowing on concessional terms.
  - Impact:
    - NPV of debt-to-exports ratio peaks at 256 percent by 2015.
    - Declines to 119 percent by 2027 (approximately 45 percentage points higher than baseline).
- Scenario 3 — Lower growth
  - Assumption: permanent reduction in real GDP growth by one percentage point relative to baseline.
  - Impact:
    - NPV of debt-to-exports ratio continuously deteriorates, reaching 343 percent (approximately 270 percentage points higher than baseline).
- Policy implications from sensitivity analysis:
  - Emphasizes need for continued prudent fiscal and debt management.
  - Authorities should implement reforms to support donor involvement, achieve higher investment, and promote export diversification.
  - Recommendation: continue reliance on grants and highly concessional loans; intensify efforts to expand tax base.

### Debt Management, Creditor Composition, and Participation (selected figures)
- External debt stock (end-2007): nominal US$1,466.4 million (compared with end-2004: US$1,386.6 million).
- Creditor composition (end-2007):
  - Multilateral creditors: 86.1 percent of total debt.
  - Bilateral and commercial creditors: 13.9 percent.
  - Largest creditors:
    - IDA: 57 percent of total outstanding debt (nominal IDA: 836.5).
    - AfDB Group: 14.8 percent (nominal AfDB Group: 217.3).
    - France: 7.2 percent (nominal France end-2007: 105.6).
- NPV of external debt (end-2007) after full HIPC assistance: US$175.4 million.
- NPV of total debt and assistance (decision-point revision):
  - NPV of debt after traditional debt relief (end-2004): revised to US$908.8 million.
  - Amount of HIPC debt relief required to reach 150 percent threshold: US$832.6 million (revised from US$825.7 million).
  - Implied common reduction factor: 91.62 percent (revised from 91.54 percent).
- Creditor assurances: Financing assurances from creditors representing 96 percent of NPV of HIPC assistance at decision point.

### Governance, Service Delivery and PFM Reforms (selected)
- Governance and service delivery
  - Completion requirements for education, health, and justice sectors implemented: budget tracking, user/provider evaluations, and action plans; surveys completed by December 2007; action plan adopted December 2008.
  - Survey findings:
    - Health: patient satisfaction 82 percent; concerns about centralization and staff concentration in capital.
    - Education: parents’ satisfaction around 18 percent for the whole system.
    - Justice: 51.4 percent consider costs excessive; 94 percent of court cases relate to land tenure; average time to complete court cases more than two years.
- PFM reforms and operations
  - New procurement and customs codes adopted; budget organic law promulgated November 2008.
  - Double-entry accounting system being introduced with closing balances for 2006 and 2007.
  - Treasury operations: move toward single treasury account; merged recurrent and capital budget accounts; eliminated seven HIPC sub-accounts and closed 90 ministry accounts.
  - Customs and tax administration: new customs code promulgated in 2007; ASYCUDA++ roll-out; computerized tax identification number system introduced.
- Incidents and corrective actions
  - Sale of presidential plane (2006): external audit, corrective action plan (September 2007), new law on sale of public goods (July 11, 2008), Parliamentary commission reported July 2008; judicial proceedings pending.
  - Payments of US$17 million to Interpetrol (February–May 2007) without normal procedures: external audit, corrective measures, independent external audit of oil sector cross-debts; repayment agreements being finalized; legal proceedings launched but not progressed since May 2007.
- External assistance and capacity building
  - Donors and institutions involved: IMF, EU, the Netherlands, the United Kingdom, Belgium, France, IDA, World Bank Group, USAID.
  - IDA facilitated training of 98 staff in new procurement law implementation.
  - IMF supporting central bank reforms with technical assistance.

### Staff Recommendation and Questions for Executive Directors
- Recommendation: Staffs recommend that the Executive Directors of IDA and the IMF approve the completion point for Burundi under the enhanced HIPC Initiative.
- Questions posed to Directors (selected):
  - Do Directors agree that Burundi has reached the completion point under the enhanced HIPC Initiative?
  - Do Directors agree with the proposed revision in the stock of debt in NPV terms and the upward revision in IMF HIPC assistance from SDR19.262 million to SDR19.28 million?
  - Do Directors agree that Burundi does not meet requirements for exceptional topping-up at the completion point?
  - Do IMF Directors agree that Burundi qualifies for an amount of debt relief by the IMF equal to SDR 31.1 million?

*Source: Executive Summary; Sections 5 and Box 2; Debt Sustainability Analysis and Tables; _cr0984 - Executive Summary (IMF staff report).*

### Executive Summary ......................................................................................................

### _cr0984 - Executive Summary

### Overview and Decision Point Background
- In August 2005 the Boards of Executive Directors of IDA and the IMF agreed that Burundi had met the requirements for reaching the decision point under the enhanced HIPC Initiative.
- Amount of debt relief committed at the decision point: US$826 million in NPV terms (US$1,495 million of debt relief in nominal terms over time), calculated to reduce the NPV of debt to 150 percent of exports at end-2004.
- The decision-point relief represented a common reduction factor of 91.5 percent for all creditors.
- Interim debt relief was granted by IDA and the IMF until the country reached its floating completion point; interim assistance was also provided by AfDB Group, the EU, the Paris Club, and other multilateral creditors.

### Progress Toward the Completion Point (Summary Findings)
- Staff view: Burundi has made satisfactory progress in meeting the requirements for reaching the completion point.
- PRSP: The first full PRSP was presented to the World Bank and IMF Boards in March 2007; implementation has been satisfactory as acknowledged by the Joint Staff Advisory Note (JSAN) and the first Annual Progress Report (APR).
- PRGF: The first review under the new PRGF arrangement will be presented to the IMF Board together with the completion point document and the APR/JSAN; IMF staff will recommend completion of the first review given satisfactory program implementation in 2008.
- Trigger implementation: Authorities have implemented six out of nine triggers and are requesting waivers for the remaining three based on good progress.
- Triggers not fully implemented: demobilization, the coffee sector, and the social sectors — satisfactory progress recorded, with corrective actions underway and substantive achievements in several areas.

### Specific Trigger Assessments and Implementation Notes
- Demobilization:
  - Demobilization, reinsertion and reintegration program substantially met the majority of its goals.
  - Final size of the army and police reasonably close to respective targets of 25,000 and 15,000.
  - Power-sharing agreement with the last rebel group signed in December 2008.
- Coffee sector:
  - Government implementing an action plan for overall reform (including divestiture, regulatory and institutional reform); decision on divestiture of government-owned washing stations taken late, but accepted by major stakeholders.
- Social sectors:
  - Government shows strong commitment to improving health services and vaccination coverage, but health system remains generally weak in a country with continued internal conflict; corrective measures being implemented.
- Public financial management:
  - An integrated computerized expenditure management system (SIGEFI) put in place in January 2006 with a new budgetary nomenclature; quarterly budget execution reports produced since mid-2006.
- Use of HIPC interim funds:
  - Since 2006 more than half of HIPC resources allocated to key social sectors (education, public health and fight against AIDS).
  - HIPC Independent Oversight Committee reactivated in mid-2007; two audits of the HIPC program undertaken in May and August 2008; Committee adopted measures in November 2008 to address audit comments.
- Debt management:
  - Strengthened through the preparation of monthly external debt reports.

### Debt Reconciliation and Creditor Participation
- Updated reconciliation: Upward revision of end-2004 NPV of debt after traditional debt relief from US$902.0 million to US$908.8 million.
- Implied increase in HIPC debt relief in NPV terms: from US$825.7 million to US$832.6 million.
- Implied common reduction factor at the decision point would increase from 91.54 to 91.62 percent.
- Creditor participation: Creditors accounting for 96 percent of total HIPC assistance in NPV terms have given satisfactory assurances of participation in the enhanced HIPC Initiative; all Paris Club creditors and most multilateral creditors have confirmed participation.

### Debt Burden Indicators and DSA Findings
- Staffs observed a slight deterioration in debt burden indicators at end-2007 compared with projections at the decision point.
- Updated analysis (after full delivery of HIPC debt relief) indicates:
  - NPV of debt-to-exports ratio at end-2007: 195.7 percent (compared with 180.4 percent projected at the decision point).
  - Taking into account voluntary additional Paris Club relief, NPV of debt-to-exports ratio at end-2007 estimated at 190.3 percent.
- Staff view on exceptional topping-up: Burundi does not meet requirements for exceptional topping-up under the enhanced HIPC Initiative. Rationale:
  - Deterioration in the NPV of debt-to-exports ratio, after additional debt relief, is fairly modest and not primarily attributable to a fundamental change in economic circumstances due to exogenous factors.
  - The most important factor contributing to the increase (higher than expected new borrowing) is not considered to be in response to an exogenous shock.

### MDRI Implications
- Upon reaching the completion point under the enhanced HIPC Initiative, Burundi qualifies for additional debt relief under the Multilateral Debt Relief Initiative (MDRI).
- MDRI relief would cover all remaining debt service obligations on eligible credit balances to IDA, the African Development Fund (AfDF) and the IMF.
- MDRI relief net of HIPC assistance would lead to a nominal reduction of debt owed to:
  - IDA: US$90.4 million
  - IMF: SDR9.2 million (US$14.5 million)
  - AfDF: US$12.6 million

### Medium-Term Debt Path and Projections
- Full delivery of HIPC and MDRI debt relief at the completion point would significantly reduce Burundi’s external public debt, but external public debt burden indicators are expected to remain high over the medium term.
- After HIPC and MDRI assistance:
  - NPV of debt-to-exports ratio expected to decline from 967 percent at end-2007 to 148 percent at end-2009.
  - It would subsequently rise to 169 percent by end-2011.
  - Thereafter the ratio is projected to continue on a slow downward trend, reaching 75 percent by the end of the projection period.

### Recommendation
- The staffs recommend that the Executive Directors of IDA and the IMF approve the completion point for Burundi under the enhanced HIPC Initiative.

*Source: Executive Summary, _cr0984 - Executive Summary.*

### 5. Governance measures and the delivery of services in key

### 5. Governance measures and the delivery of services in key sectors

### Service delivery evaluations and action plan
- Completion requirements: for education, health, and justice sectors — (i) a budget tracking exercise (budget monitoring) of public spending on the delivery of pro-poor services; (ii) an evaluation by users of the quality of services provided; (iii) an evaluation by providers of constraints to effective delivery of pro-poor services; and (iv) preparation of an action plan to address problems identified.
- Status: Implemented. 
  - Surveys were completed by December 2007.
  - Related analysis was completed and an action plan to address the findings was adopted in December 2008.

### Demobilization (National DDR Program / PNDRR)
- Objective: Execution in line with pace and final objectives in the Letter of Demobilization Policy dated 19 February, 2004.
- Status: Substantially Implemented.
- Key outcomes and figures:
  - 23,022 adult personnel discharged by the Ministries of Defense and Interior were demobilized and received a full course of reinsertion allowances.
  - 22,024 of these personnel received socio-economic reintegration support.
  - 3,261 children were released from armed groups; 3,015 of them received a reinsertion allowance.
  - Gardiens de la paix and Militants combatants were disbanded and 28,379 individuals received reinsertion allowances.
  - Final assessed sizes: 26,588 active duty army personnel and 17,161 police members — compared to respective targets of 25,000 and 15,000.
- Note: An official census exercise is on-going. Full compliance with the trigger was not possible mainly because a ceasefire agreement with the last remaining rebel group, the FNL, was signed late and a power-sharing agreement was reached only in December 2008.

### Structural measures: Coffee sector divestiture
- Trigger: Tendering for sale of state holdings in a majority of coffee washing stations.
- Status: Substantially implemented.
- Actions and timeline:
  - November 2006: government approved a detailed action plan for overall reform of the coffee sector (prepared with IDA support).
  - Action plan measures included: (i) study on competitiveness (done in 2007); (ii) liberalization of coffee marketing (done in May 2008); (iii) adoption of a divestiture option for government-owned washing stations and the drill mill company SODECO (done in December 2008, with implementation expected in 2009).
  - Change in ownership to be accompanied by a new legal, regulatory and institutional framework.
- Explanation: Full compliance is taking longer because of the more extensive reform process chosen; wider stakeholder endorsement increases likelihood of successful implementation.

### Social sectors: Education and health
- Overall status: Partially Implemented. Full compliance not achieved because the national immunization target was not reached.

Education
- Trigger: Increase in gross national enrollment rate in primary schools from 74 percent in 2003/04 to 77 percent in 2006; and from 16 percent in 2003/04 to 18 percent in 2006 in secondary schools, subject to the provision that the average increase in provinces with lower than average enrollment rates in 2004 must be higher than the increase in the national rate.
- Outcomes:
  - Elimination of primary school fees in September 2005 led to a large increase in first-grade enrollment.
  - Gross primary school enrollment rose from an estimated 80 percent in 2003/04 to 114 percent in 2006/07.
  - Secondary-school enrollment increased from 12 percent in 2003/4 to 16 percent in 2006/07.
  - Most provinces with lower than average primary school enrollment rates in 2004 experienced higher increases than the national rate (administrative data).
  - Provincial secondary-school data were not available for assessment.

Health (Immunization)
- Trigger: Increase in national immunization rate for children of less than one year of age from 75 percent in 2004 to 85 percent in 2006, subject to the provision that provinces with lower-than-average immunization rates in 2004 must have average increases higher than the national increase.
- Outcomes and figures (administrative projections for 2008):
  - Only one out of five immunization rates would reach the targeted 85 percent coverage.
  - Immunization rates: BCG 91 percent; DTC-HepB-Hib3 81 percent; VAR 78 percent; Polio 79 percent; VAT 70 percent.
- Issues:
  - Targeted national immunization rate not achieved due to general weaknesses of the health system and continued internal conflict.
  - Administrative data likely overestimate actual progress and are not comparable to the original baseline based on official UNICEF/WHO data; UNICEF/WHO data show no improvement since 2004.
- Government commitments for 2009:
  - (i) include vaccination services in the improved “free-services" package;
  - (ii) commit additional resources in the area of statistics to improve data reliability at national and provincial levels.

