Journal Issue
Share
Article

Burkina Faso: Second and Third Reviews Under the Extended Credit Facility Arrangement, and Request for Augmentation of Access and Modification of Performance Criteria—Debt Sustainability Analysis

Author(s):
International Monetary Fund. African Dept.
Published Date:
July 2015
Share
  • ShareShare
Show Summary Details

Background and Underlying Dsa Assumptions

A. Burkina Faso’s Public Debt Profile and Evolution

1. Despite a slight increase in nominal terms, Burkina Faso’s stock of public debt remained broadly constant as a share of GDP (at around 29 percent), based on preliminary end-2014 data1. Consistent with the government’s tightening fiscal policy, debt accumulation has significantly slowed down in 2014 (Figure 1), with the nominal stock of debt growing only by 2 percent (versus 4 percent projected in the previous DSA projection and 7 percent in 2013). The nominal increase was exclusively driven by external debt, which grew by 4 percent, as opposed to domestic debt which contracted by 4 percent due to tightening liquidity conditions in the regional market.

Figure 1.Growth Rate of Nominal Public Debt in CFAF, 2011-2014

2. Domestic debt remains quite low at 7 percent of GDP, but accounts for a gradually increasing overall share of debt (Table 1). Burkina Faso has made significant progress in tapping the domestic debt market for its financing needs. Since 2007 the share of domestic borrowing in the overall debt stock has increased to around 25 percent. Such progress is the result of consistent efforts to develop the sovereign bond market both at the national and WAEMU levels, in line with the country’s medium term debt strategy.

Table 1.Public Debt, 2007-2014
20072011201220132014 Prel.
(US$ billions)
Public debt1.73.23.23.53.6
External1.52.62.52.62.7
Domestic0.30.60.60.90.8
(CFAF billions)
Public debt8321508161617291760
External7101216129012911341
Domestic122292326438419
(percent of GDP)
Public debt25.629.728.328.728.5
External21.924.022.621.421.7
Domestic3.85.75.77.36.8
(percent of total debt)
External8581807576
Domestic1519202524

3. Most of this debt is concessional and is held by multilateral institutions, with IDA and AFDB accounting for the lion’s share. The IDA and the AFDB account for the largest shares with 29 and 15 percent, respectively, while other multilaterals (excluding the IMF) and bilateral donors respectively combine for 8 and 10 percent. The IMF holds 6 percent of Burkina Faso’s total public debt stock and 8 percent of its external debt.

Figure 2.Public Debt by Creditor

4. Recent appreciation of the US dollar reduces slightly the dollar value of Burkina Faso’s external debt. About one-quarter of external debt is directly or indirectly linked to the dollar, including through its influence on SDR debts (Figure 3). For the remaining non-US dollar denominated debt, the recorded value in dollar terms will decrease with the dollar appreciation. This reduces slightly the dollar value of total external debt.

Figure 3.Public Debt by Currency Denomination

B. DSA Assumptions

5. Macroeconomic projections are, on the whole, less favorable relative to the 2014 DSA, as reflected in Table 2. Gold price projections have dropped by roughly $200/ounce over the long run, while projected prices of cotton decreased by 26% over the same period, leading to lower average exports. Gold production is projected to start declining in 2022, with an impact on exports and mining-related fiscal revenues. This, plus near term impacts on services of Ebola in the region and a much stronger US$ over the medium term (which intensifies the trade deficit) lead to higher current account deficits over the projection period. In the near term, fiscal deficits and debt accrual are much lower than assumed in 2014 as a result of already-observed expenditure adjustment. They are somewhat higher in the medium term as fiscal revenues are impacted, but fiscal revenues recover over the longer term and some spending adjustment is assumed.

