This paper analyzes Burundi’s Third Review Under the Extended Credit Facility Arrangement and Request for Modification of Performance Criteria. Policy discussions in the program focus on measures to strengthen fiscal performance, which have been reflected in a revised 2013 budget, bolstering public financial and debt management. The report highlights that the macroeconomic outlook remains difficult, compounded by downside risks related to uncertainties in the external economic environment. Also, the need to preserve debt sustainability continues to anchor medium-term fiscal policy.
Mr. Francois Boutin-Dufresne, Santiago Peña, Mr. Oral Williams, and Mr. Tomasz A. Zawisza
This paper examines the determinants of net interest margins in four regional blocks in Sub-Saharan Africa and one comparator block in the Eastern Caribbean. Using bank-level data, we find that countries with a high level of operating costs, a high ratio of equity to total assets and high treasury bill interest rates have higher net interest margins. Moreover, high operating costs are associated with low measures of institutional quality and a small size of bank operations. We find support for the view that market structure is also partly responsible for high net interest margins in Sub-Saharan Africa. If interpreted causally, high operating costs and a high ratio of equity to total assets and, indirectly, institutional factors such as the rule of law, are the most important factors in accounting for high interest margins in the East African Community, relative to other regions.
The global financial crisis has slowed the Burundian economy and a significant decline in inflation. Against the background of the East African Community (EAC) integration, the Article IV Consultation discussions focused on three fundamental themes. IMF staff and authorities agreed on the need to pursue appropriate growth-enhancing reforms. The authorities and staff agreed on the need to continue reforms of wages and employment to bring the wage bill down to sustainable levels. The fourth review was completed based on Burundi’s performance and the strength of the program.
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.