### Debt management
- Trigger: Production of monthly external debt reports, including projections for the upcoming three months, for at least six months before the completion point.
- Status: Implemented.
  - Authorities produced monthly external debt reports, including projections for the upcoming three months, for six months during 2008.

*Source: _cr0984 - 5. Governance measures and the delivery of services in key (IMF staff report content provided).*

### Box 2. Reforms in Public Financial Management

### Box 2. Reforms in Public Financial Management

### Legal and institutional framework
- New procurement and customs codes have been adopted; both pieces of legislation will increase transparency and accountability while making budget execution more efficient.
- A new budget organic law was promulgated by the President in November 2008.
- The Ministry of Finance now has the exclusive right to negotiate and sign external loans.

### Debt management and reporting
- A computerized foreign debt management system has been installed that can produce monthly debt reports.
- Budget and fiscal reporting systems were revamped, introducing economic, functional, and administrative classifications.
- A double-entry accounting system is being introduced gradually with the presentation of closing balances for the 2006 and 2007 accounts.

### Budget control, audits, and oversight
- Specialized departments established to improve control of budget execution include:
  - an internal inspection and control unit in the Ministry of Finance;
  - an Inspectorate General of State department;
  - a general accounting office.
- The National Audit Office completed the audit of the 2006 accounts in 2007.
- Two independent audits of the use of HIPC funds in 2005–07 were completed in 2008.

### Treasury operations and cash management
- Authorities are moving toward a single treasury account by tightening control over cash flows and minimizing idle cash balances in ministry bank accounts.
- Measures taken include:
  - merged the recurrent budget and capital budget accounts;
  - eliminated seven HIPC sub-accounts in line ministries;
  - closed 90 ministry accounts.
- A cash flow plan was initiated in late 2007 to improve cash management.

### Customs and tax administration reforms
- A new customs code was promulgated in 2007 to make customs procedures more efficient.
- Computerization of customs operations through the roll-out of the ASYCUDA++ system has helped reduce clearance times.
- A reliable computerized tax identification number system has been introduced to improve tax enforcement and combat tax evasion.

### Governance measures and delivery of services in key sectors
- Authorities prepared budget tracking analyses in the education, health, and justice sectors and conducted surveys of users and providers to assess satisfaction and identify areas for improvement.
- Based on these analyses, the authorities adopted in November 2008 an action plan for each of the key sectors in order to improve the delivery of services. Action plans are in line with the government’s sectoral strategies.
- Further analysis will be undertaken to help address identified weaknesses.

### Survey findings on service delivery (selected results)
- Health sector:
  - patient satisfaction: 82 percent.
  - concern: excessive centralization of expenditures and concentration of qualified staff in the capital.
- Education sector:
  - parents’ satisfaction with the quality of education: around 18 percent for the whole system.
  - key weaknesses: quality of and access to education, low level of non-salary expenditures, low priority given to the non-primary educational system.
- Justice sector:
  - 51.4 percent of respondents consider costs to be excessive and not always transparent.
  - Most court cases cover issues related to land tenure (94 percent).
  - Average time to complete court cases: more than two years; delays of over five years for appeals and administrative courts.
  - Budget allocations to the sector have more than doubled since 2003, but working conditions in courts and prisons require further improvements.

### Judicial governance and anti-corruption measures
- Key priorities: (i) address delays in court rulings and (commercial) dispute resolution; (ii) build technical and human capacity for expedited dispute resolution; (iii) combat corruption.
- Measures taken:
  - adopted new investment and customs codes and finalizing commercial, enterprise and tax codes;
  - computerization of the information system of commercial courts;
  - established an Arbitration Center and a General Inspectorate of the State and Audit Court;
  - promulgated a new procurement code effective in October 2008;
  - raised salaries of judges and magistrates to combat corruption.

### Financial governance incidents and corrective actions
- Incident 1: inappropriate sale of the presidential plane in 2006.
  - Actions: external audit; action plan with corrective measures adopted in September 2007; new law on the sale of public goods promulgated on July 11, 2008; Parliamentary commission investigated and reported in July 2008.
  - Judicial proceedings related to responsible parties remain pending.
- Incident 2: payments of US$17 million to a petroleum trading company (Interpetrol) during February–May 2007 without following normal budgetary procedures.
  - Actions: government condemned the acts and took corrective measures; accelerated strengthening of fiscal management and the central bank’s internal controls; with World Bank support completed and published an independent external audit of the cross-debts of the oil sector and the government; finalizing repayment agreements with all the companies involved.
  - Legal proceedings were launched but have not progressed further since May 2007, when the former Governor of the central bank was arrested in connection with the case.

### External assistance and capacity building
- Donors and institutions supporting public financial management and institutional capacity include: IMF, EU, the Netherlands, the United Kingdom, Belgium, France, IDA, World Bank Group, USAID.
- Belgium provided support to the Audit Court.
- IDA facilitated the training of 98 staff from various ministries in the implementation of the new procurement law.
- IMF is supporting central bank reforms through technical assistance and capacity building.

### Conclusion on the PFM trigger
- In view of the progress outlined above, the IDA and IMF staffs conclude that this trigger has been implemented.

### Demobilization, Reinsertion and Reintegration (PNDRR) — summary of progress
- PNDRR aims include:
  - provide demobilization support and reintegration services for a maximum of 55,000 combatants from FAB, PMPA, and subsequently FDN;
  - provide reinsertion support to an estimated 20,000 Gardiens de la Paix and 10,000 Militants combattants;
  - contribute to the reallocation of government defense expenditure to social and economic sectors;
  - additional target group of Police nationale was added for program support in 2006;
  - ultimate targets: reduce Burundi National Defense Force to 25,000 and Burundi National Police to 15,000 members respectively.
- Implementation status (As of November 2008, selected figures from Table 3):
  - Adults: FAB, PMPA, FDN, PNB — Maximum caseload: 55,000; Identified/Demobilized/Reinsertion/Reintegration: 23,022; Reintegration completed: 22,024; Medical remaining: 1,055.
  - Adults: Gardiens de la Paix, Militants Combattants — Maximum caseload: 30,000; Identified/Demobilized/Reinsertion/Reintegration: 28,383; Reintegration: n/a.
  - Children (all groups) — Maximum caseload: 8,000; Identified/Demobilized: 3,261; Reinsertion: 3,015; Reintegration: 3,015; Medical remaining: 246.
  - Handicapped (all groups) — Maximum caseload: 4,140; Identified: 3,743; Reinsertion reflected in overall adult figures; Medical: 1,200; Reintegration: 1,950.
- Outcomes:
  - All 23,022 adult personnel discharged by the ministries of Defense and Interior that were accepted into the PNDRR were demobilized and received a full course of reinsertion allowances.
  - Of these adults, 22,024 (96 percent) received socio-economic reintegration support.
  - 3,261 children were released from armed groups and reunified with their families, and 3,015 received a reinsertion allowance.
  - PNDRR disbanded the Gardiens de la paix and Militants combattants, providing 28,379 individuals with reinsertion allowances.
  - Final assessed sizes: army 26,588 active duty personnel and police 17,161 members (assessed by the Ministries of Defense and Interior), reasonably close to targets of 25,000 and 15,000 respectively.
- Additional demobilization needs:
  - Forces nationales de libération-Palipehutu (FNL): timing and actual number to be demobilized unknown; FNL signed a ceasefire agreement in July 2007 and a power-sharing agreement in December 2008.
  - FNL “dissidents”: 3,321 individuals granted legal status as an armed group eligible for demobilization by presidential decree in August 2008.
  - Estimates of the size of the FNL range from 3,000 to 21,100 combatants.
- Financing and continuation:
  - Consensus among government, World Bank, and donors on need for continued financial and technical support for DRR beyond December 31, 2008, when the PNDRR closes.
  - World Bank preparing a US$10 million follow-up grant to the Emergency Demobilization and Reintegration Program (EDRP) for launch in FY 2009.
  - The EDRP will be closing at end-December 2008 and consists of an IDA grant of US$35.8 million and parallel financing from a multi-donor trust fund of up to US$41.8 million.
- Staff assessment:
  - IDA and IMF staffs consider the demobilization trigger substantially implemented; recommend a waiver for non-observance given late signing of the FNL ceasefire and late power-sharing agreement.

### Structural measures — coffee sector reform (summary)
- Authorities prepared a comprehensive coffee-sector reform action plan including institutional and regulatory changes, with a consultative approach.
- Objectives: improve and diversify farmers’ income, improve competitiveness in the coffee market, increase focus on high value-added cultures.
- Timeline and actions:
  - March 2006: created the Coffee Reform Steering Committee.
  - November 2006: government adopted a sectoral action plan, including strategy for privatization/divestiture of 133 washing stations.
  - May 2007: President declared that coffee producers were owners of coffee beans (cherry and green).
  - April 2008: issued a new regulation for the commercialization of green coffee for the 2008–09 season.
- Market developments as of November 2008:
  - 22 exporters had licenses and were active participants in the market.
  - About 7,500 metric tons of coffee beans have been sold and farmers are receiving a price based on current international prices.
- Divestiture approach:
  - Option chosen: divide 133 washing stations into 29 lots of 3–6 washing stations and sell through competitive bidding.
  - 75 percent of the government’s stake to be sold to the private sector and 25 percent allocated to farmer organizations.
  - Farmer organizations lack immediate financial resources; institutions such as IFC, microfinance institutions, and international financial NGOs would hold these shares for two years before transferring them to farmer organizations.
  - Option adopted by the Ministerial Council in December 2008; implementation expected to begin with the 2009/10 coffee season.
- Regulatory and organizational reform:
  - Authorities are developing a complementary organizational and regulatory framework to ensure continued financing of purchased inputs and rules consistent with the new ownership structure for coffee processing activities.

*Source: _cr0984 - Box 2. Reforms in Public Financial Management*

### 42.      In the opinion of the IDA and IMF staffs, the coffee sector trigger has been

### _cr0984 - 42.      In the opinion of the IDA and IMF staffs, the coffee sector trigger has been

### Coffee sector trigger
- Staff view: IDA and IMF staffs consider the coffee sector trigger to have been substantially implemented.
- Implementation note: Full compliance is taking longer because of the more extensive reform process chosen by the authorities (not envisaged by the completion point trigger).
- Assessment of chosen course: The proposed course of action is more likely to be successfully implemented, given its endorsement by all major stakeholders.
- Recommendation: Staffs are of the view that the completion point should not be delayed until the divestiture is completed, given the adoption by the Ministerial Council of a divestiture plan.
- Decision: Staffs recommend that a waiver be granted for the non-observance of this trigger.

### Social sector reforms — Education
- Donor engagement (November 2005): Belgium, France, IDA, the United Kingdom, UNICEF, the World Food Programme, and several NGOs cooperated with the government to:
  - (i) develop an Education Sector Plan (ESP) to be endorsed by the Education for all Fast-Track Initiative (EFA FTI); and
  - (ii) provide urgent funding to support education during the emergency period (2005–07).
- ESP status: The development of the EFA FTI Education Sector Plan is already well advanced.
- Primary education progress:
  - Elimination of primary school fees: September 2005 led to a large increase in first grade enrollment.
  - Gross primary school enrollment rate: rose from an estimated 77 percent in 2003/04 to 114 percent in 2006/07.
  - Gender parity index: improved from 0.75 in 2003/04 to 0.87 in 2006/07.
  - Provincial trend: most provinces with lower than average enrollment rates in 2004 experienced enrollment growth higher than the national increase over the same time period (based on administrative data).
  - Quality issues: repetition rates were around 30 percent in 2007; survival rates were 67 percent of the primary school student population.
- Secondary education progress:
  - Gross secondary enrollment rate: increased from 12 percent in 2003/04 to 16 percent in 2006/2007 (note: 12 percent replaces the 16 percent cited in the HIPC decision point document).
  - Student population: overall number of students doubled in four years.
  - Gender equity index: dropped slightly in the first two years and remained flat at 0.72 percent in 2005/06.
  - Repetition rate: increased from 14 percent in 2001/02 to 18 percent in 2005/06.
  - Data gap: regional secondary enrollment data were not available to assess provincial performance relative to national change.
- Assessment: Staffs conclude satisfactory progress at the national level in education; provincial data limitations noted for secondary education.

### Social sector reforms — Health
- Government commitments and NHDP objectives:
  - National Health Development Plan (NHDP) aims to: (i) reduce maternal and neonatal mortality; (ii) reduce infant and child mortality and morbidity; (iii) reduce the prevalence of communicable and non-communicable diseases; and (iv) reinforce the performance of the national health system.
  - Policy action: May 2006 presidential announcement eliminating user fees for health services for children under 5 and women during delivery.
- Immunization efforts:
  - Activities: routine vaccination programs and targeted vaccination campaigns for children under 1.
  - Campaigns: one vaccination campaign completed in June 2008; a second campaign expected to be completed by end-2008.
- Immunization coverage (projections for 2008, based on administrative data provided by authorities):
  - Only one out of five immunization rates would reach the targeted 85 percent coverage.
  - Reported administrative immunization rates:
    - BCG: 91 percent
    - DTC-HepB-Hib3: 81 percent
    - VAR: 78 percent
    - Polio: 79 percent
    - VAT: 70 percent
  - Caveats: administrative data likely overestimate actual progress and are not comparable to the original HIPC decision point baseline based on official UNICEF/WHO data; UNICEF/WHO data suggest no significant changes since 2004.
  - Data limitation: lack of survey-based national and provincial data since 2005 prevents verification of actual achievement rates or assessment of provincial differences; next Micro Indicators Cluster Survey (MICS) expected in 2009.
- Key constraints on vaccination coverage:
  - General weakness and insufficient financing of the health system in a country with continued internal conflict.
  - Operational financing issues: while financing for vaccines generally sufficient, financing for operational costs (cold chain, personnel, fuel for outreach) has been erratic.
  - Human resource issues: lack of adequate resources and personnel in health facilities and low staff motivation reduced incentives to actively seek children for routine immunization.
- Government measures to boost vaccination coverage in 2009:
  - Include routine vaccinations in the “free services" package in the second half of 2009.
  - Simplify and improve reimbursements, including a reimbursement mechanism that will give a performance bonus for certain activities, including vaccination.
  - Financing: improvement of the reimbursement mechanism and increase in available “free services” to be financed through an IDA grant under preparation.
  - Statistics: government will commit additional resources to obtain accurate and reliable data.
- Longer-term outlook: Given current status of health indicators, it is unlikely that Burundi will meet the health-related MDGs and NHDP goals without significant increases in the volume, allocative efficiency and transparency of resources.
- Assessment: Staffs of IDA and the IMF conclude the social sectors trigger has been partially implemented. To address shortcomings in health, government will (i) include vaccination services in the improved “free-services" package; and (ii) commit additional resources for statistics to obtain accurate and reliable national and provincial data. Staffs recommend that a waiver be granted for the partial implementation of this trigger.