Table 2.Changes in assumptions relative to the previous DSA
20142015201620172018203320342035
Gold (USD/ounce)Current DSA (WEO)12661180117211871206128412841284
2014 DSA13271343137013981438148714871487
Cotton prices (cts/lb)Current DSA (WEO)8363656559444444
2014 DSA8579787268585858
Real GDP growth (y/y)Current DSA4.05.06.06.56.66.06.06.0
2014 DSA6.76.87.06.86.76.06.06.0
Current account (% of GDP)Current DSA−6.1−7.6−7.8−7.9−8.0−8.3−8.3−8.3
2014 DSA−7.2−7.0−7.0−7.0−7.1−7.3−7.3−7.3
Overall fiscal balanceCurrent DSA−1.8−2.5−3.0−3.7−4.1−6.1−6.1−6.1
(% of GDP)2014 DSA−3.1−3.1−3.0−3.6−3.8−5.9−5.9−5.9

6. The baseline scenario assumes lower growth prospects relative to the 2014 DSA over the medium run, reflecting the investment spending reductions over 2014-16 due to the combined effects of shocks. Over the long run, growth is assumed to revert to the same trends as in the 2014 DSA (which was already conservative relative to recent historical averages which are closer over 6.5 percent).

7. Relative to the 2014 DSA, more non-concessional financing is assumed in the outer years. The authorities are still strongly committed to seeking concessional financing to the largest extent possible, but it is clear that the supply of such financing will be more constrained. As for the program limit on non-concessional borrowing, about 80 percent of the program limit (CFA 150 billion, or about US$70 million or 2.2 percent of GDP) has been used, mainly to finance a solar plant in Zagtouli and a national road connecting three cities in the northwest, Didyr, Toma and Tougan. Based on similar projects in the planning stages, the authorities are requesting an increase in the program ceiling to CFAF 200 billion (about US$90 million, or 3.0 percent of GDP).

Dsa Results

A. External Debt

8. The basic analysis remains unchanged from the 2014 DSA, with indicators suggesting a moderate risk of debt distress. As in the 2014 DSA, the ratio of debt-to-exports is projected to breach under the most extreme standardized stress test scenario corresponding to a one-standard-deviation drop in exports growth relative to historical levels. All other debt indicator ratios remain comfortably below corresponding thresholds.

9. The strength of the US dollar and changes in macro developments have a mixed impact on debt sustainability. As discussed above, the dollar value of external debt is somewhat reduced as a result of the recent and projected strength of the US dollar. This reduces external debt and debt service ratios in relation to exports, as the dollar value of the latter is less affected by dollar strength (Figure 5). Against this, external debt and debt service indicators deteriorate slightly in relation to GDP and revenues, as the latter decline in dollar terms by proportionately more than external debt as a result of dollar strength (Figure 4). In terms of macro developments, a lower-than-anticipated starting point for nominal external debt in 2014 and lower deficits in the near term due to expenditure compression help strengthen the debt metrics, though this is set against weaker prospects for GDP and export growth and more reliance on non concessional borrowing (see below). Overall, the DSA points to an unchanged moderate risk of external debt distress.

Figure 4.PV of Debt-to-GDP Ratio Under Alternative Exchange Rate Scenario

Figure 5.PV of Debt-to-Exports Ratio Under Alternative Exchange Rate Scenario

10. The authorities’ requests to increase the level of access under the ECF arrangement and increase the program ceiling on non concessional external borrowing (NCB) have no impact on these conclusions. To ensure that the proposed augmentation of access (by CFAF 19.7) and increase of NCB ceiling to CFAF 200 billion (from CFAF 150 billion currently) will not put the sustainability of the country’s debt into jeopardy, staff constructed an alternative baseline scenario integrating both of these changes. The results are visually and substantively similar to our baseline, as summarized for the debt-to-GDP and exports-to-GDP ratios in Figures 4 and 5 below.

Figure 6.PV of Debt-to-GDP Ratio Under Alternative Borrowing Scenario

Figure 7.PV of Debt-to-Exports Ratio Under Alternative Borrowing Scenario

B. Total Public Debt

11. Burkina Faso’s total public debt is expected to remain below indicative thresholds by ample margins. Under the baseline scenario, Burkina Faso’s total public debt stock over GDP is projected to rise steadily to 53 percent by 2035, leaving ample room below the 74 percent benchmark, both under the baseline and stress test scenarios. This profile accommodates an increased tapping of the domestic debt market, with the size of net domestic borrowing projected to increase from an average of 1 percent in recent years to 2.6 percent in 2035.

