## _cr13228

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---

### Purpose and scope
- Reviews Burkina Faso’s performance under Fund-supported programs since 2007.
- Assesses incorporation of 2006 Ex Post Assessment (EPA) recommendations into successor arrangements since 2007.
- Selectively identifies priority areas for any future Fund-supported program.
- Structure: Section II reviews macroeconomic developments since 2007; Section III considers each program’s objectives, conditionality, and outcomes; Section IV discusses reform strategy and recommendations for future Fund engagement.

### 2006 EPA recommendations (summary)
- Increase the domestic revenue effort (review investment and customs codes; computerization of tax administration; effective use of ASYCUDA at customs).
- Strengthen institutions (administrative decentralization while controlling expenditure and control systems).
- Increase private sector participation (remove structural bottlenecks; full liberalization of the utility sector).
- Closely link annual fiscal stance and debt sustainability (consider available financing, absorptive capacity, and appropriate PFM and debt management framework).
- Improve data (human, technical and financial resources at INSD; technical support to CNCS; data dissemination).
- Integrate WAEMU convergence criteria and policies in Fund-supported programs.

### Overall assessment and main findings
- Fund engagement helped progress toward poverty reduction and anchored reform efforts.
- 2006 EPA recommendations broadly incorporated, though some remain relevant given their long-term nature.
- Update identifies lessons from program experience and highlights priority reform areas for future Fund involvement.

### Macroeconomic developments since 2007 — key statistics and trends
- Real GDP growth averaged 5.3 percent between 2007 and 2012.
- GDP per capita: US$449 in 2007; estimated US$603 in 2012.
- Sectoral shares (2007–12 vs 2000–06):
  - Primary sector: declined from 30.4 percent of GDP in 2000–06 to 26.8 percent in 2007–12.
  - Secondary sector: around 20 percent of GDP.
  - Services: grew from 43 percent of GDP in 2000 to an estimated 47 percent in 2012.
- Inflation:
  - Averaged about 3 percent during 2007–12 (WAEMU convergence criterion: 3 percent).
  - Peaked at 10.7 percent in 2008; food-inflation around 23.4 percent in 2008.
- Current account balance:
  - Deteriorated to 11.5 percent of GDP in 2008; improved to 1.1 percent of GDP in 2011.
  - Remittances averaged about 1 percent of GDP in credit and 1 percent in debit.
  - In 2011, remittance receipts: WAEMU countries accounted for 43 percent, CEMAC 15 percent, Europe 25 percent.
- Natural resources and gold:
  - Gold production: 755 kg in 2007; 30.2 tons in 2012.
  - Contribution to growth from gold: estimated from 0.1 percent in 2007 to 1.2 percent in 2011.
  - Gold share of exports: 71 percent in 2012.
  - Gold-related revenues: increased from 1.2 percent of total revenue in 2007 to 21 percent in 2012 (respectively 0.2 and 3.5 percent of GDP).
  - Royalty rate changed in 2010 from fixed 3 percent to sliding scale 3 to 5 percent.
  - State stake in mining companies: 10 percent.
  - Fraser Institute ranking (Current Potential Index, 2011/2012): Burkina Faso ranked 13th worldwide.
- Trade and external sector:
  - Exports: 11.4 percent of GDP in 2006 to an estimated 26.9 percent of GDP in 2012.
  - Cotton: contribution to total exports fell from 65.2 percent in 2006 to 12 percent in 2012.
  - Imports: 25.3 percent of GDP in 2006 to an estimated 36.6 percent of GDP in 2012.
  - More than 50 percent of imports are capital and intermediate goods.
  - Export markets in 2011: Europe 27 percent, Asia 42 percent.
- Fiscal sector:
  - Overall fiscal deficit (including grants): narrowed from 5.7 percent of GDP to 3.2 percent of GDP in 2007–12.
  - Tax revenue: 12.5 percent of GDP in 2007 to an estimated 15 percent in 2012 (WAEMU target: 17 percent).
  - Tax policy/revenue measures: introduction of corporate income tax in 2010; increase of gold royalties from 3 percent to 5 percent; measures against tax fraud and evasion; tax and customs agency reforms.
  - Social expenditure: anticipated to reach 7.5 percent of GDP in 2012; averaged 4.8 percent in 2000–06.
  - Capital expenditure: averaged 11 percent of GDP in 2007–12; domestically financed capital expenditure contributed about 54 percent of total capital expenditure.
  - Burkina Faso exceeds WAEMU convergence criteria on domestically financed capital expenditure as percentage of tax revenue.
- Public vs private sector growth:
  - Private sector share of GDP estimated at almost 68 percent in 2011.
  - Private consumption accounted for about 70 percent of domestic absorption growth.
  - Private investment decreased gradually in real terms and was offset by increasing public investment.
- Administrative and PIM measures:
  - Authorities taking measures to improve administrative capacity and reduce redundant administrative steps with progress on automation.

### Box 3 — Capital Expenditure Capacity (summary)
- Context: SCADD identifies increased public investment as key to accelerate MDG progress.
- Historic levels and financing:
  - From 2007 to 2012, capital expenditure averaged 11 percent of GDP (54 percent of which was domestically financed).
  - For each year, realization lower than initially budgeted.
- Execution bottlenecks:
  - Procurement procedures bottlenecks; low administrative capacity; possibly overoptimistic projections.
- Government measures:
  - Elimination of redundant procedures; early project preparation; selection and meeting of relevant structural benchmarks.
- PIMI assessment (WP/11/37, 2011):
  - Burkina Faso overall score: 2.09 out of 4.
  - WAEMU average (excluding Guinea-Bissau and Niger): 1.59.
  - Weakest sub-index: Strategic Guidance and Project Appraisal.