### Debt management
- Institutional improvements:
  - Ministry of Finance: exclusive right to negotiate and sign external loans.
  - Debt management system: computerized foreign debt management system (SYGADE) installed; can produce monthly debt reports.
  - Central bank: collects and gathers debt statistics.
  - Human resources constraint: years of civil war resulted in poor records and the main impediment continues to be lack of human resources; authorities restructured the unit at the Ministry of Finance (DDE) managing public debt.
- Operational improvements:
  - Monthly external debt reports: produced, including projections for the upcoming three months, for at least six months prior to the completion point.
  - Debt service execution: authorities have managed to execute debt service obligations broadly as planned due to better planning.
  - Financing approach: given high indebtedness, Burundi has agreed to rely on grants and highly concessional loans to meet financing needs.
- Creditor relations:
  - Bilateral agreements with Paris Club creditors have been signed.
  - Negotiations with non-Paris Club creditors are ongoing to obtain debt relief compatible with the HIPC Initiative.
- Domestic debt management: since the 2006 audit of domestic arrears, government started repaying amounts owed to creditors according to a schedule agreed with the IMF.
- Assessment: IDA and IMF staffs conclude this trigger has been implemented.

### Debt relief and debt sustainability analysis — Updated data reconciliation and revision of assistance
- Debt stock revision (end-2004):
  - Nominal debt stock at end-December 2004: revised from US$1,384.1 million to US$1,386.6 million.
  - NPV of debt after delivery of traditional debt relief: increased by US$6.8 million to US$908.8 million.
- Main sources of revision:
  - Multilateral creditors:
    - AfDB Group and BDEGL: NPV revised slightly upward due to revised debt service projections and revisions to concessionality of arrears clearance.
    - EU: NPV revised upward by US$1.3 million.
    - BADEA: NPV revised upward by US$0.3 million.
    - IFAD: NPV revised upward from US$18.3 million to US$19.8 million due to revision of debt service projections.
  - Bilateral creditors:
    - France: NPV after traditional debt relief revised upward by US$2.4 million.
    - Other Paris Club creditors: slight revisions reflecting more accurate data available at the completion point.
- Exports revision:
  - Three-year average of exports of goods and services used to evaluate HIPC assistance at the decision point: revised downward marginally from US$50.9 million to US$50.8 million.
- Implications for HIPC assistance:
  - NPV of debt-to-exports ratio after traditional debt relief: estimated at 1,789.2 percent (compared to 1,772.3 percent at the decision point).
  - Implied common reduction factor: increases from 91.54 percent to 91.62 percent.
  - Amount of HIPC debt relief required to reach the 150 percent threshold: estimated at US$832.6 million (compared to US$825.7 million in the decision point document).
- Note: The suggested change in the amount of HIPC debt relief (US$6.8 million) is larger than the minimum threshold required for revision of HIPC assistance and is not attributable to incorrect information provided by the authorities. Targeted NPV of debt after HIPC debt relief at the decision point was US$88.4 million; the minimum threshold for Burundi is US$0.884 million (1 percent of the target NPV).

### Debt relief and debt sustainability analysis — Creditor participation in the Enhanced HIPC Initiative
- Financing assurances: creditors representing 96 percent of the NPV of HIPC assistance estimated at the decision point have provided financing assurances of participation.
- Multilateral creditors:
  - Total multilateral HIPC assistance: US$705.8 million in NPV terms, or 85 percent of total HIPC assistance.
  - Interim assistance: IDA, the IMF, the AfDB Group, and the EU have provided interim assistance; OFID and BADEA provided part of their share through arrears clearance operations during the interim period.
  - IDA:
    - Decision point assistance: US$425.2 million in NPV terms.
    - Interim delivery: US$68.5 million delivered in NPV terms through a 90 percent reduction of debt service falling due during the interim period.
    - Completion point delivery: remaining US$356.7 million in NPV terms through a 90 percent reduction of debt service on eligible debt until January 2039.
  - IMF:
    - Decision point commitment: SDR19.262 million (US$27.84 million) in NPV terms.
    - Revision: marginal revision to SDR19.28 million (US$27.9 million) in NPV terms at the decision point.
    - Interim assistance: about SDR0.26 million (nominal terms) provided.
    - Completion point: IMF will provide remaining amount through a stock-of-debt operation estimated at SDR21.9 million.
    - IMF assistance represents an average reduction of 56.9 percent of debt service on eligible debt.
  - AfDB Group:
    - HIPC relief amount: US$150.2 million in NPV terms.
    - Interim delivery: US$26.3 million through a concessional arrears clearance operation and US$20.7 million in HIPC interim debt relief.
    - Completion point assumed delivery: remaining US$103.2 million through reduction of debt service on eligible debt.
    - Note: AfDB Group suspended HIPC debt relief in April 2008; expected that relief will resume shortly and provide retroactive HIPC debt relief for the suspension period.
  - Other multilateral creditors: modalities for EU, IFAD, OFID, and BADEA summarized in Table 9 (table not reproduced here).
- Bilateral and commercial creditors:
  - Paris Club creditors:
    - Agreed in principle to provide share of assistance: US$88 million in 2004 NPV terms.
    - Interim assistance provided through a flow treatment under Cologne terms (agreed September 15, 2005).
    - Participating Paris Club creditors declared readiness to provide full share through a stock-of-debt operation at the completion point, provided Burundi maintained satisfactory relations.
    - Bilateral agreements signed with most Paris Club creditors except Russia (draft agreements exchanged).
    - Most creditors indicated willingness to provide additional assistance beyond HIPC relief, estimated at about US$5 million in end-2007 NPV terms.
  - Non-Paris Club bilateral creditors:
    - Expected to provide HIPC-comparable assistance estimated at US$33 million in 2004 NPV terms.
    - Negotiations ongoing; some creditors have already provided part of their assumed share.
    - Examples: People’s Republic of China and Saudi Arabia provide debt relief on a case-by-case basis; PRC cancelled all of Burundi’s obligations during the interim period; new rescheduling agreement signed with Libya (terms below HIPC expectations); Kuwait agreed to settle Burundi’s arrears following the completion point; negotiations with Abu Dhabi and Saudi Arabia pending.
  - Commercial creditors:
    - Expected to provide treatment comparable to Paris Club.
    - As of end-2007, Burundi was in the process of settling obligations to commercial creditors.
    - Payments: last payment to an Israeli commercial creditor was in July 2008; a final payment to a German creditor is to be paid in December 2008.

### Consideration for exceptional topping up of HIPC assistance
- Framework: Enhanced HIPC Initiative allows, on an exceptional basis, additional debt relief (“topping-up”) at the completion point.
- Condition for topping-up: Provided if a country’s actual debt burden indicators have deteriorated compared to the decision point projection and this deterioration is primarily attributable to a fundamental change in economic circumstances due to exogenous factors.
- Purpose: Additional debt relief may be provided to bring the NPV of debt-to-exports ratio down to the 150 percent threshold at the completion point.

*Sources: Burundi authorities; and IDA and IMF staff estimates contained in the chapter.*

### 71.      Burundi’s nominal stock of external debt reached US$1,466.4 million at end-2007,

### _cr0984 - 71.      Burundi’s nominal stock of external debt reached US$1,466.4 million at end-2007,

### External debt stock and creditor composition
- Burundi’s nominal stock of external debt at end-2007: US$1,466.4 million.
- Comparison: end-2004 debt stock: US$1,386.6 million.
- Creditor composition:
  - Multilateral creditors: 86.1 percent of total debt.
  - Bilateral and commercial creditors: 13.9 percent of total debt.
  - Largest creditors:
    - IDA: 57 percent of total outstanding debt.
    - AfDB Group: 14.8 percent of total outstanding debt.
    - France: 7.2 percent of total outstanding debt.

### NPV of external debt and HIPC outcomes (end-2007)
- NPV of external debt after full delivery of HIPC assistance at end-2007: US$175.4 million, equivalent to 195.7 percent of exports.
  - Owed to multilateral creditors: US$166.6 million.
  - Owed to Paris Club creditors: US$5.2 million.
- Comparison with decision point projections:
  - NPV debt-to-exports ratio projected at the decision point (after full HIPC delivery) for end-2007: 164.8 percent.
  - Actual ratio (after full HIPC delivery) at end-2007: 195.7 percent.
  - Decision point methodological revision raised the projected NPV of debt-to-exports ratio to 180.4 percent at end-2007.
  - Difference between actual and revised projection: 15.2 percentage points.
- Effect of bilateral debt relief beyond HIPC:
  - NPV of debt-to-exports ratio after full HIPC assistance would fall from 195.7 percent to 190.3 percent assuming additional bilateral creditor delivery.
  - NPV difference compared to the decision point (after such additional bilateral relief): reduced to 9.9 percentage points of exports.

### Breakdown of the increase in the NPV of debt-to-exports ratio (unanticipated change = 15.2 percentage points; 100% of increase)
- Due to changes in parameters: 2.5 percentage points (16% of total increase)
  - o/w due to changes in the discount rates: -10.3 percentage points (-68% of total increase)
  - o/w due to changes in the exchange rates: 12.8 percentage points (84% of total increase)
- Due to unanticipated new borrowing: 13.0 percentage points (85% of total increase)
  - o/w due to higher than expected disbursements: 12.7 percentage points (83% of total increase)
  - o/w due to lower concessionality of the loans: 0.3 percentage points (2% of total increase)
- Due to changes in export: -2.5 percentage points (-17% of total increase)
- Due to changes in HIPC relief and other factors: 2.3 percentage points (15% of total increase)
- NPV of debt-to-exports ratio (as projected at Decision Point, revised): 180.4
- NPV of debt-to-exports ratio (actual): 195.7
- Bilateral debt relief beyond HIPC: -5.4
- NPV after full delivery of HIPC assistance and bilateral debt relief beyond HIPC (actual): 190.3

### Drivers and staff assessment of deviations
- New borrowing:
  - Decision point expected new borrowing from end-2004 to end-2007: US$83.7 million (NPV terms according to projections at the decision point).
  - Actual new borrowing over that period: US$95.3 million.
  - Increase mainly reflects faster-than-expected disbursements from multilateral creditors associated with on-going operations (not fully disbursed loans), rather than new loan agreements.
  - Staff view: higher than expected new borrowing reflects underestimation of disbursement ratios at decision point, not an exogenous shock.
- Exchange rates and discount rates:
  - Depreciation of the US dollar contributed +12.8 percentage points to the NPV of debt-to-exports ratio.
  - Increase in discount rates contributed -10.3 percentage points to the NPV of debt-to-exports ratio.
  - Net effect of these parameter changes: +2.5 percentage points (16% of total increase).
- Exports:
  - Exports were stronger than anticipated and improved the NPV of debt-to-exports ratio by 2.5 percentage points relative to the decision point projection.
- Staff conclusion on topping-up:
  - Staffs consider Burundi does not meet the requirements for exceptional topping-up under the enhanced HIPC Initiative.
  - Reasoning: deterioration in the NPV of debt-to-exports ratio is fairly modest, not primarily attributable to a fundamental change in economic circumstances due to exogenous factors; and the main factor (higher-than-expected new borrowing) is not seen as an exogenous shock.

### Creditor participation under the MDRI
- Qualification: contingent upon approval of the completion point under the enhanced HIPC Initiative, Burundi qualifies for MDRI debt relief.
- MDRI providers: IDA, the IMF, and the AfDF.
- IDA MDRI relief:
  - Amount in nominal terms: US$98.3 million.
  - IDA MDRI implies average debt service savings (net of HIPC assistance) of US$2.89 million per year over the next 34 years.
  - Burundi’s debt stock owed to IDA would be reduced by US$90.4 million on April 1, 2009.
- IMF MDRI relief:
  - Amount: SDR 9.2 million, covering the full stock-of-debt owed to the IMF at end-2004 that remains outstanding at the completion point after full HIPC delivery.
- AfDF MDRI relief:
  - Amount in nominal terms: US$13.9 million, starting on February 1, 2009.
  - Debt stock cancellation estimated at US$12.6 million, delivered by forgiving Burundi’s post-completion-point repayment obligations.
- IDA delivery modality: irrevocably cancel credits disbursed before end-2003 and still outstanding on March 31, 2009.

