IMF Executive Board Approves US $80.77 Million in Emergency Financing Support to Burkina Faso
IMF News, March 27, 2023
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- Published: March 27, 2023
Approval and purpose
- The Executive Board of the International Monetary Fund (IMF) approved a disbursement of US$80.77 million (SDR60.2 million, 50 percent of Burkina Faso’s IMF quota) under the Food Shock Window of the Rapid Credit Facility (RCF).
- Purpose: to help Burkina Faso address urgent balance of payment needs related to the global food crisis and mitigate the impact of the food shock on the most vulnerable.
Drivers of the food crisis and food-security impact
- Identified contributing factors:
- Deteriorating security conditions, which led to the displacement of about 2 million people.
- Unfavorable climate events.
- Supply-chain disruptions following the COVID-19 pandemic.
- Russia’s war in Ukraine.
- Increasing prices for food and agricultural inputs such as fertilizer and seed.
- Food-security statistic:
- About 16 percent of the population is in acute food insecurity conditions.
Macroeconomic situation and key statistics
- External and fiscal buffers eroded substantially in 2022.
- Current account deficit: 5.2 percent of GDP.
- Overall fiscal balance widened to 10.3 percent of GPD.
- Growth:
- 2022 growth decelerated to 2.5 percent year-on-year.
- 2021 growth was 6.9 percent of GDP.
- Factors worsening macroeconomic imbalances: persistent and overlapping exogenous shocks, including a volatile political environment and fragile and deteriorating security conditions.
IMF assessment and Deputy Managing Director statement (Kenji Okamura)
- Summary of IMF views:
- Burkina Faso has been hit by several shocks, including deteriorating security conditions, unfavorable climate events, and Russia’s war in Ukraine, which triggered higher energy and agricultural input prices and reduced food access for poor households.
- Emergency financial assistance under the RCF’s Food Shock Window (RCF-FSW) would help address urgent balance-of-payments needs and mitigate the impact of the food crisis on the most vulnerable.
- Endorsement of authorities’ crisis-response priorities:
- Providing immediate food assistance to affected households.
- Preventing malnutrition and improving drinking water supply.
- Protecting livestock and animal husbandry.
- Governance and transparency recommendations:
- Measures to enhance transparency and governance in the use of Fund resources allocated under the FSW are needed.
- The authorities are committed to improving Public Financial Management practices and progressing toward the establishment of the Treasury Single Account.
- Plans to prepare progress reports and audits on the implementation of the cash transfer program and all food emergency spending are important.
- Identification and publication of the beneficial owners of entities awarded public procurement contracts related to measures to address the food crisis would be key.
Policy implications and longer-term priorities
- Stronger engagement with the IMF is seen as supportive for:
- Achieving macroeconomic stability.
- Obtaining additional external support.
- Building foundations for long-term development.
- Authorities’ longer-term focus:
- Building fiscal space to support higher growth and poverty reduction.
- Durably improving food security.
IMF press release, March 27, 2023.