### Structural reforms: progress, gaps, and sectoral issues
- Progress made under programs, but additional efforts needed to strengthen capacity and stimulate broad-based growth.
- Cotton and petroleum sector reforms lagging:
  - Divestiture progress for SOFITEX delayed.
  - Launch of flexible fuel pricing mechanism delayed; further measures under consideration.
- Administrative and PFM developments:
  - IMF and AFRITAC West provided 60 technical assistance missions between 2006 and 2011 (34 on fiscal issues).
  - Income tax revenue: improved from 2.8 to 4.2 percent of GDP from 2005 to 2011.
  - VAT: increased from 6.4 to 7.6 percent of GDP during 2005–2011.
  - 2011 tax ratio to GDP is 14.5 percent (below WAEMU target 17 percent).
  - New tax reform strategy adopted in 2011 including computerization of customs collections; government revising mining code.
  - PFM reform sluggish until 2009; Program Budgeting implementation target extended from 2012 to 2015 and subsequently to 2019 in 2011.
  - Since 2009: streamlined documentation for expenditure payment; new treasury cash flow plan; medium-term budgetary framework; implementation of SRFP.
- Areas for further work (latest TA recommendations):
  - Speed up FMIS roadmap implementation.
  - Involve parliament and supreme audit institution.
  - Submit draft laws internalizing WAEMU directives to the WAEMU Commission for QA.
  - Improve usefulness of MTEF by extending coverage and regular updates.
  - Communicate strategy for moving to accrual accounting and involve affected parties.
  - Consider simplifying internal audit structure; audit the expenditure chain.

### Lessons from program experience
- Key lessons:
  - Programs met key objectives despite repeated adverse shocks; importance of strong ownership, flexibility, and adequate TA.
  - Flexibility in program design (adjusters, focused conditionality) helped during 2007–12 shocks.
  - Frequent augmentations of access: accounted for 60 percent of access approved in the last two arrangements.
  - TA played important role; follow-up on TA recommendations and coordinated, flexible TA delivery essential.
  - Future TA should include significant training components.
- Social spending and poverty reduction challenges:
  - Social outlays increased and were largely protected, but quality of public expenditure remains a challenge.
  - Public resources shifted away from the wage bill into pro-poor spending concentrated in education, food security, and maternal and early childhood health.
  - Public spending fell short in improving income poverty indicators due to economic emergencies, weak absorptive capacity, institutional constraints, poor infrastructure, and strong demographic pressures.
  - Need greater focus on infrastructure, training/secondary education to reduce input costs and create employment in high-poverty, high job-creation sectors.
  - Strengthened capacity to deliver pro-poor programs and promote inclusive growth is a priority.

### Assessing program conditionality — findings and recommendations
- Findings:
  - Conditionality was parsimonious and focused on macro-critical variables, enhancing ownership.
  - Conditionality focused on core Fund responsibilities and coordinated with other institutions to avoid duplications.
  - Program design adapted flexibly to the global financial crisis and aftermath.
  - Macroeconomic impact generally positive; social spending largely protected, though poverty reduction progress disappointing.
- Recommendations:
  - Provide greater clarity on structural conditionality in program documents.
  - Enhance transparency through discussion of alternative policy options and new avenues to collect external views.
  - Strengthen analysis of long-term benefits and short-term/macro-social costs via standing dialogue with authorities.
  - Develop a framework with a greater range of robustness tests to strengthen debt sustainability assessments.
  - Consolidate partnerships with other institutions and donors to ensure adequate financing and coherent conditionality while avoiding duplications.

### Pro-poor growth — priorities and policy directions
- Core messages:
  - Economic and social dimensions of poverty are interlinked; effective poverty reduction needs actions on both.
  - Growth reduces poverty more effectively when policies address risks, vulnerabilities, and market failures hindering participation and job creation.
  - Government’s Special Program for Job Creation for youth and female unemployment is welcome.
- Policy priorities:
  - Eliminate regulatory and administrative barriers; reduce fees and financial requirements; improve infrastructure; eliminate bottlenecks.
  - Provide business services, strengthen governance, address socio-cultural constraints.
  - Improve competition law and enforcement; support prudent mobilization of savings and remittances; bridge banks and MFIs to expand financial access.
  - In agriculture: increase access to markets, assets, productivity-enhancing technology, and infrastructure; improve non-farm income opportunities; address risk and vulnerability.
- Implementation note:
  - Strengthen engagement between policy makers, private sector, and civil society; promote evidence-based, transparent decision making; donors may reconsider modalities to ensure effective support.

### Microfinance Institutions (Box 9) — developments, risks, and data gaps
- Sector growth:
  - Outstanding loans from MFIs increased by about 68 percent compared with 2007.
  - Deposits in MFIs increased by about 121 percent compared with 2007.
  - Recorded amounts of loans and deposits in terms of GDP are 1.8 and 2.7 in 2011, respectively.
- Regulatory framework:
  - WAEMU Banking Commission supervises large MFIs (more than CFAF 2 billion assets or deposits); remaining MFIs supervised by Microfinance Directorate at the Ministry of Finance.
  - Implementation of regulations is weak despite efforts under 2009 program conditionality.
- Risks and needs:
  - Rapid growth with weak regulations increases risk; improve human capital for risk management.
  - Limited borrower information; need capacity building and credit information provision.
  - Land collateral mechanisms and judicial/regulatory systems require reform.
- Monetary statistics coverage gap:
  - MFIs’ loans and deposits account for 7.8 and 8.9 percent of entire private loans and deposits, but monetary survey does not include them, underestimating broad money.

### Natural resource management — strategic priorities and fiscal framework
- Strategic priorities for managing resource wealth:
  - (i) policy framework ensuring fiscal sustainability and macro stability;
  - (ii) appropriate fiscal institutions ensuring transparent and efficient management;
  - (iii) adequate infrastructure and human capital to address supply-side bottlenecks (power, transportation, education);
  - (iv) strengthened governance;
  - (v) sufficient and timely data for performance assessment.
- Fiscal rules and recommended stance:
  - Short- and medium-term fiscal targets should be informed by long-term fiscal sustainability frameworks.
  - Limitations of PIH and other traditional approaches noted for capital-scarce developing countries.
  - Recommended: set appropriate public investment path and largely smooth government consumption; use fiscal rules and precautionary savings to protect investment path from revenue volatility and avoid procyclicality and Dutch disease.
  - Fiscal rules could be designed consistent with regional convergence criteria.
- Indicators and monitoring:
  - Multiple indicator approach recommended: short-term fiscal stance and solvency indicators.
  - NRPB could be one indicator; a wider battery of supplementary indicators appropriate.
- Strengthening absorptive capacity and institutions:
  - Reinforce PFM; build civil service technical capacity; ensure transparency and accountability; integrate resource fund flows into budget process.
- Data and statistics:
  - Detailed statistics (SEEA) can make explicit the contribution of natural resources to the economy and support strategy assessment.
- WAEMU Surveillance Framework (first- and second-order criteria summarized):
  - First-order (mandatory): Basic fiscal balance/GDP (≥ 0 percent); Average annual CPI inflation (≤ 3 percent); Total debt/GDP (≤ 70 percent); Change in domestic arrears (≤0); Change in external arrears (≤ 0).
  - Second-order (supplementary): Wages and salaries/tax revenue ratio (≤ 35 percent); Capital expenditure domestically financed/tax revenue (≥ 20 percent); External current account balance, excluding grants/GDP (≥-5 percent); Tax revenue/GDP (≥ 17 percent).
  - Additional monitored regional indicators listed; corrective mechanism for first-order failures has never been enforced.