### Debt sustainability outlook, 2008–27 — baseline projections and assumptions
- Near-term and long-term growth:
  - Real GDP growth projected for the near-term: 4.5 percent (down by half percentage point from June 2008 projections).
  - Long-term GDP growth expected to average about 5 percent.
- Key long-term macro assumptions (Box 3):
  - Real GDP growth: 5 percent over the medium term and about 5 percent long-term.
  - Investment: expected to average about 16 percent of GDP.
  - Inflation: assumed to decline gradually and stabilize at about 4 percent over the long term; end-2009 inflation expected to be 9 percent in 2009 and about 6 percent by 2011 (text states headline inflation is estimated to have peaked in 2008 and is expected to decline to 9 percent in 2009; Box 3 states long-term stabilization at about 4 percent).
  - Fiscal policy: revenues (excluding grants) projected to gradually increase to about 21 percent of GDP over the long term.
  - Government expenditure: expected to gradually decline to about 27 percent of GDP.
  - Public investment: expected to decline to about 4 percent of GDP over time.
  - Exports of goods and services: projected to increase by an average of 7 percent over the medium term; 9–10 percent over the longer term.
  - Imports: expected to decelerate to 5 percent over time.
  - Current account deficit (including grants): expected to deteriorate to about 17 percent of GDP in 2015, then decline to about 9 percent by end of projection period.
  - Grants: assumed to decline from about 26 percent of GDP in 2008 to about 10 percent in 2015.
  - Loans: assumed to decline from about 3 percent of GDP in 2008 to about 1 percent at the end of the projection period.
  - Borrowing assumed to be primarily on highly concessional terms.
- Macroeconomic risks and vulnerabilities:
  - Burundi is a net importer of food and oil products (25 percent of total imports).
  - Estimated balance of payments impact from food and oil price surge: about 4 percent of GDP.
  - Adverse shocks listed: (i) stronger-than-expected adverse effects of the international financial crisis (declining coffee prices and sharply lower aid flows); (ii) unexpectedly high international food and oil prices; (iii) spending pressure from higher-than-expected costs of demobilizing and reintegrating the last rebel group.

### Projected impact of full HIPC and MDRI debt relief
- NPV terms:
  - Debt stock in NPV terms: US$911 million at end-2008 (before completion point relief).
  - Debt stock in NPV terms after full delivery at end-2009: US$150 million.
- Nominal debt service relief in 2009: US$46.0 million (of which US$3.7 million relates to MDRI).

### Debt burden indicators (post-HIPC and MDRI) — selected projections
- NPV of debt-to-exports ratio:
  - At end-2007 (pre-assistance stated in text): 967 percent.
  - Expected to drop to 148 percent at end-2009 after HIPC and MDRI assistance.
  - Expected to rise to 169 percent by end-2011.
  - Expected to decline to 75 percent by the end of the projection period.
- NPV of debt-to-GDP ratio:
  - At end-2007: 89 percent.
  - Expected to decline to 11 percent at end-2009 after HIPC and MDRI assistance.
  - Expected to reach 7 percent by the end of the projection period.
- Debt service:
  - After HIPC assistance, projected at 3-4 percent of government revenues until 2011.
  - Debt-service-to-revenue ratio expected to increase during 2012–17 owing to large principal repayments, then decline to 2 percent by the end of the projection period.
  - After additional bilateral and MDRI relief, debt service would not exceed 5 percent of revenues throughout the projection period.

### Sensitivity analysis — Scenario 1: Terms-of-trade shock
- Assumptions:
  - Permanent decline in export price of coffee by 20 percent.
  - Simultaneous permanent increase in import price of oil by 17 percent.
  - Note: these percentages correspond to the average price deviation for these commodities during the past 20 years.
- Projected effects:
  - Reduction in nominal exports of about 8.4 percent in 2009, deteriorating to about 15 percent by the end of the projection period.
  - Output adversely affected due to coffee sector importance and oil impact.
  - Government assumed to borrow additional concessional loans to finance revenue shortfall.
  - NPV of debt-to-exports ratio rises rapidly, reaching 217 percent by 2011.
  - Under this scenario, the NPV of debt-to-exports ratio is more than 100 percentage points higher than the baseline by 2027.

*Source: IMF staff estimates and country report text.*

### 92.      Lower donor support may result from governance concerns, donor fatigue, or the

### _cr0984 - 92.      Lower donor support may result from governance concerns, donor fatigue, or the

### Scenario 2: Lower donor support (2009–15)
- Assumption: foreign grants are cut by 25 percent during 2009–15.
- Government response: resort to additional borrowing on concessional terms to finance the ensuing financing gap.
- Impact on NPV of debt-to-exports ratio:
  - Initially increases rapidly, peaking at 256 percent by 2015.
  - Thereafter slowly declines, reaching 119 percent by 2027, or approximately 45 percentage points higher than the baseline scenario.

### Scenario 3: Lower growth
- Assumption: permanent reduction in real GDP growth by one percentage point relative to the baseline scenario.
  - Causes cited: slower implementation of structural reforms, weakening global demand owing to the international financial crisis, or governance concerns.
  - Underlying effects: slower expansion and diversification of the export base (e.g., coffee sector liberalization and development of nontraditional sectors), and reduced investment.
- External sector effects:
  - The volume of exports is permanently reduced.
  - Import volume adjusts in line with the reduction in real GDP growth.
- Fiscal response: government closes the financing need through additional borrowing on concessional terms.
- Impact on NPV of debt-to-exports ratio:
  - Continuously deteriorates, reaching 343 percent, or approximately 270 percentage point higher than under the baseline scenario.

### Sensitivity analysis — policy implications
- The sensitivity analysis underscores the importance of continued prudent fiscal and debt management policies.
- Authorities should implement reforms to:
  - Support continued donor involvement.
  - Achieve higher investment.
  - Promote export diversification.
- Given immense social needs, authorities should intensify efforts to expand the tax base to avoid excessive debt accumulation in the presence of adverse exogenous shocks.
- Borrowing policy recommendation: continue to follow prudent borrowing policies by relying on grants and highly concessional loans.

### Conclusions on HIPC completion and debt dynamics
- IDA and IMF staffs’ opinion: Burundi has met the requirements established in August 2005 for reaching the completion point under the enhanced HIPC Initiative.
- Progress on completion point triggers:
  - Implemented six out of nine triggers; good progress on the other three (demobilization, the coffee sector, and social sectors).
  - Demobilization, reinsertion and reintegration program: substantially met the majority of its goals, with final army and police sizes reasonably close to targets of 25,000 and 15,000 respectively.
  - A ceasefire agreement with the FNL and a power-sharing agreement were signed late in the process; the power-sharing agreement was signed in December 2008.
  - Coffee sector: authorities implemented a more ambitious reform than envisaged at the decision point; broadly endorsed by major stakeholders.
  - Social sectors: satisfactory progress in education at the national level; provincial secondary education data unavailable. Health sector: strong commitment to improving services and vaccination coverage; general weaknesses noted due to continued internal conflict.
  - Government commitments to address shortcomings:
    - Include vaccination services in the improved “free services" package starting in 2009.
    - Commit additional resources in statistics to obtain accurate and reliable data at national and provincial levels.
- Revisions to end-2004 data and HIPC relief:
  - Revised NPV of debt-to-exports ratio (after traditional debt relief) at end-2004: 1,789.2 percent (compared to 1,772.3 percent at decision point).
  - Amount of HIPC debt relief required to reach the HIPC threshold of 150 percent: US$832.6 million (in end-2004 NPV terms), compared to US$825.7 million in the decision point document.
  - Assurances of participation in enhanced HIPC obtained by creditors representing 96 percent of total NPV of HIPC assistance estimated at the decision point.
- Staffs’ view on exceptional topping-up:
  - Burundi does not meet requirements for exceptional topping-up under the enhanced HIPC Initiative.
  - Deterioration in NPV of debt-to-exports ratio (after additional debt relief) considered fairly modest and not primarily attributable to a fundamental change in Burundi’s economic circumstances due to exogenous factors.
  - The main contributor to the increase (higher than expected new borrowing) is not considered a response to an exogenous shock.
- Projected post-HIPC and MDRI debt dynamics:
  - NPV of debt-to-exports ratio expected to decline from 967 percent at end-2007 to 148 percent at end-2009 after HIPC and MDRI assistance.
  - Subsequently rises to 169 percent by end-2011, before continuing a slow downward trend, reaching 75 percent by the end of the projection period.
  - Sensitivity analysis reiterates need for prudent fiscal and debt management, securing grant financing and highly concessional loans, and structural reforms for diversified and broad-based growth.
- Recommendation: staffs recommend that Executive Directors determine that Burundi has reached the completion point under the enhanced HIPC Initiative.

### Issues for discussion (questions for Executive Directors)
- Completion point: Do Directors agree that Burundi has reached the completion point under the enhanced HIPC Initiative?
- Data revision: Do Directors agree with staffs’ recommendation that the proposed revision in the stock of debt in NPV terms warrants a revision in the amount of HIPC assistance? Do IMF Directors agree with the upward revision in IMF HIPC assistance from SDR19.262 million to SDR19.28 million?
- Topping-up: Do Directors agree that Burundi does not meet the requirements for exceptional topping-up at the completion point?
- MDRI/HIPC debt relief: Do IMF Directors agree that Burundi qualifies for an amount of debt relief by the IMF equal to SDR 31.1 million?

*Source: _cr0984 - 92.      Lower donor support may result from governance concerns, donor fatigue, or the*

### 9.2 million would be financed from the MDRI-I Trust, and the rest from Burundi's HIPC

### _cr0984 - 9.2 million would be financed from the MDRI-I Trust, and the rest from Burundi's HIPC

### Creditor participation and umbrella sub-account question
- Do Directors agree that Burundi creditors have given sufficient assurances to irrevocably commit HIPC Initiative assistance to Burundi?
- Umbrella sub-account? (question noted in source.)

### Composition of the stock of external debt (figures shown for End-2004 and End-2007)
- End-2004 composition (percent of stock)
  - IDA: 57%
  - AfDB Group: 16%
  - Paris Club: 10%
  - IMF: 3%
  - Other multilateral creditors: 5%
  - IFAD: 2%
  - OFID: 1%
  - Non-Paris Club Official Bilateral: 5%
  - Commercial: 0%
- End-2007 composition (percent of stock)
  - IDA: 57%
  - AfDB Group: 15%
  - Paris Club: 10%
  - IMF: 7%
  - Other multilateral creditors: 4%
  - IFAD: 3%
  - OFID: 0%
  - Non-Paris Club Official Bilateral: 4%
  - Commercial: 0%
- Sources: Burundi authorities; and Bank-Fund staff estimates.

### External debt and debt service indicators (2007–27 projections presented)
- Indicators presented for medium- and long-term public sector debt:
  - Net Present Value of External Debt-to-Exports (time series 2007–2027) plotted for scenarios:
    - After traditional debt relief mechanism
    - After enhanced HIPC assistance
    - After additional bilateral assistance beyond HIPC assistance
    - After MDRI and bilateral relief beyond HIPC assistance
  - HIPC threshold line: 150 percent
  - Debt Service-to-Exports (time series 2008–2026) plotted for scenarios:
    - After traditional debt relief mechanism
    - After Enhanced HIPC assistance
    - After bilateral debt relief beyond HIPC assistance
    - After MDRI and bilateral debt relief beyond HIPC assistance
- Sources: Burundi authorities; and Bank-Fund staff estimates and projections.

### Sensitivity analysis (2008–27)
- Scenarios shown for NPV of External Debt-to-Exports and Debt Service-to-Exports:
  - Baseline scenario
  - Terms of trade shock
  - Lower Aid
  - Slower real GDP growth
- HIPC threshold line: 150 percent
- Sources: Burundi authorities; and Bank-Fund staff estimates.

### Revised nominal stock and NPV of debt at the Decision Point (Table 6, end-December 2004)
- Total nominal debt stock: 1,384.1 (US$ million) — 100 percent (Decision Point column)
- Total NPV of debt (Decision Point): 1,386.6 (US$ million) — 100 percent (Before rescheduling column)
- Multilateral (Decision Point nominal stock): 1,169.9 (US$ million) — 85 percent
- IDA (Decision Point nominal stock): 794.7 (US$ million) — 57 percent
- AfDB Group (Decision Point nominal stock): 223.8 (US$ million) — 16 percent
- IMF (Decision Point nominal stock): 41.0 (US$ million) — 3 percent
- EU-EIB (Decision Point nominal stock): 51.0 (US$ million) — 4 percent
- IFAD (Decision Point nominal stock): 30.3 (US$ million) — 2 percent
- Official bilateral and commercial (Decision Point nominal stock): 214.2 (US$ million) — 15 percent
- Paris Club (Decision Point nominal stock): 145.1 (US$ million) — 10 percent (pre-cutoff date: 145.1)
- Non-Paris Club Official Bilateral (Decision Point nominal stock): 62.5 (US$ million) — 5 percent (pre-cutoff date: 57.1; post-cutoff date: 5.4)
- Commercial creditors (Decision Point nominal stock shown under commercial): 6.6 (US$ million) — 0 percent
- Selected bilateral country exposures at Decision Point nominal stock:
  - Austria: 16.8 (US$ million) — 1 percent
  - France: 90.5 (US$ million) — 7 percent
  - Japan: 34.7 (US$ million) — 3 percent
  - China: 13.7 (US$ million) — 1 percent
  - Kuwait: 20.2 (US$ million) — 1 percent
  - Saudi Arabia: 20.7 (US$ million) — 1 percent
- Notes:
  - 1/ Information based on latest data available at completion point.
  - 2/ Stock of debt operation on Naples terms from official bilateral and commercial creditors.
  - NPV of Debt After Rescheduling (At Decision Point / Revised At Completion Point) columns presented in table.

