The Executive Board of the International Monetary Fund (IMF) has completed the fourth review of Burundi’s economic performance under the program supported by the Extended Credit Facility (ECF). The Executive Board’s decision, which was taken without a meeting,1 will allow for the disbursement of an amount equivalent to SDR 5 million (about US$7.7 million), bringing disbursements under the arrangement to an amount equivalent to SDR 20 million (about US$30.9 million). Burundi’s three-year ECF arrangement was approved on January 27, 2012 (See Press Release No.12/35).
Burundi’s economic recovery continues to gain momentum in the aftermath of the food and fuel shocks. Growth improved at an estimated 4.5 percent in 2013 and is projected at 4.7 percent in 2014, underpinned by the agriculture and construction sectors as well as the implementation of major infrastructure projects, including fiber optics, hydropower, and roads. There are also signs of uptick in tourist arrivals. Headline inflation declined from its peak of 25 percent in March 2012 to about 9 percent at end-2013, in the context of stable monetary and exchange rate conditions, and notable improvements in commercial banks’ liquidity. International reserves fell to about 3.5 months of imports following a 38.2 percent cumulative deterioration in the terms of trade during 2012–13.
The implementation of swift corrective measures in July 2013 in response to revenue slippages was instrumental in putting the program back on track. Revenue collections, which also benefitted from the pickup in economic activity, increased by about 6 percent (year-on-year) at end-2013, outperforming program targets, and placing the 2014 budget on a sounder footing. Expenditures were broadly contained.
Program performance was satisfactory. All end-September 2013 performance criteria and indicative targets were observed, including the indicative target on pro-poor expenditure.
Satisfactory progress was made in the implementation of structural reforms. The streamlining of customs procedures at three recently established border posts with Rwanda and Tanzania is expected to ease transportation bottlenecks and lower costs of doing business. Progress was made in enhancing treasury and financial safeguards.
The macroeconomic outlook remains difficult, and external vulnerabilities persist in the context of lower international coffee prices and the narrow export base. Economic activity is projected to improve further in 2014, while the inflation outlook, absent poor harvests, remains favorable, owing to lower projected international food and fuel prices. Policy reversals of recently adopted measures, expenditure pressures in the run-up to the 2015 elections, and slippages in the implementation of structural reforms could jeopardize the macroeconomic outlook.
The Executive Board takes decisions without a meeting when it is agreed by the Board that a proposal can be considered without convening formal decisions.