### Fiscal rules and the Non-Resource Primary Balance (NRPB)
- Price-based smoothing rule:
  - Helps delink expenditures from resource revenues; requires ability to set sustainable reference price for structural revenue computation.
- Expenditure growth rule and precautionary saving:
  - Expenditure growth rule could limit growth in nominal/real terms or as percent of non-resource GDP to limit procyclicality.
  - Precautionary liquidity buffer optimal size increases with revenue volatility, society’s risk aversion, and consumption out of resource revenue; self-insurance opportunity costs noted.
- Indicators to assess fiscal stance:
  - Overall/primary balance ill-suited alone for anchoring anti-procyclical fiscal rule.
  - NRPB defined as non-resource revenues minus primary expenditures; can decouple fiscal policy from resource revenue volatility.
  - Limitations of NRPB: may misidentify expansion in capital expenditure responding to stronger resource revenues as fiscal deterioration.
  - Complementary metrics: structural primary balance; non-resource current balance; domestic balance; break-even resource price; share of public investment in total spending; ratio of increase in public investment to increase in resource revenues (as percent of non-resource GDP).
- Data and accounting frameworks:
  - SNA does not cover natural resource sectors; SEEA approved as international statistical standard.
  - WAVES partnership noted to support natural capital accounting.

### Fund technical assistance (TA) and modalities of future Fund engagement
- Rationale for continued engagement:
  - Strong case for Fund to remain engaged after many years of largely successful programs; Burkina Faso likely to remain dependent on external support.
- Engagement options:
  - Multi-year program recommended to anchor reforms and signal donors.
  - PSI-supported program if financing needs met without Fund resources.
  - Continued Fund financing possible under a low-access ECF arrangement.
- Program design considerations:
  - Monitoring and conditionality should remain parsimonious, focused on macro-critical areas, mindful of capacity constraints.
  - Performance criteria, indicative targets, and structural conditionality should monitor ability to manage natural resource wealth (tax regime, absorptive capacity, data).
  - Continued focused TA crucial; build fiscal buffers and program flexibility given likely external shocks.
- Main priorities for future Fund TA:
  - Strengthen revenue mobilization, PFM, and debt management.
  - Mining sector focus: evaluate mining system, improve mining revenue projections, ensure tax regime captures appropriate share of rents, deepen transparency and accountability.
  - Accelerate financial sector reforms per FSAP recommendations; coordinate with World Bank and donors to improve incentives for private investment and strengthen institutional capacities.

### Annex I — Authorities’ reaction (summary)
- Draft EPA Update discussed in Ouagadougou during May 6–8, 2013; authorities broadly agreed with findings and recommendations.
- Key authority comments:
  - Growth averaged 5.3 percent in 2007–2012; noted fluctuations and exposure to external shocks (climatic conditions, cotton price trends).
  - Upcoming programs should emphasize production support in agriculture, water supply control, cotton processing, and energy production.
  - Fiscal reforms require modernizing revenue agencies (resources, computerization, procedure reengineering, IT, secure documents).
  - Expenditure focus should be on quality that promotes private investment and access to production areas and processing/preservation facilities.
  - More analysis on mining sector’s spillovers to private sector growth recommended.
  - Fighting poverty should be central; programs should include technical training, startup support (credit), and supervision to enable youth employment and formalization of small crafts activities.

*Source: INTRODUCTION — Burkina Faso, INTERNATIONAL MONETARY FUND (excerpts from document _cr13228).*

### INTRODUCTION _________________________________________________________________________________ 4

### INTRODUCTION

### Purpose and scope
- Reviews Burkina Faso’s performance under Fund-supported programs since 2007 (Table 1).
- Assesses whether recommendations under the 2006 Ex Post Assessment (EPA) were incorporated into successor arrangements since 2007.
- Selectively identifies priority areas for any future Fund-supported program.
- Structure: Section II reviews macroeconomic developments since 2007; Section III considers each program’s objectives, conditionality, and outcomes; Section IV discusses reform strategy and recommendations for future Fund engagement.

### 2006 EPA recommendations (Box 1)
- Increase the domestic revenue effort (including review of investment and customs codes; computerization of tax administration; effective use of ASYCUDA at customs).
- Strengthen institutions (administrative decentralization while controlling expenditure and control systems).
- Increase private sector participation (remove structural bottlenecks; full liberalization of the utility sector).
- Closely link annual fiscal stance and debt sustainability (consider available financing, absorptive capacity, and appropriate PFM and debt management framework).
- Improve data (human, technical and financial resources at INSD; technical support to CNCS; data dissemination).
- Integrate WAEMU convergence criteria and policies in Fund-supported programs.

### Overall assessment and main findings
- Fund engagement has helped the authorities progress toward their long-term goal of poverty reduction and assisted in anchoring reform efforts.
- The recommendations of the 2006 EPA have been broadly incorporated, though their long-term nature means some remain relevant to varying extents.
- The update identifies lessons from program experience and highlights priority reform areas for future Fund involvement.