### Estimated assistance at the Decision Point (Table 7, end-December 2004 NPV terms)
- NPV of debt-to-exports target (percent): 150.0
- Assistance (decision point document): Total 825.7 (US$ million)
  - Multilaterals: 701.4 (US$ million)
  - Bilaterals: 118.9 (US$ million)
  - Commercial: 5.3 (US$ million)
  - Common Factor (Percent): 91.54
- Assistance (revised): Total 832.6 (US$ million)
  - Multilaterals: 705.8 (US$ million)
  - Bilaterals: 121.4 (US$ million)
  - Commercial: 5.4 (US$ million)
  - Common Factor (Percent): 91.62
- Memorandum items:
  - NPV of debt (relevant figure): 908.8 (US$ million)
  - Three-year export average: 50.8 (US$ million)
  - Revised NPV of debt-to-export ratio: 1,789.2 (percent) — (text shows "Revised 1,789.2" and "Decision point document 1,772.3")
- Bilateral creditors memorandum: pre-cod ODA 91.6; pre-cod non-ODA 97.2; post-cod debt 91.6 (US$ million shown as items)
- Assumptions and notes:
  - 1/ Assumes proportional burden-sharing as described in "HIPC Initiative: Estimated Costs and Burden-Sharing Approaches," after full application of traditional debt relief mechanisms.
  - 2/ Using six-month backward-looking discount rates at end-December 2004, and end-2004 exchange rates.
  - 3/ Each creditor's NPV reduction in percent of its exposure at the decision point (after hypothetical Naples stock at the end of the base year).
  - 4/ Includes traditional debt relief; a hypothetical stock-of-debt on Naples terms with comparable treatment from non Paris Club creditors.
  - 5/ After a hypothetical stock-of-debt operation on Naples terms at end-2004.
  - 6/ Based on latest data available at the decision point after full application of traditional debt relief mechanisms.
  - 7/ Based on the latest annual data at the completion point on the three-year average of exports of goods and nonfactor services (i.e., 2002-2004).

### Discount rate and exchange rate assumptions (Table 8)
- Discount rates (percent per annum) and exchange rates (U.S. dollar per currency) presented for end-December 2004 (decision point) and end-December 2007 (completion point). Selected entries (discount rate / exchange rate):
  - Austrian Schillings: 4.815 / 0.099 (2004); 5.350 / 0.107 (2007)
  - Belgian Franc: 4.815 / 0.034 (2004); 5.350 / 0.036 (2007)
  - Swiss Franc: 3.477 / 0.884 (2004); 3.952 / 0.888 (2007)
  - Chinese Yuan: 4.643 / 0.121 (2004); 5.290 / 0.137 (2007)
  - Euro (for Euro area currencies): 4.815 / 1.362 (2004); 5.350 / 1.472 (2007)
  - Great Britain Sterling: 6.012 / 1.931 (2004); 6.325 / 2.003 (2007)
  - Japanese Yen: 2.150 / 0.010 (2004); 2.472 / 0.009 (2007)
  - Kuwaiti Dinar: 5.028 / 3.393 (2004); 5.643 / 3.663 (2007)
  - United States Dollar: 5.028 / 1.000 (2004); 5.643 / 1.000 (2007)
  - Special Drawing Rights: 4.643 / 1.553 (2004); 5.290 / 1.580 (2007)
- Sources: European Central Bank; IMF, International Financial Statistics; OECD; and Bank-Fund staff estimates.
- Notes:
  - 1/ Discount rates used are the average commercial interest reference rates (CIRRs) for the respective currencies over the six-month period ending in December 2007 for the completion point and in December 2004 for the decision point.
  - 2/ For all Euro area currencies, the Euro CIRR is used. For all currencies for which the CIRRs are not available, the SDR discount rate is used as a proxy.
  - 3/ End-of-period exchange rates.

### Status of creditor participation under the Enhanced HIPC Initiative (Table 9)
- Total assistance (US$ mln): 833 — Percentage of Total Assistance: 100
- Multilateral creditors and modalities (selected):
  - The World Bank Group: 425 (US$ mln) — Satisfactory Reply to Participate: Yes
    - Interim debt relief equivalent to a 90 percent reduction in Burundi's debt service to IDA, or US$68.5 million in NPV terms. After completion point, remaining assistance of US$356.7 million in NPV terms will be provided through a 90 percent reduction in debt service payments.
  - African Development Bank Group: 150 (US$ mln) — Yes
    - Interim debt relief provided from August 2005; HIPC debt relief provided through a concessional arrears clearance operation; remaining assistance to be provided through debt service reduction after the completion point.
  - EU-EIB: 58 (US$ mln) — Yes
    - Interim debt relief on selected loans; at Completion Point EU-EIB will provide HIPC debt relief by full or partial early repayment of selected loans.
  - International Monetary Fund: 28 (US$ mln) — Yes
    - Assistance delivered through partial payment of debt service falling due to IMF by the PRGF-HIPC Trust. Interim relief started as of August 2005. The share of debt service due on eligible IMF obligations covered by total IMF assistance averages 57 percent over 2005-2015.
  - International Fund for Agricultural Development: 18 (US$ mln) — Yes
    - 100% debt service relief until NPV target is achieved; relief will begin at the Completion Point.
  - Arab Bank for Economic Development in Africa (BADEA): 16 (US$ mln) — Yes
    - Concessional clearance of arrears during the interim period; additional HIPC debt relief after completion point.
  - OFID: 9 (US$ mln) — Yes
    - Concessional clearance of arrears during the interim period and restructuring of existing loan on more concessional terms; remaining HIPC relief at completion point through (i) extension of new HIPC loan; and/or (ii) restructuring of existing loans.
  - BDEGL: 10 (US$ mln) — Pending
- Paris Club creditors: 88 (US$ mln) — Yes
  - Interim assistance provided through Cologne flow; stock of debt operation under Cologne terms expected at completion point; some creditors cancelled part or all their claims on Burundi.
- Non-Paris Club bilateral and commercial total: 334 (US$ mln) — Some participation status varies:
  - Kuwait: 132 (US$ mln) — No (understanding offered; authorities need to follow up)
  - Saudi Arabia: 101 (US$ mln) — No (negotiations ongoing)
  - Libya: 51 (US$ mln) — No (new rescheduling signed; terms below expected HIPC terms)
  - People's Republic of China: 40 (US$ mln) — Yes (China cancelled all its loans and has delivered beyond its share of HIPC relief)
  - UAE: 20 (US$ mln) — No (proposed rescheduling not HIPC comparable)
  - Commercial creditors: 51 (US$ mln) — No
- Totals:
  - Total multilateral: 706 (US$ mln) — Percentage of total assistance column shows 85 (likely percent in table context)
  - Total bilateral and commercial: 127 (US$ mln) — Percentage of total assistance column shows 15
  - Total: 833 (US$ mln) — 100 percent
- Sources: Burundi authorities; and Bank-Fund staff estimates.

### Nominal and NPV of external debt outstanding at end-December 2007 (Table 10)
- Total nominal debt (end-2007): 1,466.4 (US$ million) — 100.0 percent
- Total NPV of debt (end-2007): 907.4 (US$ million) — 100.0 percent
- NPV of debt after enhanced HIPC relief: 175.4 (US$ million)
- NPV of debt after additional bilateral relief: 170.6 (US$ million)
- Multilateral institutions (nominal): 1,261.9 (US$ million) — 86.1 percent
  - NPV of multilateral debt: 747.4 (US$ million) — 82.4 percent
  - After enhanced HIPC relief (multilateral NPV): 166.6 (US$ million)
  - After additional bilateral relief (multilateral NPV): 166.6 (US$ million)
  - Multilateral share in percent of total debt after additional bilateral relief: 97.7 (percent shown in table)
- IDA (nominal): 836.5 (US$ million) — 57.0 percent
  - NPV: 472.5 (US$ million) — 52.1 percent
  - After enhanced HIPC relief: 88.2 (US$ million)
  - After additional bilateral relief: 88.2 (US$ million)
  - Share shown: 51.7 (percent)
- AfDB Group (nominal): 217.3 (US$ million) — 14.8 percent
  - NPV: 125.8 (US$ million) — 13.9 percent
  - After enhanced HIPC relief: 15.1 (US$ million)
  - After additional bilateral relief: 15.1 (US$ million)
  - Share shown: 15.1 (percent)
- IMF (nominal): 98.2 (US$ million) — 6.7 percent
  - NPV: 75.6 (US$ million) — 8.3 percent
  - After enhanced HIPC relief: 48.2 (US$ million)
  - After additional bilateral relief: 48.2 (US$ million)
  - Share shown: 28.2 (percent)
- EU-EIB (nominal): 44.4 (US$ million) — 3.0 percent
  - NPV: 29.9 (US$ million) — 3.3 percent
  - After enhanced HIPC relief: 8.3 (US$ million)
  - After additional bilateral relief: 8.3 (US$ million)
  - Share shown: 4.9 (percent)
- IFAD (nominal): 42.1 (US$ million) — 2.9 percent
  - NPV: 23.8 (US$ million) — 2.6 percent
  - After enhanced HIPC relief: 4.8 (US$ million)
  - After additional bilateral relief: 4.8 (US$ million)
  - Share shown: 2.8 (percent)
- BADEA (nominal): 15.9 (US$ million) — 1.1 percent
  - NPV: 14.2 (US$ million) — 1.6 percent
  - After enhanced HIPC relief: 1.3 (US$ million)
  - After additional bilateral relief: 1.3 (US$ million)
  - Share shown: 0.8 (percent)
- OFID (nominal): 6.1 (US$ million) — 0.4 percent
  - NPV: 5.1 (US$ million) — 0.6 percent
  - After enhanced HIPC relief: 0.7 (US$ million)
  - After additional bilateral relief: 0.7 (US$ million)
  - Share shown: 0.4 (percent)
- BDEGL (nominal): 1.3 (US$ million) — 0.1 percent
  - NPV: 0.5 (US$ million) — 0.1 percent
- Official bilateral and commercial (nominal): 204.5 (US$ million) — 13.9 percent
  - NPV: 160.0 (US$ million) — 17.6 percent
  - After enhanced HIPC relief (NPV): 8.8 (US$ million)
  - After additional bilateral relief (NPV): 4.0 (US$ million)
  - Share shown: 2.3 (percent)
- Paris Club (nominal): 150.7 (US$ million) — 10.3 percent
  - NPV: 107.1 (US$ million) — 11.8 percent
  - After enhanced HIPC relief: 5.2 (US$ million)
  - After additional bilateral relief: 0.8 (US$ million)
  - Share shown: 0.4 (percent)
- Pre-cutoff date Paris Club: 150.7 (nominal); 107.1 (NPV)
- ODA within Paris Club (nominal): 148.3; ODA NPV: 104.8
- Other official bilateral (nominal): 53.3 — shares and NPV listed in table with breakdowns by pre- and post-cutoff dates
- By country (selected nominal end-2007 figures):
  - Austria: 18.2 (US$ million)
  - France: 105.6 (US$ million)
  - Japan: 23.7 (US$ million)
  - China: 0.0 (nominal shown as 0.00 in table; note in footnote: China has cancelled all its claims on Burundi in 2007)
  - Kuwait: 22.7 (US$ million)
  - Libya: 6.4 (US$ million)
  - Saudi Arabia: 21.5 (US$ million)
  - Abu Dhabi: 2.7 (US$ million)
- Notes:
  - 1/ Figures are based on data as of end-2007.
  - 2/ Includes Naples flows, as well as Cologne flow and cancellations from China and Japan.
  - 4/ Paris Club creditors deliver their share of assistance as a group. Actual delivery modalities are defined on a case-by-case basis.
  - 5/ China has cancelled all its claims on Burundi in 2007. The NPV after enhanced HIPC is a simulation of debt which is then cancelled after additional bilateral relief. Libya has cancelled the interest in arrears and has implemented a new rescheduling in February 2008.
  - 3/ Assumes full delivery of HIPC assistance as of end-2007. The NPV of debt for China is simulated so as to show that China has provided beyond HIPC relief to Burundi.
- Sources: Burundi authorities; and Bank-Fund staff estimates.

### Net Present Value of External Debt time series (Table 11 heading)
- Table 11 begins presentation of NPV of external debt (US$ million) actual and projected for years 2007–2027.
- I. After traditional debt-relief mechanisms — (table continues beyond provided excerpt).

*Source: Burundi authorities; and Bank-Fund staff estimates (content extracted from the provided IMF document)._

### 1. NPV of total debt (2+4)853872889901908892814748700866744

### _cr0984 - 1. NPV of total debt (2+4)853872889901908892814748700866744

### I. Baseline: NPV of total debt and composition (pre-assistance)
- NPV of total debt (2+4): 853872889901908892814748700866744
- NPV of outstanding debt: 853852842826804773634526369760503
- Official bilateral and commercial: 105106106106105105112119118107117
- Paris Club: 7374757576778287867786
- Other official bilateral and commer: 32323130292830323230   32
- Multilateral: 747745736721699668522407251653386
- World Bank Group: 472471468463456448385302180440284
- IMF: 76797973644800043   0
- AfDB Group: 126125124122121118101815711678
- Others: 7470666258543624145423

### II. After enhanced HIPC assistance
- NPV of total debt (2+4): 869921220249277283301335423390350
- NPV of outstanding debt: 86990217317417316412111293284109
- Official bilateral and commercial: 15315689999101035 10
- Paris Club: 100104555556623   6
- Other official bilateral and commer: 5352444445513   5
- Multilateral: 7167451651661641551121028224999
- World Bank Group: 45147190919292877860157   75
- IMF: 75794848473800035   0
- AfDB Group: 120125151515151412103412
- Others: 7070121111111112122212
- NPV of total debt after full delivery 3/1: 75192220249277283301335423 (as assumed in the decision point: 146163180196207214256319...)

