IMF Executive Board Concludes 2016 Article IV Consultation with Burkina Faso
IMF News, December 22, 2016
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- Published: December 22, 2016
Economic activity and near-term developments
- On December 16, 2016, the Executive Board concluded the 2016 Article IV Consultation with Burkina Faso and completed the sixth Review under a three-year program supported by the IMF’s Extended Credit Facility (ECF) arrangement.
- Real GDP growth:
- 2015: 4.0 percent
- 2016 (projected): 5.4 percent
- Drivers of the 2016 recovery:
- Two new gold mines coming on stream.
- A sharp projected rebound in agricultural output in late 2016-early 2017 after three disappointing years.
- The January terrorist attacks and delays in approving the budget weighed on activity early in 2016, but activity subsequently rebounded.
- Inflation and credit:
- Consumer prices (end-of-period): 0.6 percent at end-year 2016.
- Private sector credit growth: 7.0 percent in 2015; projected 9.4 percent in 2016.
- Policy developments:
- The government approved a five-year national economic and social development plan (PNDES) in July, aiming to transform the economy to achieve strong, sustainable and resilient growth, create jobs, and raise living standards.
Outlook and macroeconomic projections
- Growth outlook:
- 2017 (projected): 6.1 percent
- 2018 (projected): 6.3 percent
- Factors supporting the recovery:
- Scaled up public infrastructure investment program.
- Supportive monetary stance.
- Higher agricultural output.
- Continued low international prices for energy imports.
- Fiscal implications:
- Implementation of PNDES will increase public investment, notably to close energy and transport infrastructure gaps.
- Fiscal deficit is set to widen to 3.6 percent of GDP (context: planned increase in public investment).
Program performance, reforms, and policy priorities
- Program performance:
- Program performance under the Fund-supported program remains strong; authorities advanced reforms to support medium-term economic performance and poverty reduction.
- Key reform areas and actions:
- Improvements in tax administration and measures to broaden the tax base.
- Actions to improve the management and financial health of publicly-owned energy utilities.
- Comprehensive five-year development agenda to tackle growth bottlenecks, focusing on:
- Increasing physical and human capital.
- Improving the business environment.
- Expanding financial access.
- Lowering the cost of energy.
- Fiscal policy guidance:
- Need to create fiscal space to sustainably and gradually scale up public investment.
- Contain recurrent spending, particularly the wage bill, to create adequate fiscal space for key public investment projects.
- Further improvements in public financial and debt management recommended.
- A Public Investment Management Assessment could help identify bottlenecks and improve the execution rate of the investment budget.
- Sector-specific cautions:
- Continue reforms in the energy and cotton sector to avoid buildup of contingent liabilities and the need for subsidies.
- Protect the tax base from transfer pricing practices, particularly in the mining sector.
Executive Board assessment and recommendations
- Directors welcomed:
- Continued strong performance under the Fund-supported program.
- The improving economic outlook after two years of weaker growth.
- Progress in 2016 in mobilizing higher domestic revenue.
- The authorities’ comprehensive National Economic and Social Development Plan.
- Directors emphasized:
- Sustaining higher growth requires sound policies, fiscal space, and ambitious structural reforms to reduce barriers to higher and more inclusive growth.
- Careful prioritization and sequencing of public investment projects and effective measures to improve absorptive capacity.
- Caution against too rapid an increase in public investment that could negatively impact efficiency and debt sustainability.
- Continued efforts to improve competitiveness by alleviating infrastructure bottlenecks, fostering agricultural sector dynamism, and enabling the financial sector to better support the real economy.
- Consolidate and build upon recent successes in improving the financial health of state-owned energy companies to support critical investments to increase electricity supply.
- Next steps:
- The next Article IV consultation with Burkina Faso is expected to take place in accordance with the Executive Board decision on consultation cycles for members with Fund arrangements.
