Press Release: IMF Board Completes Fifth Review Under Burkina Faso’s Three-Year Arrangement Under the Extended Credit Facility and Approves US$ 28.4 Million Disbursement
December 19, 2012Press Release No. 12/496
December 19, 2012
The Executive Board of the International Monetary Fund (IMF) has completed the fifth review under a three-year arrangement under the Extended Credit Facility (ECF) for Burkina Faso1.The completion of the review enables the disbursement of an amount equivalent to SDR 18.49 (about US$ 28.4 million), which will bring the total disbursements under the arrangement to SDR 75.82 million (about US$116.5 million). The Executive Board’s decision was taken on a lapse of time basis1.
The three-year SDR 46.15 million (about US$ 70.8 million) ECF arrangement with Burkina Faso was approved by the IMF’s Executive Board on June 14, 2010 (see Press Release No. 10/241). The Executive Board subsequently approved augmentation of access under the ECF arrangement to SDR 82.27 (about US$ 126.4 million) on June 8, 2012 (see Press Release No. 12/214).
In spite of multiple external shocks, Burkina Faso’s macroeconomic performance has remained strong. 2011 real GDP growth has been weaker than anticipated as a result of political events in the region, short-lived social turmoil in Burkina Faso, and a drought in the Sahel that led to a strong contraction in grain production. In early 2012, the authorities moved decisively to implement a comprehensive program to meet food needs created by the drought, as well as work with the international community to manage an influx of refugees fleeing political upheaval in Mali. As a result of this shock-related spending, the overall fiscal and current account deficits will expand modestly in 2012. The government’s food security program also helped to dampen food prices, which had spiked in the spring. Thanks to good rains and measures taken to boost agricultural productivity, this year’s harvest is expected to lead to a rebound in real GDP growth to about 8%.
Burkina Faso has made notable progress under the program. All targets and structural reforms under the program through end-July were respected. Domestic revenue collection has increased, as a result of tax policy and administrative reforms in recent years, as well as new revenues from fast-growing gold mining activities. Burkina Faso is well-poised to meet WAEMU revenue targets in the next year or so. Some of the higher-than-expected domestic revenues will be used to pay for retail fuel subsidies.
For the remainder of the program through mid-2013, the policy agenda is aimed at ensuring increased resources directed toward implementation of the authorities’ development program, the SCADD (Strategy for Accelerated Growth and Sustainable Development). The SCADD aims at building on innovative projects to promote inclusive growth; building up needed public infrastructure (including provision of energy); improving agricultural productivity, resilience, diversity and sustainable farming practices; and strengthening social safety nets, including through direct transfers, as well as expanded provision of school lunches and health services for pregnant mothers and young children. To help meet resource needs, the authorities will move gradually toward cost recovery for retail fuel, contain public wage costs through efforts to eliminate fraud, continue efforts to expand domestic revenues, and streamline approval processes to execute fully priority investment spending.
1 The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.