### III. After bilateral debt relief beyond HIPC assistance 4/
- NPV of total debt (2+4): 866911215244272277296329417384343
- NPV of outstanding debt: 86689116816916815811510686278102
- Official bilateral and commercial: 151145333344430   4
- Paris Club: 10096000000018   0
- Other official bilateral and commer: 5050333344412   4
- Multilateral: 7167451651661641551121028224999
- World Bank Group: 45147190919292877860
- IMF: 757948484738000
- AfDB Group: 12012515151515141210
- Others: 707012111111111212
- NPV of total debt after full delivery 3/1: 71187215244272277296329417

### IV. After MDRI assistance and bilateral debt relief beyond HIPC assistance
- NPV of total debt (2+4): 866911150181211221250292393340309
- NPV of outstanding debt: 86689110310610710269696223468
- Official bilateral and commercial 5/: 151145333344430   4
- Multilateral: 71674510010310499666658204   64
- World Bank Group: 45147141434445464639120   45
- IMF: 75793941413500033   0
- AfDB Group: 120125888888729   8
- Others: 7070121111111112122212
- NPV of total debt after full delivery 3/1: 105122150181211221250292393

### Memorandum items (selected)
- 4. NPV of new borrowing...204775104119180223331117241
- Sources: Burundi authorities; and Bank-Fund staff estimates and projections.
- Notes (selected):
  - 1/ Refers to public and publicly guaranteed external debt only and is discounted on the basis of the average commercial interest reference rate for the respective currency, derived over the six-month period prior to the latest date for which actual data are available (December 2007).
  - 2/ Assumes a stock-of-debt operation on Naples terms (67 percent NPV reduction) as of end-2007, and at least comparable action by other official bilateral and commercial creditors.
  - 3/ NPV of total debt assuming the entire HIPC Initiative assistance is fully delivered as of end-2007.
  - 4/ Includes additional debt relief provided on a voluntary basis by the Paris Club and some commercial creditors beyond the requirements of the enhanced HIPC framework as specified on Table 14.
  - 5/ This corresponds to the situation after additional bilateral relief for Paris Club Creditors.

### Table 12 — External Debt Service After Full Implementation of Debt-Relief Mechanisms (selected series, In millions of U.S. dollars)
- Projection years: 2008 2009 2010 2011 2012 2017 2022 2027; Annual averages: 2008-17, 2018-27
- After traditional debt-relief mechanisms 1/:
  - Total debt service including new borrowing: 45.854.160.566.373.769.760.967.666.665.3
  - Total debt service on outstanding debt: 45.553.859.965.372.453.253.854.156.453.8
  - Multilateral: 41.148.254.359.766.949.248.947.757.448.6
  - World Bank Group: 26.428.129.731.732.735.236.636.932.436.6
  - IMF: 0.44.79.913.218.81.10.0 0.010.10.0
  - AfDB Group: 7.17.27.17.98.38.88.57.98.18.4
  - Others: 7.38.27.56.97.14.13.82.86.83.5
  - Official bilateral: 4.35.75.65.65.54.04.96.44.75.2
  - Paris Club: 2.92.92.92.92.92.83.64.52.83.7
  - Other official bilateral and commercial: 1.52.82.72.62.61.21.32.01.81.5
- After enhanced HIPC assistance:
  - Total debt service including new borrowing: 9.18.18.711.519.425.415.523.017.920.3
  - Total debt service on outstanding debt: 8.87.88.010.618.18.98.59.613.48.7
  - Multilateral: 7.97.57.710.317.78.68.19.113.08.3
  - World Bank Group: 3.53.73.94.54.85.96.67.44.96.7
  - IMF: 0.41.11.84.411.51.10.00.06.10.0
  - AfDB Group: 0.70.70.80.80.91.01.01.10.91.0
  - Others: 3.31.91.20.60.60.60.60.61.00.6
  - Official bilateral: 0.90.30.30.30.30.30.30.60.40.4
  - Paris Club: 0.80.20.20.20.20.20.20.30.20.2
  - Other official bilateral and commercial: 0.10.20.20.20.20.20.20.30.10.2
- After bilateral debt relief beyond HIPC 2/:
  - Total debt service including new borrowing: 9.17.98.511.419.225.315.322.717.720.1
  - Total debt service on outstanding debt: 8.87.67.910.417.98.88.39.313.28.5
  - Multilateral: 7.97.57.710.317.78.68.19.113.08.3
  - Official bilateral: 0.90.20.20.20.20.20.20.20.20.2
  - Paris Club: 0.80.00.00.00.00.00.00.00.10.0
  - Other official bilateral and commercial: 0.10.20.20.20.20.20.20.20.10.2
- After MDRI assistance and bilateral debt relief beyond HIPC assistance:
  - Total debt service including new borrowing: 9.14.23.15.511.821.111.118.713.115.9
  - Total debt service on outstanding debt: 8.83.92.54.4 10.54.64.15.28.64.3
  - Multilateral: 7.93.72.44.410.34.43.95.08.34.1
  - World Bank Group: 3.51.40.71.01.42.32.93.81.93.1
  - IMF: 0.40.20.22.58.11.10.00.05.10.0
  - AfDB Group: 0.70.30.30.30.30.40.40.60.40.5
  - Others: 3.31.91.20.60.60.60.60.61.00.6
  - Official bilateral 2/: 0.90.20.20.20.20.20.20.20.20.2
- Memorandum items:
  - Debt service of new borrowing: 0.30.30.61.01.316.57.013.44.611.6
  - Nominal debt relief under the enhanced HIPC initiative: 36.746.051.854.754.444.245.444.548.745.1
  - Nominal debt relief under the MDRI: 0.03.75.45.97.44.24.24.14.64.2

### Table 13 — Key External Debt Indicators, 2007–27 (selected series, In percent)
- After traditional debt relief (selected entries):
  - NPV of debt-to-GDP ratio: 87  756357544932201349   20
  - NPV of debt-to-exports ratio 2/ 3/: 952898875774728644401229134637229
  - NPV of debt-to-exports ratio (existing debt only) 2/ 3/: 95287882970964455831216171561160
  - NPV of debt-to-revenues ratio 3/: 469391326295278254156976325096
- After enhanced HIPC assistance (selected entries):
  - NPV of debt-to-GDP ratio: 89  791616161612  9  8219
  - NPV of debt-to-exports ratio 2/ 3/: 97095021721422220414910381266103
  - NPV of debt-to-exports ratio (existing debt only) 2/ 3/: 97092917014913911860341819034
  - NPV of debt-to-revenues ratio 3/: 4784138182858158443810744
- After additional beyond HIPC bilateral assistance:
  - NPV of debt-to-GDP ratio: 89  781515161512  9  8219
  - NPV of debt-to-exports ratio 2/ 3/: 96793921221021820014610180261101
  - NPV of debt-to-revenues ratio 3/: 4774087980837957433710643
- After MDRI 5/:
  - NPV of debt-to-GDP ratio: 89  781111121210  8  7188
  - NPV of debt-to-exports ratio 2/ 3/: 967939148156169160123907522790
  - NPV of debt-to-revenues ratio 3/: 477408555965634838359238
- Memorandum items (in millions of U.S. dollars):
  - NPV of debt after traditional debt relief: 853872889901908892814748700867744
  - Debt service after traditional debt relief: ...46546166747061686765
  - NPV of debt after HIPC assistance: 869921220249277283301335423342350
  - Debt service after HIPC assistance: ...98912192516231820
  - NPV of debt after additional bilateral relief: 866911215244272277296329417336343
  - Debt service after additional bilateral relief: ...98811192515231820
  - NPV of debt after MDRI and additional bilateral relief 5/: 866911150181211221250292393287309
  - Debt service after MDRI and additional bilateral relief 5: /...9436122111191316
  - GDP: 9751,1701,4161,5931,6941,8082,5543,7055,3201,8813,922
  - Exports of goods and services 3/: 84114107128139148220360570158389
  - Exports of goods and services (3-year mvg. avg.) 2/ 3/: 9097102116125139203326523145355
  - Government revenue 4/: 1822232733053273515237691,111371815

### Table 14 — Sensitivity Analysis, 2008–27 (selected scenarios and memorandum items)
- Baseline sensitivity entries:
  - NPV of debt-to-exports ratio 2/: 125148156169160123907514590
  - Debt service-to-export ratio: 84248103384
  - Debt service-to-revenue ratio: 4212341232
  - Memorandum: NPV of debt: 122150181211221250292393208309
  - of which: new debt: 204775104119180223331117241
  - Debt service: 9436122111191316
  - of which: new debt: 0011117713   512
  - Exports 3-year average: 97102116125139203326523145355
  - Exports of goods and services 3/: 114107128139148220360570158389
  - Government revenue: 2232733053273515237691111371815
- Terms of trade shock:
  - NPV of debt-to-exports ratio 2/: 125162185217215214202179198197
  - Debt service-to-export ratio: 84359126797
  - Debt service-to-revenue ratio: 4212452343
  - Memorandum: NPV of debt: 122160203246270386546782269578
  - of which: new debt: 205796139168316476719177510
  - Debt service: 9436122317331423
  - of which: new debt: 00112191327519
  - Exports 3-year average: 9799109113126181270438133297
  - Government revenue: 2232722873073304937251047353768
- Lower aid:
  - NPV of debt-to-exports ratio 2/: 125170199233240230165119220162
  - Debt service-to-export ratio: 84359116697
  - Debt service-to-revenue ratio: 4212453343
  - Memorandum: NPV of debt: 122173232291332466537621330546
  - of which: new debt: 2070126184230397468558238478
  - Debt service: 9446132521361527
  - of which: new debt: 00123201731622
- Slower real GDP growth:
  - NPV of debt-to-exports ratio 2/: 125149163186186210266343181275
  - Debt service-to-export ratio: 84349126998
  - Debt service-to-revenue ratio: 4212453444
  - Memorandum: NPV of debt: 1221511872262493786771346254787
  - of which: new debt: 2047811191463086081284162719
  - Debt service: 9436122318391425
  - of which: new debt: 00112181434521
  - Exports 3-year average: 97101115122134180254392137276

- Notes:
  - 1/ All debt indicators refer to public and publicly guaranteed debt after full delivery of debt relief (including debt relief beyond the HIPC Initiative and MDRI relief).
  - 2/ Based on a three-year backward looking moving average of exports of goods and services.
  - 3/ Exports of goods and services as defined in IMF, Balance of Payments Manual, 5th edition, 1993.
  - 4/ Terms of trade scenario: permanent decline in coffee export price by 20 percent and permanent increase in oil import price by 17 percent.
  - 5/ Lower aid scenario: 25 percent reduction in grants during 2009-2015.
  - 6/ Slower growth scenario: permanent reduction in real GDP growth by one percentage point.

### Table 15 — Delivery of IMF Assistance Under the Enhanced HIPC Initiative and MDRI, 2005–15 (selected entries, In millions of SDRs)
- I. Pre-MDRI Debt relief (under the HIPC Initiative only) 2/ (selected flows)
  - HIPC-eligible debt service due on IMF obligations 3/: 0.1  0.2  0.2  0.2  -
  - Principal (selected): -  -  -  -  -
  - PRGF interest: 0.1  0.2  0.2  0.2  -
  - HIPC assistance–deposits into the HIPC Umbrella Account — Interim assistance: 0.1  0.1  0.1
  - Completion point disbursement: 21.9
  - Completion point assistance 4/: 19.0
  - Completion point interest: 2.8
  - HIPC assistance–drawdown from the HIPC Umbrella Account (selected): 0.04  0.09  0.09  0.04  -
  - IMF assistance without interest (selected): 0.04  0.1  0.1  0.04  -
  - Estimated interest earnings 5/ (selected): -  0.0  0.0  0.0  -
  - Debt service due on IMF obligations after HIPC assistance (selected): 0.04  0.1  0.1  0.1  -
  - Delivery schedule of IMF assistance (in percent of the total assistance; on a flow basis): 0.2  0.5  0.4  0.2  -
  - Share of debt service due on IMF obligations covered by HIPC assistance (in percent): 50.0  52.5  52.7  25.4  -
  - Proportion (in percent) of each principal repayment falling due during the period to be paid by HIPC assistance from the principal deposited in Umbrella account: 50.0  51.8  51.3  24.9  -
- II. Post-MDRI Debt relief (under both MDRI and HIPC Initiatives) (selected)
  - Projected pre-cutoff date debt at completion point 6/: 26.4
  - Delivery of debt relief (on stock basis): from the MDRI-I Trust 7/: 9.2; from the HIPC Umbrella Account: 17.2
  - Delivery of remaining HIPC assistance for post MDRI cutoff date debt (on stock basis): 4.7
- III. Debt service due to the IMF after HIPC and MDRI debt relief 8/ (selected): 0.06  0.14  0.21  0.32  -  0.2  0.2  1.7  5.2  7.0  10.0  9.3

- Notes (selected):
  - 1/ Total IMF assistance under the enhanced HIPC Initiative is SDR 19.28 million in NPV terms calculated on the basis of data available at the decision point, excluding interest earned on Burundi's account and on committed but undisbursed amounts as described in footnote 5. IMF assistance committed at the decision point is adjusted upwards from SDR 19.262 million to SDR 19.28 million owing to data revisions.
  - 3/ Data as of decision point. Interest obligations exclude net SDR charges and assessments which are not eligible for HIPC assistance.
  - 4/ A final disbursement of SDR 19 million will be deposited into Burundi's Umbrella Account at the completion point in January 2009.
  - 5/ Includes estimated interest earnings based on assumed interest rates gradually increasing to 5 percent in 2013 and beyond.
  - 6/ Associated with disbursements made prior to December 31, 2004.
  - 7/ Credit outstanding at end-2004 that has not been repaid by the member or with HIPC assistance at the completion point and is not scheduled to be repaid by HIPC assistance, as defined in the MDRI-I Trust Instrument.
  - 8/ Data prior to completion point represent actual debt service paid. Projected debt service from November 2008 are as of end-October 2008.