C. Debt Management

12. Ongoing technical assistance should help strengthen debt management capacity. Although Burkina Faso’s CPIA and PEFA scores reflect a capacity broadly adequate for a low income country, the most recent DEMPA assessment shows that debt management capacity should be strengthened going forward. In particular, given the projected gradual transition from highly concessional financing to more market-based borrowing, the authorities have requested World Bank and IMF TA to strengthen capacity. A Reform Plan under discussion aims at modernizing the structure of DGTCP by consolidating functions spread across several units; improving the quality of the debt management strategy by linking it more closely to the macro program; and making a more efficient use of the regional debt market by reviewing the issuance program and improving the management of the government cash balances. Reforms have not yet been put into place, since these recommendations are still being discussed under ongoing TA.

Conclusion

13. The DSA results indicate that Burkina Faso’s risk of external debt distress remains “moderate.” All relevant ratios remain below indicative thresholds under the baseline scenario. The stress test analysis indentifies risks to the projection only in the case of the debt-to-export ratio, which breaches the 200 percent threshold under a scenario of significant slowdown of exports. The proposed requests for augmentation of access of the ECF arrangement and an increase in the program ceiling on NCB would not change the assessment.

Authorities’ Views

The conclusions of the DSA were shared with the authorities who broadly concurred with the assessment and with maintaining a “moderate” debt risk rating. They stressed that Burkina Faso’s debt management capacity is broadly appropriate for a low income country mostly borrowing in highly concessional terms, but reiterated the need for reinforcement of capacity in anticipation of the country’s gradual transition to market sources.

Figure 8.Burkina Faso: Indicators of Public and Publicly Guaranteed External Debt Under Alternative Scenarios, 2015-2035 1/

Sources: Country authorities; and staff estimates and projections.

1/ The most extreme stress test is the test that yields the highest ratio on or before 2025. In figure b. it corresponds to a One-time depreciation shock; in c. to a Exports shock; in d. to a One-time depreciation shock; in e. to a Exports shock and in figure f. to a One-time depreciation shock

Figure 9.Burkina Faso: Indicators of Public Debt Under Alternative Scenarios, 2015-2035 1/

Sources: Country authorities; and staff estimates and projections.

1/ The most extreme stress test is the test that yields the highest ratio on or before 2025.

2/ Revenues are defined inclusive of grants.