### Macroeconomic developments since 2007 — key statistics and trends
- Real GDP growth averaged 5.3 percent between 2007 and 2012.
- GDP per capita: US$449 in 2007; estimated US$603 in 2012.
- Sectoral shares (2007–12 vs 2000–06):
  - Primary sector: declined from 30.4 percent of GDP in 2000–06 to 26.8 percent in 2007–12.
  - Secondary sector: around 20 percent of GDP (no increase despite gold emergence).
  - Services: grew from 43 percent of GDP in 2000 to an estimated 47 percent in 2012.
- Inflation:
  - Averaged about 3 percent during 2007–12 (WAEMU convergence criterion: 3 percent).
  - Peaked at 10.7 percent in 2008; food-inflation around 23.4 percent in 2008.
- Current account balance:
  - Deteriorated to 11.5 percent of GDP in 2008; improved to 1.1 percent of GDP in 2011.
  - Remittances averaged about 1 percent of GDP in credit and 1 percent in debit.
  - In 2011, remittance receipts: WAEMU countries accounted for 43 percent, CEMAC 15 percent, Europe 25 percent.
- Natural resources and gold (Box 2):
  - Gold production: 755 kg in 2007; 30.2 tons in 2012.
  - Contribution to growth from gold: estimated from 0.1 percent in 2007 to 1.2 percent in 2011.
  - Gold share of exports: 71 percent in 2012.
  - Gold-related revenues: increased from 1.2 percent of total revenue in 2007 to 21 percent in 2012 (respectively 0.2 and 3.5 percent of GDP).
  - Royalty rate changed in 2010 from fixed 3 percent to sliding scale 3 to 5 percent.
  - State stake in mining companies: 10 percent.
  - Fraser Institute ranking (Current Potential Index, 2011/2012): Burkina Faso ranked 13th worldwide.
- Trade and external sector:
  - Exports: 11.4 percent of GDP in 2006 to an estimated 26.9 percent of GDP in 2012.
  - Cotton: contribution to total exports fell from 65.2 percent in 2006 to 12 percent in 2012.
  - Imports: 25.3 percent of GDP in 2006 to an estimated 36.6 percent of GDP in 2012.
  - More than 50 percent of imports are capital and intermediate goods.
  - Export markets in 2011: Europe 27 percent, Asia 42 percent.
- Fiscal sector:
  - Overall fiscal deficit (including grants): narrowed from 5.7 percent of GDP to 3.2 percent of GDP in 2007–12.
  - Tax revenue: 12.5 percent of GDP in 2007 to an estimated 15 percent in 2012 (WAEMU target: 17 percent).
  - Tax policy/revenue measures: introduction of corporate income tax in 2010; increase of gold royalties from 3 percent to 5 percent; measures against tax fraud and evasion; tax and customs agency reforms.
  - Social expenditure: anticipated to reach 7.5 percent of GDP in 2012; averaged 4.8 percent in 2000–06.
  - Capital expenditure: averaged 11 percent of GDP in 2007–12; domestically financed capital expenditure contributed about 54 percent of total capital expenditure.
  - Burkina Faso exceeds WAEMU convergence criteria on domestically financed capital expenditure as percentage of tax revenue.
- Public vs private sector growth:
  - Private sector share of GDP estimated at almost 68 percent in 2011.
  - Private consumption accounted for about 70 percent of domestic absorption growth.
  - Private investment decreased gradually in real terms and was offset by increasing public investment.
- Administrative and PIM measures:
  - Authorities taking measures to improve administrative capacity and reduce redundant administrative steps with progress on automation (see Box 3).

### Structure of subsequent sections (as presented)
- Section II: Macroeconomic developments since 2007 (covered above).
- Section III: Fund-supported programs — objectives, conditionality, and outcomes (including PRGF arrangement 2007–10; ECF arrangement 2010–present; lessons).
- Section IV: Key reform priorities and future Fund involvement (including modalities of future Fund engagement).
- Boxes, Figures, Tables, Appendix, and Annex listed for detailed evidence and analysis (Box 1–10; Figures 1–2; Tables 1–6; Appendix I; Annex I).

*Source: INTRODUCTION — Burkina Faso, INTERNATIONAL MONETARY FUND.*

### Box 3. Capital Expenditure Capacity

### Box 3. Capital Expenditure Capacity

### Context and objectives
- Through its Strategy for Accelerated Growth and Sustained Development (SCADD), the authorities have indentified the increase of public investment as a key factor to achieve the objective of accelerating progress toward the MDGs.

### Historic capital expenditure levels and financing
- From 2007 to 2012, capital expenditure averaged 11 percent of GDP (54 percent of which was domestically financed).
- For each year, the realization has been lower than initially budgeted.

### Execution bottlenecks and government measures
- Reasons for under-execution identified in the source:
  - Bottlenecks in the procurement procedures.
  - Low administrative capacity.
  - Possibly overoptimistic projections.
- Measures taken by the government to enhance execution of capital expenditure:
  - Elimination of redundant procedures.
  - Early preparation of projects.
  - Selection and meeting of relevant structural benchmarks throughout both programs.

### Public Investment Management Index (PIMI) assessment
- IMF working paper “Investing in Public Investment: An Index of Public Investment Efficiency” (WP/11/37), published in 2011, calculates the Public Investment Management Index (PIMI) to capture ex ante and ex post dimensions of stages of the investment process.
- According to this study:
  - Burkina Faso has an overall score of 2.09 out of 4.
  - WAEMU average (excluding Guinea-Bissau and Niger) is 1.59.
  - The weakest sub-index for Burkina Faso is Strategic Guidance and Project Appraisal, indicating low capacity in the choice of public investment projects.

*Source: _cr13228 - Box 3. Capital Expenditure Capacity*

### 26.      While important progress in implementing structural reforms has been made under

### _cr13228 - 26.      While important progress in implementing structural reforms has been made under

### Structural reforms: progress and gaps
- Important progress in implementing structural reforms has been made under the program, but additional efforts are needed to strengthen capacity and stimulate broad-based economic growth (Table 6).
- Cotton and petroleum sector reforms have been lagging:
  - Progress toward divesting a majority stake in the state-owned cotton ginning company, SOFITEX, was delayed.
  - Launch of a flexible fuel pricing mechanism has been delayed; further measures under consideration by the authorities are welcome to support smooth reform of the fuel price mechanism, free resources for social spending, and depoliticize energy pricing.

### Revenue and Public Financial Management (Box 6)
- Technical assistance:
  - IMF and AFRITAC West provided 60 technical assistance missions between 2006 and 2011 (34 on fiscal issues).
- Revenue reform achievements:
  - Income tax revenue in percent of GDP improved from 2.8 to 4.2 from 2005 to 2011.
  - VAT in percent of GDP increased from 6.4 to 7.6 during 2005–2011.
  - 2011 tax ratio to GDP is 14.5 percent, which is still below the WAEMU target 17 percent).
  - In 2011, the authorities adopted a new tax reform strategy, including computerization of custom collections; the government is revising the mining code.
- PFM reform developments:
  - Reform of public financial management (PFM) was sluggish until 2009; the target year for Program Budgeting (PB) implementation was extended from 2012 to 2015 and subsequently to 2019 in 2011.
  - Full adoption of WAEMU’s PFM framework has not yet been completed; incorporation of FMIS is delayed; capacity of the Cour des Comptes is highly limited.
  - Since 2009, progress includes streamlined documentation for expenditure payment, adoption of a new treasury cash flow plan, introduction of the medium-term budgetary framework, and implementation of the strategy for strengthening public finance (SRFP).
- Areas for further work (latest TA mission recommendations):
  - Speed up implementation of the roadmap to update the FMIS as a priority to avoid downstream risks.
  - Involve the parliament and the supreme audit institution in the ongoing reform.
  - Submit draft laws for internalization of the WAEMU directives to the WAEMU Commission for quality assurance.
  - Improve usefulness of the MTEF by extending coverage to government agencies and donor-funded projects and updating it regularly.
  - Communicate the strategy for moving to accrual accounting to all those affected and involve them in its implementation.
  - Consider simplifying the current internal audit structure to avoid duplicating layers.
  - Audit the expenditure chain to identify bottlenecks as budget responsibilities devolve to line ministries.