### Table 16 — Delivery of World Bank HIPC Assistance and MDRI, 2005–45 (selected entries, In millions of U.S. dollars)
- World Bank debt service before HIPC relief (selected): 21.54 22.97 23.41 26.40 28.14 29.72 31.71 32.67 34.51 34.74 35.41 35.10 38.12 24.87 9.07 0.04
- World Bank debt service after HIPC relief (selected): 13.1 2.3 2.3 3.5 3.7 3.9 4.5 4.8 5.3 5.6 6.0 5.9 7.6 6.0 9.1 0.0
- World Bank assistance 2/ (selected): 8.4 20.7 21.1 22.9 24.4 25.8 27.2 27.8 29.2 29.1 29.5 29.2 30.6 18.9 0.0 0.0
- Relief under the MDRI (selected):
  - Projected stock of IDA credits outstanding at implementation date: 836.5
  - Debt stock reduction on eligible credits: 743.0
  - Due to HIPC relief: 652.6
  - Due to MDRI: 90.4
  - Remaining IDA credits after MDRI relief: 93.5
  - IDA debt service relief under the MDRI (selected): 2.39 3.27 3.43 3.49 3.62 3.61 3.65 3.63 3.71 2.23 4.01 - 3.54 2.27
  - Debt service due to IDA after HIPC relief and the MDRI (selected): 1.35 0.65 1.04 1.35 1.70 1.99 2.31 2.27 3.86 3.75 5.06 0.04 2.24 3.33
- Memorandum items:
  - Interim Assistance: 68.51
  - Interim relief as percent of total: 16.1%
  - IDA debt service relief under the MDRI (in millions of SDR) 9/: 1.57 2.15 2.25 2.29 2.38 2.37 2.40 2.38 2.43 1.46 2.63 0.00 2.32 1.49

- Source: IDA staff estimates.
- Note 1/: For the 2005-2007 period, debt service and debt relief is estimated on debt outstanding as of December 31, 2004, using end-2004 exchange rates. For the projection period, the debt service presented here is on end-2007 outstanding debt, using end-2007 exchange rates. 2/ Enhanced HIPC assistance until end January 2009 as approved by the Board of IDA (IDA/R2005-0174).

*Sources: Burundi authorities; and Bank-Fund staff estimates and projections.*

### 425.2 million in NPV terms, using end-2004

### _cr0984 - 425.2 million in NPV terms, using end-2004

### Paris Club creditors' delivery of debt relief under bilateral initiatives
- Presentation: creditors' provision of relief to HIPCs summarized across ODA / non-ODA, pre-cutoff and post-cutoff debt, with modalities (flow, stock, case-by-case).
- Examples of creditor treatments (as reported):
  - Australia: HIPCs 100 100 100 100
  - Canada: HIPCs 100 100 100 flow Stock; moratorium as of January 2001 on debt disbursed before end-March 1999 for 13 out of 17 HIPCs; 100% cancellation at completion point for eligible HIPCs.
  - France: HIPCs 100 100 100-100 flow Stock; cancellation of 100 percent of debt service on pre-cutoff date commercial claims on the government as they fall due starting at the decision point.
  - Netherlands: HIPCs 100 100 100-90-100 flow Stock; 100 percent ODA (pre- and post-cutoff date debt cancelled at decision point); non-ODA: particular cases receive 100 percent, others interim relief up to 90 percent; completion point: 100 percent cancellation of remaining stock of pre-cutoff date debt.
  - United Kingdom: HIPCs 100 100 100 100 100 flow Stock; "beyond 100 percent" full write-off of all debts of HIPCs as of their decision points, and reimbursement at the decision point of any debt service paid before the decision point.
  - United States: HIPCs 100 100 100 100 100 flow Stock; 100 percent post-cutoff date non-ODA treated on debt assumed prior to June 20, 1999 (the Cologne Summit).
- Footnote and conversion rules noted:
  - For SDR-denominated IDA credits, MDRI relief estimated as 100 percent of SDR-based debt service minus USD-based debt relief under the Enhanced HIPC Initiative; conversions use the foreign exchange reference rate of 1.52448 agreed by donors under the latest regular IDA replenishment.
  - USD-denominated IDA credits: MDRI relief estimated as 100 percent of USD-based debt service minus USD-based debt relief under the Enhanced HIPC Initiative; resulting amounts converted into SDR equivalent amounts by applying the foreign exchange reference rates agreed by donors under the latest regular IDA replenishment.

### HIPC Initiative — Status of country cases (as of March 18, 2008): key aggregates and country examples
- Total assistance provided/committed (table totals): 39,683; 19,594; 19,990; 3,369; 9,329; 1,262; Total 68,340 (units: millions of U.S. dollars, present value).
- Selected country completion-point outcomes (present value of debt reduction and nominal debt relief examples):
  - Benin: Completion point Jul. 00; Decision point Mar. 03; Total NPV of debt reduction: 150; Nominal debt relief (in millions of U.S. dollars): 460
  - Bolivia (enhanced framework): Decision point Feb. 00; Completion point Jun. 01; Total NPV of debt reduction: 150; Nominal debt relief: 1,300
  - Mozambique (original framework): Decision point Apr. 98; Completion point Jun. 99; Total NPV of debt reduction: 200; Nominal debt relief: 3,700; enhanced framework topping-up: Total NPV 150; Nominal debt relief: 600
  - Rwanda (enhanced framework): Decision point Dec. 00; Completion point Apr-05; Total NPV 150; Nominal debt relief: 839; topping-up: NPV 150; Nominal debt relief: 477
  - Zambia: Decision point Dec. 00; Completion point Apr-05; Total NPV 150; Nominal debt relief: 3,900
- Decision point reached under enhanced framework (selected cases and figures):
  - Burundi: Decision point Aug. 05; Floating target; Total NPV 150; Estimated total NPV of debt reduction: 826; Nominal debt relief: 1,465
  - Democratic Republic of Congo: Decision point Jul. 03; Floating target; Total NPV 150; Estimated total NPV of debt reduction: 6,311; Nominal debt relief: 10,389
  - Liberia: Decision point Feb. 08; Floating target; Total NPV 150; Estimated total NPV of debt reduction: 2,846; Nominal debt relief: 4,008
- Sources for the table: IMF and World Bank Board decisions, completion point documents, decision point documents, preliminary HIPC documents, and staff calculations.

### Burundi: Selected economic and financial indicators and macro projections
- Period averages presented for intervals: 2003-07, 2008-12, 2013-17, 2018-22, 2023-27.
- Real GDP growth (annual percentage change):
  - 2003-07: 2.6
  - 2008-12: 4.8
  - 2013-17: 5.0
  - 2018-22: 5.0
  - 2023-27: 5.0
- Consumer prices (end of period):
  - 2003-07: 9.5
  - 2008-12: 10.0
  - 2013-17: 4.6
  - 2018-22: 4.0
  - 2023-27: 4.0
- External sector (annual percentage change unless noted):
  - Exports, f.o.b. (US$): 12.2; 14.4; 5.8; 6.9; 6.9 (for the five periods respectively)
  - Imports, f.o.b. (US$): 22.5; 5.6; 8.1; 5.8; 6.3
  - Export volume: 1.0; 13.7; 5.6; 6.3; 6.3
  - Import volume: 12.5; 6.2; 7.4; 5.0; 5.4
- General government (percent of GDP):
  - Revenue (excluding grants): 19.7; 19.4; 20.2; 20.8; 21.0
  - Total expenditure and net lending: 37.6; 43.1; 35.0; 28.1; 27.1
  - Overall balance (commitment basis) excluding grants: -17.9; -23.8; -14.7; -7.3; -6.1
  - Overall balance including grants: -3.7; 10.7; -2.6; -0.8; -1.4
- Savings-Investment balance (percent of GDP):
  - Total: -10.5; -12.1; -15.5; -12.8; -8.9
  - Private: -8.0; -10.0; -12.9; -12.0; -7.5
  - Public: -2.5; -2.1; -2.6; -0.8; -1.4
- External sector:
  - Current account, including grants: -22.6; -9.9; -11.1; -8.3; -5.2
  - Gross official reserves (months of imports of the following year): 3.3; 3.3; 3.0; 3.0; 3.0
- Memorandum:
  - GDP at current market prices (Fbu billion): 848.5; 1,878.5; 2,136.1; 5,014.7; 9,940.3

### Burundi: public external debt and recent developments (DSA context)
- Public and publicly guaranteed (PPG) external debt in 2007:
  - Nominal PPG debt: US$1.5 billion
  - Percent of GDP: 155 percent of GDP in 2007
  - Present value (PV) of debt-to-exports ratio: 104.8 percent
  - Creditor composition: about 86 percent of outstanding external PPG debt owed to multilateral creditors; bilateral creditors account for the remainder.
  - External debt service in 2007: 6.8 percent of exports (from 10.7 percent in 2006), reflecting primarily debt relief by Paris Club creditors.
- Public external debt stock composition (selected years from Table 1):
  - Total (2004): 1,384 (100.0)
  - Total (2006): 1,472 (100.0)
  - Total (2007): 1,468.0 (100.0)
  - Multilateral: 1170 84.5 (2004); 1,253 85.1 (2006); 1,262 86.0 (2007)
  - Bilateral: 208 15.0 (2004); 213 14.5 (2006); 205.4 14.0 (2007)
  - Paris Club (subset): 145.1 10.5 (2004); 146.3 9.9 (2006); 152.1 10.4 (2007)
  - Non-Paris Club bilateral: 62.5 4.5 (2004); 67.0 4.6 (2006); 53.3 3.6 (2007)
  - Commercial: 6.6 0.5 (2004); 5.8 0.4 (2006); 0.6 0.0 (2007)

### Debt management assessment and recommendations (Appendix I)
- Improvements since decision point:
  - Ministry of Finance now has exclusive right to negotiate and sign external loans.
  - Reorganization and improved staffing of the unit in charge of debt at the Ministry of Finance.
  - Provision of more appropriate technical facilities.
- Remaining impediments:
  - Lack of trained human resources at the “Direction de la Dette Extérieure” (DDE).
  - Insufficient communication between the debt management unit and public enterprises.
  - Data for disbursements, debt service, and payment plan schedules are prone to errors.
- Systems and training:
  - Authorities benefit from training from UNCTAD.
  - Introduction of the latest version of SYGADE debt management software.
  - Benefits limited by lack of trained and experienced staff.
- Policy recommendations and priorities:
  - Ensure well-coordinated institutional arrangements fully integrated into overall macroeconomic policymaking.
  - Improve coordination between DDE and other government institutions, including the central bank.
  - Maintain technical assistance to improve skills of the debt management unit.
  - Achieve accurate and timely reporting on debt outstanding, debt service projections, and timely execution of debt-service obligations.
  - Once back-office functions are in place, articulate a sound debt management strategy based on more informed analysis.

### LIC DSA for Burundi: methodology, key findings, and policy implications (Appendix II)
- Methodological notes (LIC DSA differences vs HIPC DSA):
  - Discount rate fixed at 5 percent (LIC DSA) versus currency-specific 6-month average CIRR used in HIPC DSA.
  - Export denominator based on current level of exports (LIC DSA) rather than three-year backward average (HIPC DSA).
  - Exchange rate projections used to convert debt data after debt relief (LIC DSA).
  - Present value of debt is calculated by discounting debt service converted in dollar terms using the WEO average exchange rate for the first 5 years, and maintaining exchange rates constant thereafter.
- Core conclusion:
  - Despite delivery of HIPC and MDRI assistance, Burundi has a high risk of debt distress (an improvement from prior LIC DSA which found Burundi to be “in debt distress”).
- Baseline and projections assumptions:
  - After full delivery of HIPC assistance, bilateral debt relief beyond HIPC and MDRI, Burundi’s PV of debt-to-exports ratio expected to remain above the country-specific policy dependent threshold for most of the projection period.
  - Under standard alternative scenarios and stress tests, all indicators except debt-to-revenue and debt service-to-revenue ratios exceed country-specific debt burden thresholds.
- Policy implications:
  - Burundi should continue to rely on grants and highly concessional loans to meet financing needs.
  - Intensify efforts to increase and diversify its export base.
- Key baseline macroeconomic assumptions:
  - Medium- and long-term real GDP growth expected to average 5 percent.
  - Investment expected to average about 16 percent of GDP.
  - External current account deficit including grants will decline over time despite lower donor support.
  - Financing expected to continue in the form of grants and highly concessional loans.
  - Fiscal policy supportive of growth and poverty reduction while preserving debt sustainability.
  - Revenue mobilization efforts expected to gradually increase government revenues; expenditure to decline to more sustainable levels as transition ends.

*Source: IMF staff report text (tables and appendices as provided in the content unit).*

### 6.      Risks to the macroeconomic outlook are significant. A worsening of the

### 6. Risks to the macroeconomic outlook are significant

### Risk overview
- A worsening of the political, social and security situation would endanger donor support and lead to a rapid deterioration of debt indicators.
- Exogenous shocks, including a stronger-than-expected impact of the international economic crisis on exports and growth and a reversal of the current downward trend in oil prices, would lead to a further deterioration in debt indicators.

### External debt sustainability analysis — baseline findings
- All but one debt indicators are expected to remain below the country-specific debt burden thresholds under the baseline scenario following HIPC and MDRI relief.
- The present value (PV) of debt-to-GDP, the PV of debt-to-revenues, the debt service-to-exports ratio, and the debt service-to-revenue ratios are expected to remain well below the indicative country-specific thresholds throughout the projection period.
- All debt and debt-service indicators increase modestly over the medium term and then gradually level off.
- The PV of debt-to-exports ratio will remain above the 100 percent threshold until 2019 and then decline rapidly to about 70 percent at the end of the projection period.
- The evolution of the PV of debt-to-exports ratio reflects the country’s development needs over the medium term and the gradual improvement in export capacity.
- The latest World Bank Country Policy and Institutional Assessment (CPIA) rates Burundi as a poor performer. The three-year moving average CPIA in 2007 is 3.0. This score has remained unchanged during the last three years. A rating below 3.25 corresponds to a poor policy performance, according to the LIC DSF.

