Press Release: IMF Executive Board Reviews Noncomplying Purchase Made by Burkina Faso, Acknowledges Corrective Actions, and Grants Waiver of Nonobservance
IMF News, February 4, 2005
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- Press Release: IMF Executive Board Reviews Noncomplying Purchase Made by Burkina Faso, Acknowledges Corrective Actions, and Grants Waiver of Nonobservance
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Bibliographic details
- Published: February 4, 2005
Executive Board action
- On February 2, 2005, the Executive Board of the International Monetary Fund (IMF) discussed Burkina Faso's noncomplying purchase in connection with a performance criterion under the three-year Poverty Reduction and Growth Facility (PRGF) arrangement.
- The Executive Board granted a waiver of two incidents of nonobservance of the performance criterion after reviewing the circumstances of the noncomplying purchase and the authorities' corrective actions.
Background and nature of the noncomplying purchase
- The noncomplying purchase occurred at the time of the second disbursement under the PRGF arrangement (see Press Release No. 03/82).
- Burkina Faso had reported that it had observed a continuous performance criterion under which the government agreed not to contract or guarantee any nonconcessional external debt.
- Subsequent to the second disbursement, IMF staff determined that Burkina Faso had entered into two loan agreements that did not adhere to the terms of the performance criterion.
Rationale for granting the waiver
- The Executive Board decided to waive two incidents of nonobservance of the criterion on the following bases:
- The relatively minor impact of the two loans on Burkina Faso's external debt burden.
- The corrective actions undertaken by the authorities to ensure that nonconcessional loans are not contracted or guaranteed in the future.
- The authorities' continuing commitment to program objectives.
Authorities' corrective actions and commitments
- The authorities took prompt corrective actions aimed at ensuring that non-concessional loans are not contracted or guaranteed in the future.
- The Executive Board noted the authorities' strong commitment to achieving the program's objectives.
Statements by IMF management
- Following the Executive Board discussion, Anne O. Krueger, First Deputy Managing Director and Acting Chair, stated:
- "The Executive Board reviewed a noncomplying purchase made by Burkina Faso under its Poverty Reduction and Growth Facility Arrangement with the Fund, which arose as a result of misreporting of data to the Fund regarding the contracting or guaranteeing of non-concessional external debt.
- "The Executive Board regretted the authorities' failure to provide accurate data, which was the result of administrative weaknesses in public expenditure management. The contracting of non-concessional debt was of particular concern in light of the sharp increase in Burkina Faso's external indebtedness since the country reached the completion point under the enhanced Heavily Indebted Poor Countries Initiative in 2002.
- "However, in view of the prompt corrective actions taken by the authorities to ensure that non-concessional loans are not contracted or guaranteed in the future, and the authorities' strong commitment to achieving the program's objectives, the Executive Board decided to grant a waiver for the non-observance of the performance criterion that gave rise to the noncomplying purchase," Ms. Krueger said.
Key facts and references
- Press Release No.: 05/21
- Date of press release: February 4, 2005
- Executive Board discussion date: February 2, 2005
- Program: three-year Poverty Reduction and Growth Facility (PRGF) arrangement
- Related press release referenced: Press Release No. 03/82
- Historical context noted: completion point under the enhanced Heavily Indebted Poor Countries Initiative in 2002
International Monetary Fund press release