Burundi: Request for a 38-Month Arrangement under the Extended Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Burundi
IMF Staff Country Reports, July 25, 2023
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- Burundi: Request for a 38-Month Arrangement under the Extended Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Burundi
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Bibliographic details
- Published: July 25, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400249358.002
Overview and context
- Paper highlights Burundi’s Request for a 38-month arrangement under the Extended Credit Facility (ECF).
- Key macroeconomic pressures:
- Protracted balance of payments needs with a widening current account deficit and low foreign reserves coverage.
- Large development needs.
- Macroeconomic challenges triggered by spillovers from the war in Ukraine and domestic climate shocks and livestock sanitary crisis.
- Purpose of the 38-month ECF arrangement:
- Cushion Burundi’s adjustment.
- 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.
Major challenges identified
- Balance of payments stress:
- Widening current account deficit.
- Low foreign reserves coverage.
- Exogenous and domestic shocks:
- Spillovers from the war in Ukraine.
- Domestic climate shocks.
- Livestock sanitary crisis.
- Development and fiscal pressures:
- Large development needs compounded by macroeconomic vulnerabilities.
Policy measures and reform agenda under the ECF
- Macroeconomic policy recalibration:
- Recalibrate Burundi’s macroeconomic policy mix.
- Restore external sustainability through unification of the official and parallel exchange rate markets and foreign exchange market liberalization, while being attuned to financial sector vulnerabilities.
- Fiscal and debt strategy:
- Strengthen debt sustainability.
- Achieve a better-quality fiscal consolidation path through:
- Higher domestic revenue mobilization.
- Scaled-up investment and better-targeted spending.
- Prudent borrowing.
- Monetary and exchange rate policy:
- Exchange rate market unification and liberalization consistent with attention to financial sector vulnerabilities.
Expected outcomes and objectives
- Restore external sustainability.
- Reduce debt vulnerabilities.
- Strengthen inclusive economic growth and governance.
- Improve quality of fiscal consolidation via revenue mobilization, investment scaling, and targeted spending.
Content in this bundle
- 1bdiea2023001