Press Release No. 11/429

Press Release No. 11/429
November 22, 2011

A mission from the International Monetary Fund (IMF), led by Mr. Oral Williams, visited Bujumbura from November 8–21, 2011 to conduct the seventh review of the government’s economic and financial program supported by the IMF under the Extended Credit Facility (ECF). The mission also reviewed the authorities’ fiscal plans for 2012 and discussed the key elements of a successor ECF arrangement.¹

The mission met with the Second Vice-President, Gervais Rufyikiri, the Minister of Finance, Clotilde Nizigama, the President of the Senate, Gabriel Ntisezerana, the Minister in Charge of Good Governance and Privatization, Jean Baptiste Gahimbare, the Governor of the Central Bank, Gaspard Sindayigaya, and other senior government officials. The mission had constructive discussions with members of the donor community, private sector, and civil society.

At the end of the mission, Mr. Williams issued the following statement:

“The economy is expected to grow by about 4.2 percent in 2011, lower than earlier projected, owing to a weakening in aggregate demand related to the food and fuel price shock. Although headline inflation rose sharply to 11.7 percent in September, core inflation remained in single digits. A rebound in coffee production and construction activity should contribute to a moderate pick-up in growth to 4.8 percent in 2012. The uncertainty in the external environment owing to weaker growth in trading partners, lower aid flows, and high oil prices remain key downside risks to the macroeconomic outlook.

“Performance under the ECF-supported program has been satisfactory, despite difficult economic conditions. There was good progress in the implementation of structural reforms focused on public financial management and the safeguard measures at the central bank and the treasury.

In 2012, budget support is expected to decline sharply reflecting uncertainties in the global economy. While revenue mobilization is likely to strengthen due to ongoing administrative reforms by the Burundi Revenue Authority, expenditures will have to be contained with a view to limiting recourse to domestic financing

“The mission reached agreements, ad referendum, on the key elements that would underpin a new ECF arrangement for 201214. These policies build on the ex-post assessment of longer term program engagement approved by the Executive Board of the IMF in July 2011 that highlighted the need for greater exchange rate flexibility, rebuilding of fiscal buffers and safeguarding fiscal sustainability. The mission discussed measures to increase revenue mobilization, strengthen public financial management, and improve regulations hampering private sector activity.

“The IMF's Executive Board is scheduled to discuss the seventh review of Burundi’s economic program under the ECF and the authorities’ request for a new ECF arrangement for 2012–14 in January 2012. The mission would like to thank the authorities for their warm hospitality and very close and constructive cooperation.”

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¹ The ECF is a concessional IMF facility for low-income countries. ECF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in the country's Poverty Reduction Strategy Paper. ECF loans carry a zero interest rate until end-2011 and an annual interest rate of no more than 0.5 percent thereafter. The loans are repayable over 10 years with a 5½ -year grace period on principal payments.