Burkina Faso: IMF Executive Board Completes First Review under Extended Credit Facility Arrangement and Concludes 2024 Article IV Consultation
IMF News, June 14, 2024
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- Published: June 14, 2024
Program decision and financing
- The Executive Board completed the first review of Burkina Faso’s Extended Credit Facility (ECF) arrangement and the 2024 Article IV consultation.
- The first-review decision allows for an immediate disbursement of about US$ 31.7 million (SDR 24.08 million).
- Total IMF financial support under the arrangement after the disbursement: about US$63.4 million (SDR 48.16 million).
- The Board also completed the Financing Assurances Review.
Performance under the program
- Burkina Faso’s performance under the program has been positive.
- All quantitative performance criteria were met.
- All indicative targets but one were met.
- Most structural benchmarks for the first review were met; some structural benchmarks were implemented with delay.
- The authorities are progressing on fiscal consolidation, structural reforms, fiscal governance measures, and creating fiscal space for priority spending.
Macro outlook and key projections
- Growth accelerated in 2023 to 3.6 percent of GDP, supported by a rebound in construction and expansion of the tertiary sector.
- Growth is projected at 5.5 percent in 2024 but remains below potential in the medium term; a lasting recovery is contingent on bringing security under control.
- Inflation averaged 0.7 percent in 2023, down from 14.1 percent in 2022, and is projected to stabilize around 2 percent going forward.
- The overall fiscal deficit declined from 10.7 percent of GDP in 2022 to 6.7 percent of GDP in 2023; it is expected to further decline as fiscal consolidation continues under the ECF-supported program.
- Public debt eased to 55.6 percent of GDP in 2023 and is expected to remain stable on account of convergence of the fiscal deficit to 3 percent of GDP over the program period.
Structural and policy priorities discussed in the Article IV consultation
- Measures to improve medium-term economic performance and resilience, including policies to:
- enhance growth through structural reforms, diversifying exports, regional integration, and addressing the security crisis;
- control fiscal risks and ensure fiscal sustainability;
- enhance social safety nets;
- adapt to, and mitigate the impact of, climate change;
- address forced displacement.
- Authorities committed to a capacity development agenda supported by the IMF and other partners to further enhance fiscal governance and transparency.
- In January 2024 the authorities decided to exit ECOWAS but reaffirmed commitment to membership in the West African Economic and Monetary Union (WAEMU).
Risks and contingent factors
- Risks to the outlook are tilted to the downside, mainly from the continuous threat of terrorist attacks, which weigh on mining and agricultural production, impact government revenue collection, and add pressures on current spending.
- A sustained recovery depends on substantial progress in security and reductions in political uncertainty.
Executive Board / Management statements and recommendations
- Mr. Kenji Okamura, Deputy Managing Director and Acting Chair, noted:
- “A sustained recovery, supported by a pick-up in agricultural production and gold mining, is contingent on substantial progress in security and overall reductions in political uncertainty.”
- “Despite the challenging context, the results achieved under the program are broadly satisfactory. All quantitative performance criteria and five of six indicative targets were reached by the end of December. Implementation of the authorities’ structural reform program is also broadly on track, with three of five structural benchmarks having been met by December.”
- Authorities plan to continue domestic revenue mobilization, strengthen tax and customs administration, bring the public sector wage bill as a share of tax revenue to a sustainable level, reform the energy sector (including reducing untargeted energy subsidies and increasing efficiency), and strengthen fiscal governance and transparency.
- Given large humanitarian and socio-economic development needs, social spending must be further scaled up and social protection strengthened, including consolidating existing social safety nets and accelerating establishment of the Single National Registry of Beneficiaries.
- “For the country’s long-term development process, it remains essential to sustain structural reforms to foster economic growth and diversification, enhance fiscal governance and transparency, as well as to reduce poverty. In this context, further efforts to improve the business environment, reinforce governance and anti-corruption efforts, and address the security crisis are critical.”
Executive Directors’ assessment
- Directors agreed with the thrust of the staff appraisal and supported the program’s objectives of addressing balance of payment needs, creating fiscal space for priority spending, and reducing debt vulnerabilities.
- Directors underscored importance of strengthening resilience to security and climate shocks, reducing poverty and inequality, and reinforcing fiscal discipline, transparency, and governance.
- Directors welcomed satisfactory program performance but emphasized substantial risks and the need for resolute commitment to policy, structural reform, and fiscal governance agenda to preserve donor confidence and catalyze additional concessional financing.
- Directors welcomed the comprehensive fiscal governance agenda, an accelerated timeline for the Governance Diagnostics Assessment, and the authorities’ request for a Fiscal Transparency Evaluation.
- Directors called for contingency planning and stronger safeguards in the program to mitigate potential reputational risks to the Fund and urged staff to maintain close engagement and adapt program objectives as needed.
- Directors encouraged continued fiscal consolidation, revenue mobilization, expenditure rationalization, prioritization of concessional financing, balancing security-related, development, and social expenditures, scaling up social spending, strengthening social protection (including resuming cash transfer programs to security-affected regions), and prompt implementation of overdue energy-sector efficiency measures.
- Directors stressed sustaining structural reforms, reinforcing governance and anti-corruption efforts, enhancing AML/CFT frameworks, tailoring capacity development support, and noted authorities’ interest in accessing the Resilience and Sustainability Facility.
Selected economic and social indicators (selected entries from Burkina Faso: Selected Economic and Financial Indicators, 2021–28)
- Population (2023): 22.7 million
- Gini Index (2018): 47.3
- Per capita GDP (2023): 831 USD
- Life Expectancy (years): 60
- Share of population below the poverty line (2022): 43.7%
- Literacy rate (2018): 39%
- GDP growth: 2021: 6.9; 2022: 1.8; 2023: 3.6; 2024 (proj.): 5.5
- Inflation (annual average): 2022: 14.1; 2023: 0.7; projected to stabilize around 2 percent
- Overall fiscal balance, incl. grants (commitments): 2022: -10.7; 2023: -6.7; program aims to converge to 3 percent of GDP over the program period
- Total public debt: 2023: 55.6 percent of GDP
International Monetary Fund — Press Release No. 24/219, June 14, 2024.