### Lessons from program experience
- Key lessons:
  - Recent programs met key objectives despite repeated adverse shocks, underlining the importance of strong program ownership, flexibility in program implementation, and adequate technical support, including Fund TA.
  - Flexibility in program design (use of adjusters, focused conditionality) helped adjust to extraordinary adverse shocks over 2007-12.
  - Frequent augmentations of access (see Table 1) accounted for 60 percent of access approved in the last two arrangements.
  - TA played an important role in accompanying reforms, especially in the public sector; follow-up on TA recommendations and coordinated, flexible TA delivery are essential.
  - Future TA could usefully include a significant training component to facilitate effective implementation of specific reform recommendations.
- Challenges in social spending and poverty reduction:
  - Despite emphasis on increasing social outlays and protecting social spending, improving quality of public expenditure remains a challenge.
  - Public resources were shifted away from the wage bill into pro-poor spending concentrated in education, food security, and maternal and early childhood health.
  - Public spending has fallen somewhat short of expectations in improving income poverty indicators due to repeated economic emergencies, weak absorptive capacity from institutional constraints and poor infrastructures, and strong demographic pressures.
  - Greater focus needed on public spending to improve infrastructure and training/secondary education to reduce input costs and create more employment in high-poverty, high job-creation-potential sectors.
  - Strengthened capacity to deliver pro-poor programs and promote inclusive growth is a priority.

### Assessing program conditionality (Box 7): findings and recommendations
- Findings:
  - Conditionality was parsimonious and focused on macro-critical variables, enhancing ownership.
  - Conditionality focused on core Fund responsibilities and coordinated with other institutions to avoid duplications.
  - Program design adapted flexibly to the global financial crisis and aftermath.
  - Macroeconomic impact appears generally positive; social spending largely protected, though poverty reduction progress was disappointing.
- Recommendations to strengthen future program implementation and reporting:
  - Provide greater clarity on structural conditionality in program documents, particularly adequacy of progress in structural reforms subject to review-based conditionality.
  - Enhance transparency through discussion of alternative policy options, greater clarity in program documents, and new avenues to collect external views.
  - Strengthen analysis of both long-term benefits and short-term and macro-social costs of alternative policy options via standing dialogue with authorities.
  - Develop a framework with a greater range of robustness tests with respect to identified risks (including cross-checking against past crisis cases) to strengthen debt sustainability assessments.
  - Consolidate partnerships with other institutions and donors to ensure adequate financing and coherent conditionality while avoiding duplications; maintain standing dialogue with relevant regional institutions.

### Pro-poor growth (Box 8): priorities and policy directions
- Core messages:
  - Economic and social dimensions of poverty are interlinked; effective poverty reduction needs actions on both.
  - Growth reduces poverty more effectively when policies address risks, vulnerabilities, and market failures that hinder participation and job creation.
  - The government’s Special Program for Job Creation to reduce youth and female unemployment (response to 2011 unrest) is welcome.
- Policy priorities to promote pro-poor growth:
  - Eliminate regulatory and administrative barriers, reduce fees and financial requirements, improve infrastructure, and eliminate bottlenecks.
  - Provide key business services (business development advisory and financing), strengthen governance, and address socio-cultural constraints.
  - Improve competition law and enforcement; support prudent mobilization of savings and remittances; bridge gap between banks and microfinance institutions to mainstream greater access to financial services.
  - In agriculture: increase access to markets, assets, productivity-enhancing technology, and infrastructure (power and roads); improve opportunities to earn non-farm incomes; address risk and vulnerability via prevention, mitigation, and coping strategies; support country-led national development strategies and local partnerships.
- Implementation note:
  - Strengthen engagement between policy makers, private sector representatives, and civil society, especially those representing the poor; promote evidence-based, transparent decision making; donors may need to reconsider modalities to ensure effective support and collaboration.

### Key reform priorities and future Fund involvement
- Priority reform areas:
  - Maintain momentum on structural reforms to diversify economic activity and enhance competitiveness.
  - Support financial sustainability in the cotton sector.
  - Design a flexible and gradual approach to petroleum prices.
  - Improve the business climate.
  - Broaden access to financial services, including for SMEs (see Box 9).
- Coordination:
  - Strong coordination among development partners is crucial; good cooperation with donors and civil society has resulted in a relatively stable net flow of aid and broad macroeconomic stability.
  - The Bagré Growth Pole project and investor interest (investor roundtable in September 2012) are highlighted as channels to intensify inclusive growth and expand project financing in 2013.

### Natural resource opportunity: gold exports and implications
- Burkina Faso has emerged as a large potential exporter of gold relative to other Sub-Saharan African countries and to the size of its exports.
- The gold boom has improved the external position and generated a rapid and sizable increase in fiscal revenue.
- Policy objective: transform the exhaustible underground resource into a portfolio of physical, human, and financial assets to support sustainable development for current and future generations.

### Microfinance Institutions (Box 9): developments, risks, and data gaps
- Sector growth and scale:
  - Outstanding loans from MFIs increased by about 68 percent compared with 2007.
  - Deposits in MFIs increased by about 121 percent compared with 2007.
  - Recorded amounts of loans and deposits in terms of GDP are 1.8 and 2.7 in 2011, respectively—the largest in the WAEMU region.
- Regulatory framework and supervision:
  - Regulation is two-fold: WAEMU Banking Commission supervises large MFIs (more than CFAF 2 billion assets or deposits); remaining MFIs supervised by the Microfinance Directorate at the Ministry of Finance.
  - Implementation of regulations is weak despite efforts to strengthen supervision under 2009 program conditionality.
- Risks and capacity needs:
  - Rapid growth with weak regulations could raise risk; quality of human capital for risk management should be improved.
  - Limited borrower information for creditors could hinder loan decisions by MFIs and formal banks; capacity building and credit information provision should be urged.
  - Land collateral mechanisms and related judicial/regulatory systems require reform to support financial access.
- Monetary statistics and coverage gap:
  - MFIs’ loans and deposits account for 7.8 and 8.9 percent of entire private loans and deposits, but current monetary survey does not include them, causing broad money to be somewhat underestimated.
- Comparative note:
  - Data for MFs’ loans and deposits in Benin, Cote d’Ivoire, Guinea-Bissau, and Togo are not available; it is very unlikely those amounts are higher than Burkina Faso due to extremely small numbers of MFIs and branches per 100,000 adults.