### Box 1 — Main Macroeconomic Assumptions, 2008–28
- Real GDP growth:
  - Expected to accelerate to 5 percent over the medium term reflecting the consolidation of peace, the reform of the coffee sector, and economic stimulus from increased capital spending associated with donor support.
  - Long-term growth is expected to be about 5 percent.
- Investment:
  - Expected to average about 16 percent of GDP.
- Inflation:
  - Assumed to decline gradually over the medium term and stabilize at about 4 percent over the long term.
- Fiscal policy:
  - Supportive of economic growth and poverty reduction, while maintaining debt sustainability and macroeconomic stability.
  - Government revenues, excluding grants, projected to remain rather stable over the medium term, but gradually increase to about 21 percent of GDP over the long term.
  - Government expenditure expected to gradually decline over time to about 27 percent of GDP.
  - Public investment expected to gradually decline over time to about 4 percent of GDP.
- Exports and imports:
  - Exports of goods and services projected to increase by an average of 7 percent over the medium term; projected to increase by 9–10 percent over the longer term.
  - Imports of goods and services will gradually decelerate over time to a rate of 5 percent.
- Current account and external financing:
  - Current account deficit, including grants, expected to deteriorate to about 17 percent of GDP in 2015, and then gradually decline to about 9 percent at the end of the projection period.
  - Excluding transfers, the current account deficit assumed to decline from 26 percent of GDP to about 9 percent at the end of the projection period.
  - Grant support assumed to decline from about 26 percent of GDP in 2008 to about 10 percent in 2015.
  - Loans assumed to gradually decline from about 3 percent of GDP in 2008 to about 1 percent at the end of the projection period; borrowing assumed to be primarily on highly concessional terms.

### Alternative scenarios and stress tests — key results
- Under the historical scenario, debt indicators are considerably worse over the medium term, but improve rapidly relative to the baseline scenario. Results should be interpreted with caution given Burundi’s history of conflict.
- Scenario assuming new borrowing at a higher interest rate shows debt indicators at the end of the projection period are generally worse than in the baseline scenario, underscoring the need for continued reliance on grants and highly concessional financing.
- Burundi is vulnerable to a combination of growth, export, inflation, and FDI/current transfers shocks.
- Bound tests suggest that in the presence of shocks, all debt indicators, with the exception of the debt service to revenue ratio, will exceed the indicative debt-burden thresholds.
- All debt indicators worsen assuming an unchanged primary balance from 2008, highlighting the need for fiscal prudence.
- A scenario based on the historical growth and primary balance leads to a rapid deterioration of debt indicators, underscoring the importance of avoiding past unsustainable policies.
- Under the most extreme shock (lower real GDP growth and higher primary deficit), all debt indicators worsen rapidly; however, the debt service-to-revenue ratio increases only gradually as additional borrowing is on highly concessional terms.

### Box 2 — Burundi: Summary of Baseline Debt Sustainability Indicators (Percent)
- Indicative Threshold
- 2008 2001 8 2028
- Average 2008-28
- NPV of debt to GDP: 309.4 9.9 7.4 9.7
- NPV of debt to exports: 100 96.2 113.4 68.5 109.0
- NPV of debt to revenue: 200 49.3 47.9 35.3 48.1
- Debt service to exports: 153.0 8.7 4.2 6.1
- Debt service to revenues: 251.5 3.7 2.2 2.7
- Sources: Burundi authorities; and staff estimates.

### Fiscal debt sustainability
- Public external debt accounts for almost the entire stock of public debt.
- Ratios of the PV of public debt-to-GDP and public debt-to-revenues are low reflecting reliance on grants; they are expected to decline over time as the public sector borrowing requirement declines.
- Alternative scenarios and stress tests show public debt indicators can worsen rapidly:
  - All debt indicators worsen assuming an unchanged primary balance from 2008.
  - Historical growth and primary balance scenario leads to rapid deterioration.
  - Under the most extreme shock (lower real GDP growth and higher primary deficit), all public debt indicators worsen rapidly.
  - The debt service-to-revenue ratio increases only gradually due to highly concessional additional borrowing.

### Conclusion
- The risk of debt distress will remain high following the HIPC completion point given a protracted breach of the PV of debt-to-exports threshold under the baseline scenario and the likelihood that all debt burden thresholds would be exceeded in the event of shocks.

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr0984.pdf*

### 12.      Burundi will remain at a high risk of debt distress following the HIPC

### 12.      Burundi will remain at a high risk of debt distress following the HIPC

### Status after HIPC completion point and MDRI
- Despite debt relief at the HIPC completion point and under MDRI, the PV of external debt-to-exports will remain above the country-specific debt burden threshold over the long term.
- Burundi is vulnerable to exogenous shocks which could lead to a considerable worsening of debt indicators.
- Baseline assumption: no issuance of medium-term domestic debt because the market for government debt is not expected to play a significant role in meeting the government’s financing needs in the foreseeable future.

### Key quantitative indicators (selected, as reported)
- External debt (nominal) series (selected years and items):
  - 2005: 169.8
  - 2006: 154.8
  - 2007: 148.8
  - 2008: 122.0
  - 2018 average (2014-2028 average context): 22.7
  - 2028: 16.0
- Change in external debt (selected):
  - 2005: -52.0
  - 2008: -26.8
  - 2013: -0.4
  - 2018: -1.4
  - 2028: -0.5
- Identified net debt-creating flows (selected):
  - 2005: -39.8
  - 2008: -1.7
  - 2013: 4.2
  - 2018: 9.2
  - 2028: 5.8
- PV of external debt (PV of PPG external debt) — selected levels (in Millions of US dollars and percent of exports/revenues):
  - PV of PPG external debt (Millions of US dollars, selected): 87.6 (2005), 110.0 (2006), 140.7 (2007), 174.8 (2008), 208.1 (2009), 220.9 (2010), 233.1 (2011), 273.3 (2012), 424.6 (2018)
  - PV of PPG external debt in percent of exports (selected years): 104.8, 96.2, 131.7, 136.3, 149.7, 149.0, 146.1, 113.4, 68.5 (series corresponds to projection years)
  - PV of PPG external debt in percent of government revenues (selected): 48.2, 49.3, 51.6, 56.5, 63.1, 62.4, 61.0, 47.9, 35.3
- Debt service ratios (selected):
  - Debt service-to-exports ratio (in percent): 28.4, 10.7, 6.8, 3.0, 3.7, 2.4, 4.0, 7.9, 8.8, 8.7, 4.2 (time series as reported)
  - PPG debt service-to-revenue ratio (in percent): 16.3, 5.7, 3.1, 1.5, 1.4, 1.0, 1.7, 3.3, 3.7, 3.7, 2.2
- Total gross financing need (Millions of U.S. dollars) (selected): -9.5, 106.8, 76.3, 48.8, 38.8, 20.4, 56.8, 94.3, 115.8, 301.0, 396.5
- Non-interest current account deficit that stabilizes debt ratio (selected): 50.9, 29.4, 21.4, 39.7, 107.1, 9.4, 11.7, 13.9, 14.8, 15.8, 8.2

### Key macroeconomic assumptions (selected)
- Real GDP growth (in percent) (selected series and assumptions):
  - Historical: 0.9, 5.1, 3.6, 2.3, 2.6
  - Projections: 4.5, 4.5, 5.0, 5.0, 5.0, 5.0, 4.8, 5.0, 5.0, 5.0
- GDP deflator in US dollar terms (change in percent) (selected): 19.4, 9.2, 2.4, -1.7, 10.6, 14.8, 15.8, 7.2, 1.3, 1.7, 1.7
- Effective interest rate (percent) (current-year interest payments divided by previous period debt stock) (selected): 1.3, 0.1, 0.3, 0.8, 0.6, 0.0, 0.1, 0.5, 0.6, 0.6, 0.6, 0.4, 0.7, 0.7, 0.7
- Growth of exports of G&S (US dollar terms, in percent) (selected): 44.8, 1.0, -10.2, 1.0, 24.0, 36.8, -6.5, 20.0, 8.4, 6.7, 7.6, 12.1, 9.5, 8.8, 9.5
- Growth of imports of G&S (US dollar terms, in percent) (selected): 44.2, 37.5, 5.5, 15.6, 21.7, 15.3, -5.7, 6.6, 6.6, 5.5, 5.4, 5.6, 5.0, 4.9, 5.0
- Government revenues (excluding grants, in percent of GDP) (selected): 20.0, 18.9, 18.6, 19.1, 19.3, 19.4, 19.5, 19.6, 19.8, 20.7, 21.0, 20.8

### Aid and grant-equivalent financing (selected)
- Aid flows (in Millions of US dollars) (defined as grants, concessional loans, and debt relief) (selected):
  - 2005: 163.1
  - 2006: 198.5
  - 2007: 227.6
  - 2008: 337.9   1224.5 (format as in source)
  - 2018: 251.8
  - 2028: 297.0
- Of which: Grants (Millions of US dollars) (selected): 93.8, 164.2, 203.7, 298.5   1185.5, 324.9, 305.9, 300.5, 316.0, 224.2, 239.8
- Of which: Concessional loans (Millions of US dollars) (selected): 69.3, 34.3, 24.0, 39.4, 39.0, 38.6, 38.2, 34.4, 36.7, 27.6, 57.2
- Grant-equivalent financing (in percent of GDP) (selected): 27.8, 85.8, 22.2, 19.7, 17.7, 17.5, 8.7, 4.8, 7.5
- Grant-equivalent financing (in percent of external financing) (selected): 93.2, 97.6, 92.1, 91.8, 95.8, 95.7, 95.5, 92.1, 93.5

### Public sector debt dynamics (selected)
- Public sector debt (central government gross basis) (selected):
  - 2005: 169.8
  - 2006: 154.8
  - 2007: 148.8
  - 2008: 122.0
  - 2018 average (2008-13 average context): 22.7
  - 2028: 16.0
- Change in public sector debt (selected): -52.0 (2005), -15.0 (2006), -6.0 (2007), -26.8 (2008), -95.7 (2009), 0.7 (2010), 0.3 (2011), -0.4 (2012), -0.4 (2013), -1.4 (2018), -0.5 (2028)
- Identified debt-creating flows (selected): -48.6, -16.1, -2.7, -29.7, -80.6, 1.8, 2.5, 3.2, 3.0, -2.5, 0.4
- Primary deficit (selected): 0.5, -0.1, -3.2, 0.7, 2.2, -1.4, -59.7, 2.7, 3.5, 4.3, 4.3, -7.7, -0.9, 1.5, 1.4
- Revenue and grants (in percent of GDP) (selected): 31.7, 36.8, 39.5, 44.6, 103.0, 39.8, 37.5, 36.2, 36.2, 28.9, 25.2
  - of which: grants (selected): 11.7, 17.9, 20.9, 25.5, 83.7, 20.4, 18.1, 16.6, 16.4, 8.1, 4.2
- Automatic debt dynamics and contributions (selected):
  - Automatic debt dynamics: -47.9, -13.0, 1.6, -28.3, -20.9, -0.9, -1.0, -1.1, -1.3, -1.5, -1.0
  - Contribution from interest rate/growth differential: -4.0, -11.8, -7.2, -7.8, -6.0, -0.9, -1.1, -1.2, -1.3, -1.4, -1.0
  - Contribution from real exchange rate depreciation (in percent, + indicates depreciation): -22.2, -5.0, 12.0, 12.2, 22.4, -7.5
- PV of public sector debt (selected, in percent of GDP and components):
  - PV of public sector debt (selected percent series): 0.0, 0.0, 9.3, 9.3, 9.7, 11.3, 12.5, 12.4, 12.2, 10.0, 7.5
  - o/w external (selected): 9.3, 9.3, 9.7, 11.3, 12.5, 12.4, 12.2, 10.0, 7.5
- Gross financing need (selected): 7.1, 4.7, -1.7, -0.8, 0.5, -58.8, 4.2, 4.7, 5.7, 1.8, 1.7
- PV of public sector debt-to-revenue ratio (in percent) (selected): 0.0, 0.1, 49.7, 48.8, 50.5, 58.0, 64.3, 63.5, 61.9, 48.3, 35.6
- Debt service-to-revenue ratio (in percent) (selected): 22.8, 8.0, 11.3, 8.4, 7.2, 4.5, 3.8, 3.3, 2.5, 1.0, 0.5
- Primary deficit that stabilizes the debt-to-GDP ratio (selected): 52.5, 14.9, 2.9, 25.4, 35.9, 2.0, 3.2, 4.7, 4.7, 0.4, 1.9

### Sensitivity and stress tests (high-level results)
- Alternative scenarios and bound tests show substantially higher ratios under adverse shocks:
  - PV of debt-to-exports ratio (Baseline and stress outcomes, selected): Baseline values show substantial elevations (e.g., series includes 96, 132, 136, 150, 149, 146, 141, 134, 128, 122, 113, 105, 98, 93, 88, 84, 81, 77, 74, 71, 69...). Stress scenarios such as combinations yield much larger peaks (charts and tables indicate values up to and above 461 in some stress cases).
  - PV of debt-to-GDP ratio and PV of debt-to-revenue ratio similarly rise under combinations of shocks and bound tests (tables and figures report pronounced increases in these indicators under scenarios B1–B6 and combined shocks).
- Specific stress-test labels and outcomes (table references):
  - A1. Key variables at their historical averages in 2008-2028.
  - A2. New public sector loans on less favorable terms in 2008-2028 (assumes interest rate on new borrowing is by 2 percentage points higher than in the baseline).
  - B1–B6. Bound tests including shocks to real GDP growth, export value growth, US dollar GDP deflator, net non-debt creating flows, combination shocks, and a one-time 30 percent nominal depreciation in 2009.
- The most extreme stress test in several figures corresponds to a Combination shock; in the PV of debt-to-exports and PV of debt-to-revenue panels it corresponds to a Combination shock; in one panel to an Exports shock.

### Policy implications and recommendations
- Continue to implement prudent policies that support macroeconomic stability.
- Rely on grants and highly concessional loans to meet financing needs.
- Intensify efforts to improve tax administration and widen the tax base.
- Diversify the export base.
- Encourage private sector development by addressing existing weaknesses in the business environment.

*Source: Staff simulations and projections as presented in the IMF staff report tables and figures.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr0984.pdf_