IMF Executive Board Approves a US$271 million 38-month Arrangement Under the Extended Credit Facility for Burundi

July 17, 2023

  • The Executive Board of the International Monetary Fund (IMF) approved a 38-month arrangement under the Extended Credit Facility (ECF) for Burundi. The arrangement will provide financing of SDR200.2 million (about US$271 million), with an immediate disbursement of SDR46.2 million (about US$62.6 million).
  • Burundi faces protracted balance of payments needs with a widening current account deficit and low foreign reserves coverage, large development needs, and macroeconomic challenges triggered by spillovers from the war in Ukraine and domestic climate shocks and livestock sanitary crisis.
  • The 38-month arrangement under the ECF will help cushion Burundi’s adjustment and support the authorities’ reform agenda aimed at reducing debt vulnerabilities, recalibrating exchange rate and monetary policies to restore external sustainability, and strengthening inclusive economic growth and governance.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved a 38-month arrangement under the Extended Credit Facility (ECF) for Burundi with access of 130 percent of quota, equivalent to SDR 200.2 million (about US$271 million). [1] The decision allows an immediate disbursement of SDR 46.2 million (about US$ 62.6 million).

The arrangement will help Burundi address its protracted balance of payments needs, reduce debt vulnerabilities, and cope with the effects of recent domestic and external shocks. Burundi’s post-COVID-19 economic recovery has slowed down, although still healthy. Spillovers of the war in Ukraine have triggered sharp increases in commodity prices and domestic inflationary pressures. Domestic shocks, including delayed rainfall, limited availability of fertilizer, and outbreaks of livestock fevers have impacted Burundi’s primary sector. External imbalances have heightened, with a widening current account deficit, low foreign exchange reserves, and a still large parallel foreign exchange (FX) market premium. Higher spending needs, including on fertilizers, social programs, and vaccines have deteriorated the fiscal path and raised fiscal financing needs.

The ECF arrangement will cushion Burundi’s policy recalibration and economic adjustment, while supporting the authorities’ policy agenda. Key commitments include (i) a better-quality fiscal consolidation path achieved through higher revenue, scaled-up investment, and prudent borrowing while protecting priority social spending; (ii) unification of the official and parallel exchange rate markets and foreign exchange market liberalization to restore external sustainability; (iii) tightened monetary policy in support of the ongoing unification and to rein in inflation, while modernizing the monetary policy framework and fostering financial sector stability; and (iv) undertaking further governance and structural reforms to ensure an environment conducive to inclusive growth and job creation.

At the conclusion of the Executive Board’s discussion, Mr. Okamura, Deputy Managing Director, and Acting Chair, issued the following statement:

“Burundi has recently been hit by several shocks. Spillovers from Russia’s war in Ukraine have triggered commodity price increases, which led to heightened domestic inflation pressures and slowed the post COVID-19 growth recovery. Domestic shocks, including unfavorable weather conditions and an animal sanitary crisis, have hampered primary sector prospects and living conditions. The country faces important macroeconomic challenges, including persistently high inflation, external imbalances with a widening current account deficit and inadequate foreign exchange reserve coverage, and large fiscal needs and public debt.

“To address these challenges, the Burundian authorities have requested a 38-month arrangement under the Extended Credit Facility (ECF). The arrangement would help address the country’s protracted balance of payments needs, rebuild external buffers, reduce public debt vulnerabilities, and support the implementation of the authorities’ reform agenda. This is Burundi’s first Upper Credit Tranche-quality arrangement with the IMF since 2016.

“Under the ECF arrangement, the authorities aim to recalibrate Burundi’s macroeconomic policy mix. They plan to restore external sustainability with the unification of the official and parallel exchange rate markets and foreign exchange market liberalization, while being attuned to financial sector vulnerabilities. They will strengthen debt sustainability and achieve a better-quality fiscal consolidation path through higher domestic revenue mobilization, scaled-up investment and better targeted spending, and prudent borrowing. Monetary policy tightening, while modernizing the monetary policy framework and exiting monetary financing, will support the ongoing exchange rate unification and contain inflation. Governance and growth-enhancing reforms, as well as timely capacity development will support the program objectives.

“The arrangement is expected to catalyze donor funding, which is essential to cater to Burundi’s large financing needs and support its exit from fragility.”



[1] SDR figures for the program are converted at the market rate of U.S. dollar per SDR on the day of program approval.

Burundi: Selected Economic Indicators, 2020 –2028

2020

2021

2022

2023

2024

2025

2026

2027

2028

Est.

Proj.

(Annual percentage change, unless otherwise indicated)

Output, prices, and exchange rate

Real GDP 1/

0.3

3.1

1.8

3.3

6.0

5.9

5.7

5.9

5.5

GDP deflator

9.2

9.4

17.7

20.0

17.0

10.9

11.0

10.7

10.9

CPI (period average)

7.3

8.3

18.9

20.1

16.1

10.1

10.2

10.0

10.2

CPI (end of period)

7.5

10.1

26.6

12.3

22.4

13.9

12.2

7.4

8.1

Terms of trade ( - =deterioration)

-12.3

1.6

-18.7

4.5

1.5

1.4

0.2

0.2

0.1

Money and credit

Broad Money (M2)

25.4

22.4

34.7

25.9

21.9

15.6

15.4

21.7

22.3

[Reserve money] (optional)

Credit to non-government sector 2/

21.5

67.9

42.8

28.1

23.9

25.5

22.3

20.2

16.9

M2/GDP (percent)

42.7

46.7

52.2

51.3

50.5

49.7

48.9

50.7

53.1

(Percent of GDP, unless otherwise indicated)

