IMF and Burundi Reach Staff Level Agreement on a US$78 Million Financial Assistance Under the Rapid Credit Facility

July 27, 2021

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
  • The Rapid Credit Facility will support the government’s efforts to combat the impacts of the COVID-19 pandemic, including steps to support the economy and individuals, as well as to bolster the health sector.
  • The current account improved in 2020 thanks to lower international fuel prices triggered by the pandemic and countercyclical workers’ remittances. However, international reserves remain critically low.
  • Moving forward, a moderate recovery is expected in 2021. Burundi will continue to face the challenges of balancing urgent and important development, social, and COVID spending needs with debt and external sustainability.

Washington, DC: A team from the International Monetary Fund (IMF) led by Ms. Mame Astou Diouf, Mission Chief for Burundi conducted a virtual mission during June 23–July 26, 2021 to hold discussions on a request for financial assistance under the IMF’s Rapid Credit Facility (RCF).

At the end of the mission, Ms. Mame Astou Diouf issued the following statement:

“The Burundian authorities and the IMF have reached a staff-level agreement on economic and structural policies that could be supported by a disbursement of SDR 53.9 million (about US$ 78 million) under the RCF to address the economic and social impacts of the COVID-19 pandemic. The staff level agreement is subject to IMF management approval and Executive Board consideration, planned for September 2021.

“The Burundian economy was moderately affected by the COVID-19 pandemic. Staff estimate that real GDP contracted by about one percent in 2020. The tertiary sector (including hotels, restaurants, commerce, and transportation) bore the brunt of the shock, impacted by travel and border restrictions and disruptions of supply chains in trading partner countries. The downturn was cushioned by steady growth in subsistence agriculture and construction activity including public infrastructure projects. The economy is expected to rebound mildly in 2021 to about 2 percent, supported by stronger activities in the secondary and tertiary sectors as supply chain issues wane. Inflation turned positive in 2020 at 7.5 percent (up from -0.7 percent in 2019), driven by rising food prices. Risks to the macroeconomic outlook are tilted to the downside, including the risks of a longer second wave of COVID-19.

“International reserves remain critically low. Exports decreased, reflecting partly the closure of borders, including Burundi’s international airport, and lockdown measures in trading partners to slow down the spread of COVID-19. The current account deficit however improved in 2020 thanks to lower international fuel prices triggered by the pandemic, countercyclical workers’ remittances, and imports compression due to foreign exchange rationing.

“The central bank - Banque de la Republique du Burundi (BRB) - has introduced several measures to support the banking sector and private sector credit. The banking system appears broadly resilient and nonperforming loans remain moderate and stable. However, it is important to continue monitoring loan restructurings. Private sector credit growth remained vibrant, supported by the BRB’s new refinancing window to facilitate access to long term loans.

“Revenue collection was strong in 2020/21, exceeding budget targets and with an increase of one percentage point of GDP compared to 2019/20. Spending was larger than budgeted owing to outlays related to COVID-19 and the organizational changes of various Ministries following the elections. The deficit was larger than budgeted, reflecting predominantly COVID-19 related outlays and it was mainly financed by domestic borrowing.

“Moving forward, Burundi will continue to face the challenges of balancing important development, social, and COVID-19 related spending needs with debt and external sustainability. Key policy priorities will include (i) prudent pro-growth and pro-poor fiscal policy to maintain debt sustainability; (ii) cautious rebalancing of external policies to restore external sustainability and improve reserve coverage to more comfortable levels; (iii) reforms to alleviate growth bottlenecks and support the private sector’s activities; and (iv) continuing to strengthen transparency and governance, including with regard to the use of funds for COVID-19.

“The staff team met with S.E. Domitien Ndihokubwayo, Minister of Finance, Budget, and Economic Planification (MFBEP); M. Jean Ciza, Governor of the Banque de la République du Burundi; M. Audace Niyonzima, First Vice Governor of the BRB; Ms. Christine Niragira- Permanent Secretary of the MFBEP. The mission also met with M. Pacifique Munyeshongore, Head (Commissaire Général) of the Burundian revenue agency; Ms. Elyse Ndaye, Président of the Court of Auditors, and representatives of the manufacturing sector, commercial banks, and donors.

“The staff team is grateful to the authorities for the candid and constructive discussions that took place.”

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