Burundi’s economy has continued to grow at a slower pace than envisaged owing to the impact of food and fuel shocks on aggregate demand. The macroeconomic outlook remains broadly positive but subject to risks that emanate from the security situation and the external environment. The foremost risks are a decline in donor support, warranting an abrupt fiscal adjustment, and a worsening in the security situation. These risks are mitigated in part by reforms that have improved revenue mobilization and efforts in nation building.
Burundi’s extreme poverty, post-conflict environment, and persistent fragility created considerable risks to program implementation, calling for extensive flexibility in engagement. The program succeeded in establishing some of the key foundations of macroeconomic stability, mobilizing donor resources, and promoting poverty reduction. A successor program should strike the right balance between reforms narrowly aimed at improving the conduct of macroeconomic policies and other macro-critical reforms. Ensuring public debt sustainability should remain a key program objective. Risks to the new program are likely to remain high but manageable.
The government of Burundi undertook to prepare the first Growth and Poverty Reduction Strategy Framework (GPRSF). The general framework for most economic and social development programs initiated by Burundi and its donors has been established. A general balance sheet of performance has also been established. Economic development efforts have generally had an impact on the population’s material well-being. The principal objective of the second strategic axis focusing on economic growth was annual growth between 6 and 7 percent, capable of doubling per capita GDP in 15 years.
The implementation of the Growth and Poverty Reduction Strategy Framework (GPRSF) first describes the characteristics of poverty in Burundi before proceeding to review progress made in terms of each strategic axis. The analysis of macroeconomic performance, including the real sector, inflation, budgetary framework, the real sector [sic], and currency completes this report. In this context of extreme poverty and given the link between population numbers and poverty reduction, it is crucial that issues related to demographic pressure be clearly taken into account in all development programs.
Over the last thirty years Burundi's low economic growth has led to a significant decline in per capita GDP. The purpose of this paper is to shed light on supply-side constraints that prevented Burundi's economy from growing faster. Lack of investment, civil conflict, economic inefficiencies, state intervention in the economy, and regulatory restrictions explain a large part of the weak growth performance for the last thirty years.
This Selected Issues paper on Burundi highlights that after the Arusha Peace Agreement in 2000 Burundi has faced a wide range of challenges to generate sustained and equitable economic growth and improve social conditions. Burundi has begun to stabilize the economy, liberalized the trade and exchange regimes, reformed monetary policy, and taken steps to reinforce public financial management. GDP growth has been high during the program, except in 2005, when drought and floods reduced growth to about 1 percent of GDP.
Burundi’s First Review Under the Poverty Reduction and Growth Facility and Request for Waiver of Performance Criteria are discussed. Fiscal slippages emerged following the surge in petroleum prices and higher spending needs associated with the peace process and the domestically financed counterpart to much higher-than-expected project spending. Important progress has been made in pursuing peace and reconciliation and initiating the multiyear demobilization effort and security programs. Burundi has made considerable progress in normalizing relations with international creditors.
Burundi has made much progress since the signing of the Arusha peace and reconciliation agreement. The handling of the economy has been highly competent considering the inordinate difficulties faced by Burundi in recent years. The bank of the Republic of Burundi has made progress in the implementation of monetary policies and in the conduct of bank supervision. Progress in implementing structural reforms has been satisfactory overall. Burundi continues to face unsustainably heavy debt-service obligations. The government is gradually rebuilding its administrative capacity.
The following statistical data of Burundi are presented in detail: savings and investment, cotton production, consumption, exports, and prices, production of manufacturing industries, energy production, imports, and consumption, retail prices of petroleum products, minimum wages, import duty exemptions, military expenditure, central government revenue, structure of interest rates, composition of exports and imports, services and transfers, list of public enterprises, structure, volume, and prices of international trade, direction of trade, summary of exchange and trade system, size, composition, and so on.