Washington, DC: An International Monetary Fund (IMF) team led by Alexandre Chailloux visited Burundi on April 27 – May 8 to hold meetings with the economic authorities and other counterparts from the public and private sectors for the 2026 Article IV consultation. Discussions focused on recent developments, the economic outlook, and risks, and on the policies and reforms needed to deliver macroeconomic stabilization, foster robust growth and job creation, preserve debt sustainability, strengthen financial stability, and reduce poverty.
Context, Macroeconomic Outlook, and Risks
- In 2025, economic conditions improved thanks to the authorities’ stabilization efforts, improved fiscal discipline, and a large positive terms-of-trade shock. Real GDP growth is estimated at 4.2 percent, driven by strong exports. Higher international prices for gold and coffee, Burundi’s main exports, as well as increased volumes - for gold, from about 400 kg in 2024 to 1.2 tons in 2025 - led to a marked increase in export revenue and foreign exchange inflows. As a result, pressures in the foreign exchange market moderated and the parallel exchange rate premium declined, though it remains high at 100 percent at end-April 2026.
- The fiscal performance has improved in 2025/26 relative to the last fiscal year, despite recent shortfalls in revenue collection. Fiscal adjustment remains a central pillar of the authorities’ macroeconomic stabilization strategy. The overall fiscal deficit is projected to narrow significantly to 3.4 percent of GDP in 2025/26 from 5.5 percent in 2024/25, reflecting the authorities’ fiscal consolidation efforts, although further efforts will be needed to reach the medium-term deficit target. Revenue performance up to March 2026 was below target, especially non-tax revenues related to an undershooting of rental revenues and sales of goods and services. Staff expects the authorities to continue prioritizing expenditure and improving spending efficiency to address revenue shortfalls, while protecting essential services, targeted social spending, and high-quality public investment. Public debt, estimated by staff at 42 percent of GDP at end-2025, is assessed as sustainable but with high risk of debt distress, underscoring the importance of continued fiscal consolidation, cautious borrowing policies, and reliance on concessional financing.
- Inflation has fallen significantly and is now approaching the Central Bank's target of 8 percent. Year-on-year inflation fell from about 45.5 percent in April 2025 to 10.8 percent in March 2026. This reflects primarily improved fiscal discipline, which has helped limit recourse to central bank financing of the deficit, as well as better coordination between fiscal and monetary policies.
- The economic outlook for Burundi is positive, provided that the current reform momentum is sustained and external conditions normalize. Real GDP growth is projected at around 3.9 percent in 2026 and to strengthen gradually over the medium term to between 4 to 4.5 percent, supported by improved macroeconomic stability, easing foreign exchange constraints, and reforms aimed at unlocking growth in key export and productive sectors. Inflation is expected to increase slightly in the second half of the year to reach an average of 14.5 percent in 2026 and to converge toward the 10-12 percent range, above the central bank target, in the medium term, assuming continued policy discipline. The current account deficit is projected to narrow in 2026 to 6 percent of GDP, benefiting from higher gold exports, and to improve further over the medium term, assuming stable terms of trade. Foreign exchange reserves are expected to increase gradually to about US$ 500 million or 2.8 months of imports in the medium term.
- The outlook is marked by large uncertainties related to the war in the Middle East. Short-run risks are tilted to the downside and are both domestic and external. On the domestic front, revenue shortfalls, capacity constraints, political economy pressures, or delays in governance reforms could weaken stabilization efforts. Externally, a prolongation or intensification of global geopolitical tensions could reverse Burundi’s recent terms-of-trade gains and undermine economic momentum. In that case, well-targeted, deficit-neutral and transitory mitigation measures may be warranted to protect the most vulnerable.
Fiscal Policy
- Staff commends the authorities for the ambitious fiscal adjustment underway and the adoption of a medium-term budget framework, which constitutes the cornerstone of the macroeconomic stabilization strategy. The Government did not draw on BRB advances to finance the deficit so far this fiscal year, thus contributing to lower inflationary pressures and a more stable economic environment.
- Going forward, staff recommends strengthening domestic revenue mobilization to create space for higher priority social and development spending, while continuing to reduce public debt. Revenue reforms should combine tax administration and tax policy measures. In terms of tax administration, staff welcomes the phased deployment of EKori, the Burundi Revenue Authority integrated revenue management system, which will be an important step toward improving taxpayer registration, compliance, and monitoring. The continued roll-out of VAT machines will increase formality and broaden the tax base. For tax policy, staff recommends carefully reviewing and better targeting tax exemptions, which cost the government around 1.5 to 3 percent of GDP each year in recent years, and broadening the tax base. Reducing the VAT registration thresholds, reviewing and eliminating unnecessary VAT exemptions, and reducing the number of items taxed at the reduced VAT rate would yield additional revenues, help formalize economic activity, and improve the efficiency of the tax system
- On expenditure, staff recommends avoiding across-the-board cuts which could undermine essential public services and growth. Instead, fiscal consolidation should rely on better targeted, more durable measures. Recent decisions to reduce leakages in fertilizer subsidies by improving targeting and oversight, while safeguarding support to vulnerable farmers, are welcome. Protecting and, where possible, increasing targeted social spending in priority areas like health and education remains critical to support the most vulnerable households. Preserving high-quality public investment will be essential to support medium-term growth, provided projects are carefully prioritized and aligned with available financing. The formulation of a medium-term fiscal framework that also highlights fiscal risks is welcome. This can be further streamlined through better coordination of the revenue and expenditure functions.