Central government budget 3/

Revenue and grants

22.2

24.9

26.0

26.2

31.1

31.1

28.9

27.3

25.3

of which: grants 4/

4.3

6.3

7.2

9.3

15.2

14.8

12.1

10.2

8.0

of which: revenue

17.9

18.5

18.8

16.8

15.9

16.3

16.8

17.1

17.3

Expenditure

28.2

32.5

33.0

35.0

35.6

34.4

31.9

29.8

27.7

Expense

20.3

24.0

21.6

20.7

15.9

15.6

14.9

14.2

14.1

Net acquisition of non-financial assets

7.9

8.5

11.3

14.4

19.7

18.8

17.1

15.6

13.6

Primary balance

-3.1

-4.7

-4.2

-6.4

-1.8

-0.7

-0.6

-0.3

-0.3

Overall balance

-6.0

-7.6

-7.0

-8.9

-4.5

-3.3

-3.0

-2.5

-2.4

Excluding grants

-10.3

-13.9

-14.2

-18.2

-19.7

-18.1

-15.2

-12.7

-10.4

Net acquisition of financial assets

1.4

3.4

3.8

-2.7

1.2

-0.7

-0.8

0.0

0.1

Net domestic borrowing

5.3

9.0

4.6

5.5

3.2

2.3

2.1

2.2

1.7

Net foreign borrowing

0.6

0.4

3.4

-0.2

-0.1

-0.5

-0.5

0.2

0.8

Accounts payable

1.5

1.6

2.8

0.8

0.0

0.0

0.0

0.0

0.0

Public debt

Public gross nominal debt

66.0

66.6

68.4

72.7

65.8

61.3

56.6

52.2

48.0

of which: external public debt

17.7

20.2

19.9

34.4

32.5

30.5

28.2

25.4

23.4

domestic public debt

48.2

46.3

48.4

38.3

33.3

30.8

28.4

26.8

24.7

Investment and savings

Investment

19.8

19.8

22.1

25.6

26.5

25.1

24.1

23.1

21.5

Public

4.5

5.3

9.1

12.5

13.3

11.9

10.9

9.9

8.3

Private

15.3

14.5

13.0

13.1

13.2

13.2

13.2

13.2

13.2

Savings

9.5

7.3

6.5

7.9

7.9

6.8

7.8

9.5

10.4

Public

-1.8

0.0

-2.9

7.5

10.6

8.1

8.5

7.3

6.0

Private

11.3

7.3

9.5

0.4

-2.7

-1.2

-0.8

2.1

4.4

External sector

Exports (goods and services)

8.8

8.1

7.1

9.8

12.4

13.2

14.2

16.2

16.6

Imports (goods and services)

33.1

35.1

35.0

44.6

49.8

47.7

45.9

44.2

41.1

Trade Balance (goods and services)

-24.3

-27.0

-27.8

-34.8

-37.4

-34.5

-31.7

-28.0

-24.5

Current account balance (incl. budget support)

-10.3

-12.4

-15.6

-17.6

-18.6

-18.3

-16.3

-13.7

-11.1

Current account balance (excl. budget support)

-10.3

-12.4

-15.6

-19.7

-21.1

-18.8

-16.8

-14.2

-11.6

Gross international reserves (incl. ECF)

In millions of US$

94.3

281.0

159.0

239.7

337.9

385.1

467.1

545.6

664.4

In months of next year imports

1.0

2.5

1.3

1.9

2.5

2.7

3.0

3.4

3.5

Memorandum items:

Official current transfers

0.0

0.0

0.0

2.0

2.5

0.5

0.5

0.5

0.5

Official capital transfers 4/

4.4

4.0

4.3

13.0

14.6

12.7

11.0

8.9

6.5

GDP at current market prices

In billions of Burundi Francs

5,911

6,613

7,970

10,213

12,656

14,869

17,437

20,442

23,905

In billions of US$

3.1

3.4

3.9

3.2

3.1

3.4

3.8

4.2

4.7

GDP per capita (Nominal US$)

259.9

274.0

311.0

245.8

228.8

248.1

267.1

288.0

309

Export volume growth (goods, in percent)

-21.6

-12.4

20.0

10.3

27.8

19.4

19.4

15.3

6.6

Import volume growth (goods, in percent)

-16.1

13.6

-3.8

7.8

4.6

6.8

3.3

2.0

-2.9

Population (million)

11.9

12.2

12.6

13.0

13.4

13.8

14.2

14.6

15.0

Health and social spending 3/

Health

1.9

3.6

3.1

Social

3.0

3.2

3.0

Sources: Burundi authorities; and IMF staff estimates and projections.

1/ The jump in 2023 is due to the resuming activity in the mining sector, the implementation of the capital project including the EAC tile projects, and a more dynamic tertiary sector driven by the ongoing exchange rate reform.

2/ A statistical adjustment of 15 percent (the gap between credit to private sector and the updated data that include the new bank) was applied to 2021 credit growth data to account for the reclassification of a bank—the Urban Housing Promotion Fund became the Burundi Housing Bank in 2021 and is now covered in the monetary survey.

3/ Fiscal year values (July-June) starting in 2019 (i.e. 2019 is FY 2018/19). Includes Covid-related fiscal measures starting in FY2020/21.

4/ Includes vaccine donations (starting in FY2021/22) and the grant for the IMF debt service falling due from October 16, 2021 to April 13, 2022 under the CCRT. Starting with FY2022/23, grants also include project grants from the US and the EU. Grants averaged 17.7 percent of GDP per year during 2010-14, before the 2015 political crisis.

IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Eva Graf

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson