Statement by an IMF Staff Mission to Burkina FasoPress Release No. 11/121
April 7, 2011
An International Monetary Fund (IMF) mission visited Ouagadougou during March 24–April 7, 2011 to conduct discussions for the second review of performance under the program supported by the IMF under the Extended Credit Facility (ECF) arrangement. The mission met with Mr. Lucien Bembamba, Minister of Economy and Finance; Mr. Francois Zoundi, Deputy Minister in charge of Budget; Mr. Bolo Sanou, the National Director of the Central Bank of West African States; and other senior officials. The team also met with representatives of the private sector, and the donor community.
At the conclusion of the discussions, Mrs. Kabedi-Mbuyi, IMF mission chief for Burkina Faso, issued the following statement:
“Macroeconomic performance improved in 2010 compared with 2009. The real gross domestic product (GDP) growth is estimated at 7.9 percent compared with 3.2 percent in 2009, supported by a significant expansion in the agriculture and mining sectors, as well as higher public investment. Inflation remained moderate mainly on account of a good harvest. Cotton and gold production, as well as prices increased in 2010, strengthening Burkina Faso’s external position. The current account deficit (excluding official transfers) narrowed from 4.2 percent of GDP in 2009 to 3.5 percent in 2010.
“Revenue performance strengthened further in 2010, reflecting the authorities’ continued efforts to improve tax administration, and thanks to the collection of revenue from the renewal of mobile phone licenses. Total revenue rose to 15.6 percent of GDP, up from 13.7 percent in 2009. Expenditure amounted to 25.7 percent of GDP, rising by 1.3 percentage points of GDP compared with 2009, partly reflecting an increase in investment spending. Consequently, the overall budget deficit widened from 4.8 percent of GDP in 2009 to 5.6 percent in 2010.
“There was good progress in the implementation of policies and structural reforms under the ECF-supported program. The authorities met all quantitative targets and structural benchmarks for end-December 2010. Structural reform measures focused on public financial management, civil service, financial sector development, and cotton sector rehabilitation.
“Prospects for 2011 are marked by uncertainties due to downside risks. Real GDP growth is projected to decelerate to 5.2 percent, with agriculture and mining sectors remaining the main sources of growth. With the increase in global oil and food prices, inflationary pressures may intensify despite the high level of stocks for cereals following a bumper crop in 2010. The external position is likely to deteriorate compared with 2010, because of the increase in imports linked to investment and higher oil prices, as well as lower cotton export volume. In the fiscal area, the authorities’ efforts to strengthen revenue collection and contain nonpriority spending are expected to continue. Revenue mobilization will particularly benefit from the effective implementation of the tax reform measures adopted in 2010–11. Downside risks to this outlook are related mainly to increasing global oil and food prices. They are expected to increase costs in the productive sector, and generate additional expenditure.
“Strengthening medium-term prospects requires continued fiscal consolidation and structural reform efforts. An efficient implementation of the authorities’ Strategy for Accelerated Growth and Sustainable Development (SCADD), adopted in December 2010 will be crucial to reduce the economy’s vulnerability to exogenous shocks and support broad-based growth and poverty reduction.
“The authorities and the IMF mission reached understandings ad referendum on macroeconomic and structural policies for 2011-12 that are consistent with the ECF-supported program, and could form the basis for completing the second review under the program. The IMF Executive Board consideration of the review could take place in early June.
“The mission wishes to thank the Burkinabè authorities for open and frank discussions during the mission and for their hospitality”.