*Source: IMF staff report content as provided in the supplied PDF excerpt.*

### 33.      Management of natural resource wealth should feature front and central in future

### 33.      Management of natural resource wealth should feature front and central in future

### Strategic priorities for managing natural resource wealth
- Management of natural resource wealth should be central to Burkina Faso’s economic development strategy and require:
  - (i) a policy framework that ensures fiscal sustainability and macroeconomic stability;
  - (ii) appropriate fiscal institutions that ensure transparent and efficient management of resource wealth;
  - (iii) adequate infrastructure and human capital to allay supply-side bottlenecks (for instance, by targeting public investment to improve power-generation capacity, transportation, and education);
  - (iv) strengthened governance; and
  - (v) sufficient and timely data to be able to assess performance effectively.
- The challenges in managing natural resource wealth are discussed in the Appendix.

### Fiscal framework, targets, and rules
- Short- and medium-term fiscal targets should be informed by long-term fiscal sustainability frameworks.
- Limitations of common approaches:
  - Traditional methods based on the Permanent Income Hypothesis are ill-suited because they aim to smooth consumption over time but cannot capture growth-enhancing benefits of a short-term scaling up of investment.
  - External stability and debt sustainability analyses have limitations when net debt is potentially negative as assets are projected to surge.
- Recommended policy stance:
  - Set an appropriate path for public investment and largely smooth government consumption to avoid short-term capacity constraints, subject to an expected resource revenue envelope based on expected, but realistic, production and prices.
  - Use fiscal rules and precautionary savings to protect the investment path from revenue volatility and unintended procyclical fiscal impulses that could exacerbate inflationary pressures, real exchange rate appreciation, and loss of competitiveness in specific sectors (Dutch disease).
  - Fiscal rules could be designed and calibrated to be consistent with regional convergence criteria.

### Indicators and monitoring
- Fiscal policy should be based on a multiple indicator approach, because traditional indicators such as the overall and primary balances can be incomplete or misleading.
- Indicators needed:
  - (i) the short-term fiscal stance (whether an expansionary fiscal policy is leading to inflation and larger current account deficits); and
  - (ii) solvency (the government’s capacity to meet the intertemporal budget constraint).
- While the NRPB could be one indicator, a wider battery of supplementary indicators is appropriate.

### Strengthening absorptive capacity, institutions, and transparency
- Ramping up investment spending faces microeconomic bottlenecks, including weaknesses in project implementation, project selection, and budgeting, which lower investment efficiency.
- Policy actions required:
  - Reinforce public financial management.
  - Build the technical capacity of the civil service.
  - Put in place institutional structures and procedures to ensure government transparency and accountability.
  - Strengthen the business climate to improve competitiveness.
- Resource fund flows should be integrated into the budget process to ensure the budget’s integrity and its role in setting expenditure priorities and allocating public resources.

### Data and statistics
- Adequate and timely data are required to support the development strategy.
- Detailed statistics, such as those compiled under the System of Environmental and Economic Accounts, can make explicit the contribution of natural resources to the economy and allow effective and timely assessment of strategies.

### WAEMU Surveillance Framework (Box 10) — convergence criteria and monitored indicators
- WAEMU’s multilateral surveillance framework is based on five first-order and four second-order convergence criteria:

  First-order (mandatory) criteria
  - Basic fiscal balance/GDP (≥ 0 percent)
  - Average annual CPI inflation (≤ 3 percent)
  - Total debt/GDP (≤ 70 percent)
  - Change in domestic arrears (≤0)
  - Change in external arrears (≤ 0)

  Second-order (supplementary) criteria
  - Wages and salaries/tax revenue ratio (≤ 35 percent)
  - Capital expenditure domestically financed/tax revenue (≥ 20 percent)
  - External current account balance, excluding grants/GDP (≥-5 percent)
  - Tax revenue/GDP (≥ 17 percent)

- Additional regional integration indicators monitored since 2012 include:
  - Changes in per capita GDP relative to average in the zone
  - Change in intra-regional trade as a share of the total
  - Visa and/or passport requirement for labor mobility within the WAEMU
  - Number of projects underway and completed relative to plan related with the Regional Economic Plan
  - Disbursements relative to commitments related with the Regional Economic Plan
  - Doing Business Indicators
  - Share of (intraregional) cross-border bank-to-bank transactions (both in value and volume)
- Detailed targets, guidelines, and/or rules for member countries have not yet been determined and the WAEMU’s correcting mechanism for failures of first-order criteria has never been enforced.

### Modalities of future Fund engagement
- Rationale for continued IMF engagement:
  - After many years of largely successful IMF-supported programs, there is a strong case for the Fund to remain engaged in Burkina Faso.
  - With a very low income base and a still uncertain growth takeoff, Burkina Faso is likely to remain strongly dependent on external support, for which Fund engagement is likely to play a catalytic role.
  - The authorities, with donor support, have made important strides toward bringing Burkina Faso closer to the MDGs.
- Options for engagement:
  - A multi-year program would best assist authorities to anchor reform efforts and signal to donors, creditors, and the public.
  - If Burkina Faso’s financing needs can be met without Fund resources, a PSI-supported program would be an option.
  - Alternatively, continued Fund financing would be possible under a low-access ECF arrangement.
- Program design considerations:
  - Program monitoring and conditionality should remain parsimonious, focused on macro-critical areas, and mindful of capacity constraints.
  - Performance criteria, indicative targets, and structural conditionality and benchmarks should ensure appropriate monitoring and assessment of the authorities’ ability to manage natural resource wealth, including reforms to maximize the resource windfall (tax regime), improve absorptive capacity, and enhance data for impact and sustainability assessment.
  - Continued support via focused TA would remain crucial.
  - Given the likelihood of external shocks, steps to build fiscal buffers and program flexibility are essential.

