Washington, DC:
An International Monetary Fund (IMF) team led by Ms. Mame Astou Diouf,
Mission Chief for Burundi, visited Bujumbura during February 2−12 and held
follow-up virtual meetings during February 22−April 6 to discuss with the
Burundian authorities IMF support for their macro-economic policies and
reform plan.
At the end of the discussions, Ms. Mame Astou Diouf issued the following
statement:
“The Burundian authorities and IMF staff team have reached a staff-level
agreement on a 40-month arrangement under the
Extended Credit Facility (ECF)
with access of SDR 200.2 million (or about US$ 261.7 million, representing
130 percent of quota). This is the first Upper Credit Tranche-quality
program for Burundi supported by the Fund since 2015. The program aims to
support a calibrated macroeconomic policy mix to restore external
sustainability, strengthen debt sustainability, while supporting economic
recovery from shocks and creating fiscal space for accelerated and
inclusive growth. The staff-level agreement is subject to IMF Management
approval and consideration by the Executive Board.
“Discussions held with the Burundian authorities covered recent
macro-developments, the impact of the various domestic and external shocks
faced by Burundi, and Burundi’s macro-policy plans and structural reform
agenda.
“Burundi’s economy has been hit by several shocks, halting its recovery
from the negative effects of the COVID-19 pandemic and heightening its
macroeconomic imbalances. Delayed rainfall in the last quarter of 2022 and
limited availability of fertilizer— driven by higher prices in the context
of limited foreign exchange (FX) availability for imports, supply
disruptions linked to the war in Ukraine, and insufficient domestic
production to cover local farmers’ demand— hampered agricultural
production. Outbreaks of the rift valley and porcine fevers impacted
Burundi’s livestock production. Higher import prices triggered by the war
in Ukraine have pushed up inflation, widened the fiscal deficit, and
heightened current account (CA) pressures.
“Real GDP Growth is estimated to have slowed down to 1.8 percent in 2022
(from 3.1 percent in 2021) but is projected to rebound to 3.3 percent in
2023. Delayed harvest and lower crop of 2022 will impact agricultural
production in 2023 owing to reduced land and seed availability.
“Inflation pressures have not receded. Inflation averaged 18.9 percent in
2022 and has continued accelerating (28.6 percent y/y at end-January 2023),
driven by food prices. It is projected to remain high, at around 18 percent
in 2023.
“With the support of the ECF arrangement, the Burundian authorities
have planned a broad-based near- and medium-term macroeconomic reform
agenda aimed at tackling key challenges:
“Resuming pro-growth fiscal consolidation to support debt sustainability
while protecting the vulnerable population.
The fiscal position is projected to weaken in FY2022/23 (July-June) because
of slow revenue collection from measures adopted in the last two budget
laws and spending overruns including large fertilizer subsidies. A return
to fiscal consolidation is planned starting in FY2023/24, building on
strengthened revenue collection efforts and current spending restraint
while preserving social spending and efficient investment scaling up under
the authorities’ Public Investment Plan (PIP). Public debt will be
declining over the medium term under the program.
“External rebalancing and unwinding monetary financing. The
central bank (BRB) is committed to recalibrating monetary and external
policies to address the below-adequacy FX reserves (1.5 months of imports
at end-2022) and large parallel FX market premium. In preparation for the
external rebalancing, the BRB has initiated FX market liberalization and
reduced financing provision to commercial banks. This will also help curb
inflation pressures. Limiting BRB financing to the budget will also be
essential.
“Governance and structural reforms will be at the core of the authorities’ medium-term program to ensure a business
environment conducive to private-led diversified and inclusive growth and
job creation.
“The mission met with H.E. Prime Minister Gervais Ndirakobuca, H.E. Audace
Niyonzima, Minister of Finance, Budget and Economic Planning (MFBPE); Mr.
Dieudonné Murengerantwari, Governor of the Bank of the Republic of Burundi
(BRB); Mr. Désiré Musharitse, First Vice-Governor of the BRB; Ms. Francine
Inarukundo, Permanent Secretary of the MFBPE. The mission also met with
other officials of the government and the BRB, as well as representatives
of commercial banks, the private sector, non-governmental organizations,
and the donor community.
“The mission would like to take this opportunity to thank the Burundian
authorities for their hospitality and cooperation, and fruitful and open
discussions.