Press Release No. 11/218

Press Release No. 11/218
June 6, 2011

A mission from the International Monetary Fund (IMF), led by Mr. Oral Williams, visited Bujumbura from May 23–June 2, 2011 to conduct the sixth review of the government’s economic and financial program supported by the IMF under the Extended Credit Facility (ECF). The mission met with the Second Vice-President, Gervais Rufyikiri; the Minister of Finance, Clotilde Nizigama; the President of the Senate, Gabriel Ntisezerana; the Minister in Charge of Good Governance and Privatization, Jean Baptiste Gahimbare; and the Governor of the Central Bank, Gaspard Sindayigaya. The mission had constructive discussions with members of the donor community, the private sector, and the civil society.

At the end of the mission, Mr. Williams, IMF Mission Chief for Burundi, issued the following statement:

“Performance under the ECF-supported program has been broadly satisfactory, despite the impact of the food and fuel price shocks facing the country. All quantitative performance criteria for March 2011 were observed, and structural reforms are on track. Notably, progress has been made toward the implementation of the regulations on public budget management and the adoption of a financial sector reform strategy.

“The economy is expected to grow by about 4.2 percent in 2011, lower than earlier projected, following a modest recovery of 3.9 percent in 2010, in the aftermath of the global financial crisis. Reflecting rising food and fuel prices, headline inflation (end of period) is likely to increase during the year and then return to normal levels. The main downside risk in the macroeconomic outlook stems from the uncertain external environment.

“Policy discussions focused on the appropriate response to the food and fuel price shock, with a view to consolidating macroeconomic stability and further reducing poverty. The mission discussed measures to cushion the impact of the increase in food and fuel prices on the poor while safeguarding the sustainability of public finances. In this regard, it encouraged the authorities to intensify efforts to seek additional budget support from the donor community. The mission stressed the need to pursue an appropriate monetary policy, in the context of a flexible exchange rate system, in order to contain inflationary expectations. To accelerate growth, the authorities will pursue structural reforms by refocusing capital spending on key infrastructure, accelerating integration within the East African Community (EAC), and advancing financial sector reforms to improve the business and regulatory environments over the medium term. Given Burundi’s debt burden, external financing of the budget should be limited to grants and highly concessional loans.

“The mission was encouraged by the authorities’ efforts to consolidate progress on revenue collections and reallocate spending to priority sectors. The continued implementation of governance reforms is important to improve the business environment which is key to attracting foreign investment.

“The mission confirmed that the IMF will continue to work with Burundi to address these challenges. The discussions are expected to be finalized in the coming weeks, which would allow the IMF Executive Board to consider the sixth review of the ECF by mid-July. The mission would like to thank the authorities for their warm hospitality and very close and constructive cooperation.”