*Source: IMF staff.*

### 41.      Fund TA will remain instrumental in strengthening institutional capacity, and in

### _cr13228 - 41.      Fund TA will remain instrumental in strengthening institutional capacity, and in

### Fund technical assistance (TA): priorities and role
- Fund TA will remain instrumental in strengthening institutional capacity, and in guiding and pacing reform momentum.
- Main priorities for future Fund TA engagement (in addition to continuing to strengthen revenue mobilization, public finance management, and debt management) relate to mining, particularly the gold industry.
- Specific TA roles and objectives:
  - Evaluate Burkina Faso’s mining system in comparison with other comparable countries.
  - Improve mining sector revenue projections.
  - Ensure that the tax regime of the industry captures an appropriate share of natural resource rents.
  - Deepen transparency and accountability in the mining industry.
  - Accelerate financial sector reforms in line with past FSAP recommendations.
  - Closely collaborate with the World Bank to improve incentives for private investment and business activity.
  - Coordinate among all donors to strengthen Burkina Faso’s institutional capacities consistent with its absorptive constraints.

### Contextual points and institutional guidance
- The Santiago Principles (2008) adopted by a group of internationally recognized funds provide generally accepted good operating principles that can help guide countries with the financial management of fund resources.
- The Fund has been continuously engaged in Burkina Faso for 22 years; literature finds concessionary IMF programs under the PRGF (and its predecessors) were positively and significantly linked to official development assistance (see cited literature).

### Fiscal and policy frameworks for natural resource windfalls (Appendix I)
- Managing natural resource windfalls is a central short- to medium-run challenge; objective is to transform underground resources into physical, human, and financial assets.
- Key macroeconomic consequences of resource windfalls: inflation, competitiveness, and structural effects between tradable and non-tradable sectors.

A. Fiscal sustainability: frameworks and implications
- Bird-in-Hand approach:
  - Allows only interest income from already extracted resources to be consumed; effectively back-loads consumption spending.
- Permanent Income Hypothesis (PIH) approach:
  - Suggests perfect consumption smoothing across generations; incorporates value of resources in the ground into the government’s intertemporal budget constraint.
  - Not adequate for capital-scarce developing countries with high returns on capital and limited access to deep domestic or international financial markets.
- Modified PIH (MPIH) approach:
  - Allows for a more front-loaded spending path during an initial investment scaling-up period.
  - Permits drawing down financial assets for a few years, offset by future fiscal adjustment to rebuild financial assets to the same level as under PIH.
  - Does not account for the potential ratchet effect of larger investment on growth and non-resource revenues.
- Fiscal Sustainability Framework:
  - Explicitly incorporates ex ante the expected impact of higher investment on growth and non-resource revenues, as well as larger operation and maintenance expenditures.
  - Allows stabilization of net wealth at lower levels than under PIH or MPIH by using resource assets to build human and physical capital that produce a fiscal return.
  - The specific stabilizing target for net wealth (and the time horizon) is country-specific and depends on interactions between government spending needs and non-resource growth.

B. Macroeconomic stability: transmission channels and mitigation
- Natural resource windfalls primarily affect domestic economic activity through fiscal policy responses; monetary and exchange rate responses also matter.
- Key risks:
  - Higher public spending on local goods and services can put upward pressure on prices of local factors and create inflationary pressures.
  - Real exchange rate appreciation can reduce productivity growth in the tradable sector (Dutch disease), especially if investment has low import content.
  - Low-income countries face magnified effects due to larger fiscal multipliers from lack of labor market flexibility, sector/geographic segmentation, and high propensity to consume.
- Mitigating factors:
  - Composition and speed of spending.
  - Structural reforms to alleviate absorptive capacity constraints.

C. Dealing with volatility
- Volatility in commodity prices, output volumes, and revenue swings complicates macroeconomic management and fiscal planning.
- When expenditure closely follows resource prices, economic cycles are reinforced.
- Adoption of certain fiscal rules is recommended to mitigate procyclicality (discussion of specific rules and design considerations follows in the Appendix).

### Key numeric and programmatic data points (as presented)
- The Fund has been continuously engaged in Burkina Faso for 22 years.
- The Santiago Principles were adopted in 2008.
- Tables in the source present Fund arrangements and performance criteria for 2007–10 and 2010–13 ECF arrangements, and development indicators for 2000–06 and 2007–12 (period averages and end-period targets are shown in the source tables).

*Source: IMF staff report text in document _cr13228 - 41.      Fund TA will remain instrumental in strengthening institutional capacity, and in*

### 1.      A price-based smoothing rule would help delink expenditures from resource

### _cr13228 - 1.      A price-based smoothing rule would help delink expenditures from resource

### Price-based smoothing rule and structural revenues
- A price-based smoothing rule would help delink expenditures from resource revenues, and, while not ensuring fiscal sustainability by definition, it could support long-term solvency by construction through “prudent” forecasts of structural revenues.
- Crucial to this end would be the ability to set a sustainable reference price for computing structural resource revenues “conservatively”.

### Expenditure growth rule and precautionary saving
- An expenditure growth rule, which would limit the growth of government spending in nominal or real terms, or as a percent of non-resource GDP, could usefully supplement a price-based rule by setting floors and ceilings for expenditure growth to limit fiscal procyclicality in the face of resource price volatility.
- Revenue volatility also creates a motive to save some of the resource windfalls for precautionary reasons (that is, in addition to the need to save part of revenue windfalls because of capacity constraints).
- Theoretical determinants of the optimal precautionary liquidity buffer:
  - The optimal size would be larger the higher and more persistent revenue volatility.
  - The optimal size would be larger the higher society’s risk aversion (that is, its dislike for swings in consumption).
  - The optimal size would be larger the higher consumption out of resource revenue.
- Practical consideration:
  - Self-insurance for precautionary reasons may have high opportunity costs in terms of foregone investment, especially in developing countries that have little or no access to international capital markets and depend heavily on grants to finance development projects.