- Staff welcomes the ongoing progress in Public Finance Management reforms. The gradual implementation of the Treasury Single Account will help rationalize cash management in the public sector and support interest savings. The appointment of public accountants in ministries and at the provincial level, budget execution decentralization, and plans to acquire an integrated public finance management system will help align public service delivery with expenditure management and control. These reforms are important steps toward strengthening budget credibility, improving cash management, and enhancing the efficiency of public spending.
Foreign Exchange, Monetary and Financial Sector Policies
- Phasing-out the current dual exchange rate would help reduce distortions, support competitiveness, strengthen foreign exchange inflows, and improve the transmission of external support to the economy. Staff and the authorities discussed options for advancing foreign exchange reform in a carefully sequenced manner, taking into account macroeconomic stability, market conditions, and the need to protect vulnerable households. Adoption of a clearly sequenced roadmap would be an important first step. Such a roadmap should be consistent with the authorities’ broader stabilization strategy and supported by sound fiscal and monetary policies. Exchange rate reform would bring macroeconomic and structural benefits, ease fuel shortages, boost exports and foreign direct investment, and raise the value of external assistance. Staff recognizes that there are different ways to achieve convergence, ranging from rapid adjustment to a more gradual approach. With external pressures having eased - higher export prices and stronger foreign exchange inflows have contributed to some parallel exchange rate appreciation - staff considers it an opportune time to advance steps toward restoring equilibrium in the foreign exchange market. Maintaining sound fiscal and monetary policies will also be critical to support this process.
- Tighter monetary policy is needed to consolidate recent disinflation gains and support foreign exchange reforms. Given tight financing conditions, continued fiscal prudence is needed to avoid recourse to central bank financing, which would create inflationary pressure. Staff expects the implementation of the Treasury Single Account and more efficient public sector cash management to gradually contract liquidity. This would require proactive liquidity management by the BRB to offset potential pressures in the money market. Looking forward, real policy rates in positive territory, a strengthened monetary policy framework, including forward-looking liquidity management and active communication, will help anchor inflation expectations, reinforce policy credibility, and entrench recent disinflation gains.
- The financial sector has remained broadly stable, but vulnerabilities persist. Despite liquidity buffers and capital positions in line with regulatory minimums, banks face a challenging environment marked by negative real interest rates, limited private sector lending opportunities and high exposure to government debt. Staff encourages the authorities to continue strengthening financial sector supervision and regulation, enhance stress testing capacity and banks’ FX risk monitoring, and address emerging risks in a timely manner. Bank supervision resources should be reinforced to ramp up on-site examination capacities. Staff reiterated its recommendation to conduct a full Asset Quality Review as part of broader efforts to further strengthen financial sector resilience and safeguard stability.
Structural Policies
- Strengthening governance is important for unlocking the country’s full economic potential and ensuring that recent macroeconomic gains translate into durable and inclusive growth. An IMF Governance Diagnostic Assessment of Burundi, currently being finalized, will support the authorities’ reform efforts by identifying opportunities to strengthen transparency, accountability, institutional effectiveness, and the business climate. Timely implementation of the assessment’s recommendations, in line with national priorities and ongoing public finance management reforms, will be important to strengthen policy credibility, improve the business climate, and reinforce public confidence.
- Reforms are also needed to unleash the growth potential of key strategic sectors identified by the authorities as central to Burundi’s economic transformation agenda.
- In the coffee sector, efforts to enhance export quality, traceability, and compliance with international standards through digitalization to improve pricing transparency and formalization have boosted exports. Improving price incentives for small farmers and stronger pass-through of international coffee prices could further boost production and income. Recent measures to improve agricultural techniques and replace ageing trees will support higher yields and a strong supply response to higher international prices.
- In the electricity sector, improvements in distribution and transmission are key to leveraging recent progress in power generation and providing access to affordable renewable electricity to a larger share of the population. Public-private partnerships and donors’ support to accelerate investments in the power grid, and measures to improve the technical performance and financial soundness of the public power utility, REGIDESO, should be at the core of the authorities’ investment strategy. These efforts would support the authorities’ objectives of expanding access to electricity, reducing production costs, and enabling private sector development.
- In the gold sector, progress in formalization, increased transparency by joining the EITI, and establishment of a stable fiscal regime coupled with effective regulatory oversight would help ensure that mineral resources contribute fully to fiscal revenues, foreign exchange inflows, and sustainable development. Continued efforts to strengthen traceability, formalization, and revenue mobilization in the sector will be important to maximize the contribution of mining to macroeconomic stability and inclusive growth.
The IMF mission team thanks the Burundian authorities and all other interlocutors for the candid discussions and their hospitality.
