Press Release No. 12/280

Press Release: IMF Executive Board Completes First Review Under the Extended Credit Facility Arrangement for Burundi and Approves US$6 Million Disbursement

July 27, 2012

The Executive Board of the International Monetary Fund (IMF) today completed the first review of Burundi’s performance under the program supported by the Extended Credit Facility (ECF). In completing the review, the Executive Board approved a modification of performance criteria for end-September 2012.

The Executive Board’s decision will allow for the disbursement of an amount equivalent to SDR 4 million (about US$ 6 million), bringing disbursements under the arrangement to an amount equivalent to SDR 5 million (about US$ 7.6 million). Burundi’s current three-year ECF arrangement was approved on January 27, 2012 (See Press Release No.12/35)

Following the Executive Board’s decision on Burundi, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, issued the following statement:

“Progress under the Fund-supported program has continued at an uneven pace. Economic growth is expected to exceed 4 percent in 2012, but inflation has been persistent in the wake of the food and fuel price shocks. The medium-term economic outlook remains challenging and vulnerable to downside risks stemming from internal strains, declining donor support, and the external environment.

“Fiscal slippages in early 2012 were addressed decisively in a supplementary budget through a combination of revenue and expenditure measures. To ensure that the budget targets are achieved, further revenue mobilization, including through improvements in tax administration, remains important.

“Underlying inflation has started to decline, but monetary policy should stay focused on anchoring inflation expectations. Higher policy rates have contributed to a welcome slowdown in credit expansion, but further action will be necessary if inflationary pressures do not ease in the period ahead.

“Maintaining debt sustainability remains a priority for fiscal policy. Given Burundi’s vulnerability to debt distress, financing should continue to rely primarily on highly concessional resources. Equally important, further steps are needed to strengthen public debt management, including the finalization of a medium-term debt management strategy currently under preparation.

“Burundi’s competitiveness needs to be enhanced to boost growth prospects and accelerate economic development. To this end, it is important to push ahead with structural reforms to improve the business environment, including by strengthening infrastructure and energy supply,” Mr. Shinohara added.