### Setting and assessing the fiscal stance — indicators
- The overall (or primary) balance measures the change in net financial assets but is ill-suited alone to anchor a fiscal rule intended to avoid procyclicality because a massive fiscal expansion would not be detected by the overall balance after a spike in natural resource prices and revenues.
- The non-resource primary balance (NRPB), defined as non-resource revenues minus primary expenditures (i.e., excluding net interest payments, income and expenditures associated with development of the resource sector), would capture such an expansionary fiscal stance.
- Setting fiscal policy on the basis of the NRPB could:
  - help decouple fiscal policy from the volatility of resource revenues; and
  - facilitate an explicit link to fiscal sustainability, particularly for countries with short reserve horizons, by choosing a target for the NRPB consistent with one of the fiscal sustainability approaches above.
- Limitations of an NRPB rule:
  - It would inaccurately identify an expansion in capital expenditure in response to stronger resource revenues, even if consistent with macroeconomic stability, as a worsening in the fiscal outlook.
  - To the extent that a country derives an increasingly large part of its fiscal revenues from natural resources, more economic activity would be excluded from fiscal indicators.
- Complementary metric:
  - Targeting a structural primary balance — the NRPB plus the structural component of resource revenues — would be an important complement to the NRPB, particularly for countries with long reserve horizons.
- Other complementary indicators:
  - The non-resource current balance, which indicates the maximum amount of public investment that could be executed without incurring an overall fiscal deficit.
  - The domestic balance, which excludes resource revenues and the import content of government expenditures so that its abrupt deterioration (resulting, for example, from an increase in public investment without a large import content) could indicate potentially binding absorptive capacity constraints.
  - The break-even resource price, which is the price at which the overall balance will be zero; a constantly rising break-even price suggests that the budget is becoming increasingly vulnerable to declines in resource prices.
  - The share of public investment in total spending, which is expected to rise over time until major infrastructure gaps are closed.
  - The ratio of the increase in public investment to the increase in resource revenues, both as a percent of non-resource GDP, which would provide a measure of the extent to which additional resource revenues are used to expand capital spending.

### Data and accounting frameworks
- The System of National Accounts (SNA) provides detailed statistics on management for many economic sectors, but it does not cover natural resource sectors.
- The System of Environmental and Economic Accounts (SEEA), which compiles natural capital accounts with detailed information for resource management, making explicit the contribution to the economy of natural resources, was recently approved as an international statistical standard.
- Use of such system of accounts has greatly improved the ability of policy makers to manage their resources.
- To support countries as they move to natural capital accounting, the World Bank has initiated a new partnership, WAVES—Wealth Accounting and the Valuation of Ecosystem Services.

### Institutional capacity and governance
- Well-designed fiscal institutions are paramount to scaling up public investment while maintaining sound fiscal policies and improving non-resource tax policy and administration.
- Key elements of a governance structure required for natural resource wealth to be transformed into growth-enhancing infrastructure:
  - Transparent public financial management systems.
  - Special fiscal institutions, such as natural resource funds and independent forecasting bodies.
  - A budget process underpinned by a medium-term fiscal framework with forecasts for broad fiscal aggregates for revenues and expenditures in line with a fiscal rule.
  - A sustainable investing framework that allows evaluation (via the Public Investment Management Index) of which of the four stages of the public investment management process (project appraisal, selection, implementation, and evaluation) is a bottleneck and needs to be strengthened before scaling up public investment.
  - An effective legal framework.

### Annex I — The Burkinabé Authorities’ Reaction (summary of comments)
- The draft EPA Update was presented to and discussed with a wide group of stakeholders in Ouagadougou during May 6–8, 2013.
- The authorities appreciated the opportunity to review the Fund’s program engagement and discuss longer-term priorities and were broadly in agreement with the report’s findings and recommendations. They provided the following specific comments:
  - “The assessment report shows that, in the period from 2007 to 2012, growth fluctuated above regional norms, and reached an average of 5.3 percent. This calls for two (2) major observations:
    - Fluctuation in growth and weakness in growth for achieving the MDGs: The report seems to justify this situation by the unfavorable climatic conditions that prevail in Burkina Faso and unfavorable trends in global cotton prices. With regard to this first observation, it is important to stress two aspects in the upcoming programs. In addition to production support, such as fertilizer, seeds, supervision, etc., it is important to implement policies aimed at controlling water supply and promoting agricultural products, cotton processing in particular. Moreover, upcoming programs should do more in terms of taking the production of energy into account.
    - The Burkinabé economy is seriously exposed to external shocks: this situation is not unique to Burkina Faso. Cotton and gold are the leading sources of foreign currency. It would be helpful to emphasize quality tourism infrastructure that could support cultural events held in Burkina Faso such as the Panafrican Film and Television Festival of Ouagadougou (FESPACO), the International Art and Craft Fair (SIAO), etc..”
  - Fiscal reforms require modernizing revenue agencies, including by giving them adequate resources, so that the government is able to collect more revenue and better harness expenditures. Future revenue programs should be bi-directional:
    - The first direction should deal with the revenue collection agencies (modernization, training, interconnection and professionalism).
    - The second direction should make customs, taxation and treasury services more accessible to users by streamlining them and improving awareness and proximity.
  - Due to the obvious constraints of the tax administration in terms of modernization, it is very important to propose that future programs incorporate measures that address computerization, procedure reengineering, and the use of information technology and secure documents to control fraud and forgery.
  - Progress in reforming revenue mobilization has been substantial. There have been about thirty IMF missions that have provided assistance in this area between 2006 and 2011. However, if, despite all the efforts, the regional tax ratio norm of 17 percent has not yet been achieved, questions may be raised as to the degree to which these reforms have been effectively implemented.
  - On the expenditure side, emphasis should be on the quality of expenditures that could promote and facilitate private investments, including social expenditures and expenditures directed towards improving access to major production areas and to facilities for processing and preserving agricultural products (such as tomatoes, mangoes, etc.). These must complement business climate improvement efforts; it is important to welcome the creation of the commercial court.
  - The development of the mining sector is advantageous for companies that provide services, but more analysis could be done to highlight the impact the mining sector has on the growth of the private sector overall, including in terms of creating new companies and the investments these companies make.
  - Fighting poverty should be a major component of future programs and should take Burkina Faso’s specificities into account. In addition to the government’s ongoing efforts, quality technical training in this area should be encouraged and promoted with donors support. Likewise, the programs should provide for startup (credit, for example) and supervision (management) for young technicians who have been through the training centers that were established for this purpose. This support will be advantageous in that it will fight unemployment among youths and foster a sort of formalization of the activities of small crafts persons who, in the past, were in the informal sector. At the same time, this support will serve as a means through which the dividends from growth are passed on to those who are most vulnerable.”

*IMF staff report content from _cr13228 - 1.      A price-based smoothing rule would help delink expenditures from resource*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13228.pdf_