Selected economic indicators (annual percentage change or as indicated)
- GDP at constant prices:
- 2012: 6.5
- 2013: 5.7
- 2014: 4.2
- 2015: 4.0
- 2016 (Prel./Proj.): 5.4
- 2017 (Proj.): 6.1
- 2018 (Proj.): 6.3
- GDP deflator:
- 2012: 5.8
- 2013: -2.1
- 2014: -0.9
- 2015: 3.7
- 2016 (Prel./Proj.): 1.9
- 2017 (Proj.): 2.0
- Consumer prices (eop):
- 2012: 1.7
- 2013: 0.1
- 2014: -0.1
- 2015: 1.3
- 2016 (Prel./Proj.): 0.6
- Exchange rate (eop, depreciation -) CFAF per US dollar:
- 2012: -0.5
- 2013: 4.3
- 2014: -11.1
- 2015: -13.4
- 2016 (Prel./Proj.): 3.1
- 2017 (Proj.): 0.7
- 2018 (Proj.): 0.5
- Private sector credit:
- 2012: 24.1
- 2013: 26.3
- 2014: 18.9
- 2015: 7.0
- 2016 (Prel./Proj.): 9.4
- 2017 (Proj.): 12.9
- 2018 (Proj.): 14.7
- Broad money:
- 2012: 15.9
- 2013: 11.3
- 2014: 11.9
- 2015: 19.9
- 2016 (Prel./Proj.): 13.3
- 2017 (Proj.): 18.4
- Net domestic assets (banking system):
- 2012: 16.1
- 2013: 19.6
- 2014: 20.0
- 2015: 7.3
- 2016 (Prel./Proj.): 9.6
- 2017 (Proj.): 14.9
- 2018 (Proj.): 12.7
- Credit to the government (banking system):
- 2012: -2.7
- 2013: 5.3
- 2014: 4.9
- 2015: 1.8
- 2016 (Prel./Proj.): 1.2
- 2017 (Proj.): 2.9
- Central government finances (percent of GDP):
- Current revenue:
- 2012: 17.5
- 2013: 19.0
- 2014: 18.3
- 2015: 19.3
- Total expenditure and net lending:
- 2012: 25.5
- 2013: 28.0
- 2014: 23.6
- 2015: 21.5
- 2016 (Prel./Proj.): 24.5
- 2017 (Proj.): 26.5
- 2018 (Proj.): 26.8
- Primary balance:
- 2012: -2.4
- 2013: -3.0
- 2014: -1.1
- 2015: -1.5
- 2016 (Prel./Proj.): -1.8
- 2017 (Proj.): -2.8
- Overall fiscal balance, incl. grants:
- 2012: -3.1
- 2013: -3.6
- 2014: -1.9
- 2015: -2.5
- 2016 (Prel./Proj.): -3.5
- Total Public Debt:
- 2012: 28.3
- 2013: 29.3
- 2014: 30.6
- 2015: 32.5
- 2016 (Prel./Proj.): 31.7
- 2017 (Proj.): 32.6
- 2018 (Proj.): 32.9
- Public External Debt:
- 2012: 22.6
- 2013: 21.9
- 2014: 22.0
- 2015: 23.8
- 2016 (Prel./Proj.): 23.2
- 2017 (Proj.): 22.4
- 2018 (Proj.): 22.3
- External sector:
- Exports (f.o.b.; valued in CFAF):
- 2012: 2.3
- 2013: 7.4
- 2014: 17.2
- 2015: 8.0
- Imports (f.o.b.; valued in CFAF):
- 2012: 19.8
- 2013: 21.3
- 2014: -9.3
- 2015: 3.3
- 2016 (Prel./Proj.): 7.9
- 2017 (Proj.): 13.8
- Terms of trade:
- 2012: 11.1
- 2013: -12.8
- 2014: -5.5
- 2015: 8.7
- Current Account (percent of GDP):
- 2012: -7.0
- 2013: -11.3
- 2014: -8.1
- 2015: -8.0
- 2016 (Prel./Proj.): -7.6
- 2017 (Proj.): -6.7
- 2018 (Proj.): -6.5
- Memorandum items:
- Nominal GDP (US$ billion):
- 2015: 11.2
- 2016: 12.3
- 2017: 12.0
- 2018 (Proj.): 13.1
- 2018 (Proj. in table): 14.3
- Nominal GDP per capita (US$):
- 2012: 677.1
- 2013: 706.4
- 2014: 707.8
- 2015: 619.9
- 2016 (Prel./Proj.): 651.6
- 2017 (Proj.): 692.5
- 2018 (Proj.): 734.4
Source: IMF Communications Department — Press Release No. 16/578, December 22, 2016.