Table 3.Burkina Faso: External Debt Sustainability Framework, Baseline Scenario, 2014-2035 1/(In percent of GDP, unless otherwise indicated)
ActualHist. 6/Std. 6/Projections
Aver.Dev.2015-2020
2014201520162017201820192020Average2021202520302035
External debt (nominal) 1/21.723.623.824.525.525.826.127.130.735.839.8
of which: public and publicly guaranteed (PPG)21.723.623.824.525.525.826.127.130.735.839.8
Change in external debt0.31.90.20.71.00.30.31.00.61.00.7
Identified net debt-creating flows4.35.14.74.64.73.73.74.43.84.23.9
Non-interest current account deficit5.96.43.67.67.57.67.76.76.77.56.97.47.3
Deficit in balance of goods and services9.011.210.610.810.89.79.810.59.79.99.5
Exports21.921.220.720.320.420.620.620.719.217.217.3
Imports30.932.431.331.131.230.330.431.328.927.126.8
Net current transfers (negative = inflow)−3.4−4.80.9−3.9−3.4−3.4−3.3−3.2−3.1−3.1−2.7−2.4−1.8
of which: official−2.1−2.7−2.3−2.3−2.2−2.1−2.1−2.1−1.7−1.4−1.0
Other current account flows (negative = net inflow)0.30.30.30.20.20.10.10.10.0−0.1−0.3
Net FDI (negative = inflow)−1.3−1.41.4−1.7−1.8−1.9−1.9−1.9−1.9−1.9−2.0−2.1−2.2
Endogenous debt dynamics 2/−0.3−0.9−1.0−1.1−1.1−1.1−1.1−1.1−1.1−1.2−1.2
Contribution from nominal interest rate0.20.30.30.30.40.40.40.50.60.81.0
Contribution from real GDP growth−0.8−1.2−1.3−1.4−1.5−1.5−1.5−1.6−1.8−2.0−2.2
Contribution from price and exchange rate changes0.3
Residual (3-4) 3/ with changes in project grants−1.5−0.4−1.7−1.2−1.1−0.9−0.9−0.9−0.9−0.9−0.9
of which: exceptional financing0.00.00.00.00.00.00.00.00.00.00.0
PV of external debt 4/14.315.515.816.417.217.517.818.721.926.630.4
In percent of exports65.273.376.381.184.385.086.590.2114.1155.0175.2
PV of PPG external debt14.315.515.816.417.217.517.818.721.926.630.4
In percent of exports65.273.376.381.184.385.086.590.2114.1155.0175.2
In percent of government revenues82.689.788.188.891.892.594.398.8122.7156.8173.2
Debt service-to-exports ratio (in percent)3.74.94.95.25.55.45.05.05.79.112.1
PPG debt service-to-exports ratio (in percent)3.74.94.95.25.55.45.05.05.79.112.1
PPG debt service-to-revenue ratio (in percent)4.76.15.75.76.05.95.45.56.19.211.9
Total gross financing need (Billions of U.S. dollars)0.70.80.80.91.01.01.01.31.62.84.3
Non-interest current account deficit that stabilizes debt ratio5.65.87.36.96.76.46.46.46.46.56.6
Key macroeconomic assumptions
Real GDP growth (in percent)4.06.01.95.06.06.56.66.66.66.26.66.36.26.0
GDP deflator in US dollar terms (change in percent)−1.53.96.9−13.72.03.03.23.33.80.32.02.02.02.3
Effective interest rate (percent) 5/1.01.00.21.21.31.51.71.81.91.62.02.32.62.8
Growth of exports of G&S (US dollar terms, in percent)−7.819.827.2−12.15.57.510.611.110.85.69.36.88.38.4
Growth of imports of G&S (US dollar terms, in percent)−7.613.116.4−4.94.48.810.47.010.96.111.87.47.58.4
Grant element of new public sector borrowing (in percent)41.435.733.333.733.632.735.132.329.526.622.6
Government revenues (excluding grants, in percent of GDP)17.317.317.918.518.718.918.918.917.917.017.6
Aid flows (in Billions of US dollars) 7/0.60.70.60.70.70.70.80.91.11.42.1
of which: Grants0.50.60.60.60.60.70.70.81.01.31.9
of which: Concessional loans0.10.10.10.10.10.10.10.10.10.10.2
Grant-equivalent financing (in percent of GDP) 8/5.85.75.75.65.25.25.34.64.44.3
Grant-equivalent financing (in percent of external financing) 8/82.775.970.468.269.969.567.965.557.952.9
Memorandum items:
Nominal GDP (Billions of US dollars)12.511.312.213.414.816.318.019.627.240.660.3
Nominal dollar GDP growth2.5−9.48.19.810.010.110.76.58.78.58.38.5
PV of PPG external debt (in Billions of US dollars)1.71.81.92.22.62.93.23.76.010.918.5
(PVt-PVt-1)/GDPt-1 (in percent)0.81.62.32.52.12.31.92.52.53.13.3
Gross workers’ remittances (Billions of US dollars)0.20.20.20.20.20.20.20.20.30.40.5
PV of PPG external debt (in percent of GDP + remittances)14.015.315.616.217.017.317.618.521.726.330.1
PV of PPG external debt (in percent of exports + remittances)61.168.771.776.279.380.181.785.2107.9146.4166.7
Debt service of PPG external debt (in percent of exports + remittances)3.54.64.64.95.25.14.74.75.48.611.5
Sources: Country authorities; and staff estimates and projections.

Includes both public and private sector external debt.

Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.

Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate change

Assumes that PV of private sector debt is equivalent to its face value.

Current-year interest payments divided by previous period debt stock.

Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.

Defined as grants, concessional loans, and debt relief.

Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).

Sources: Country authorities; and staff estimates and projections.

Includes both public and private sector external debt.

Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.

Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate change

Assumes that PV of private sector debt is equivalent to its face value.

Current-year interest payments divided by previous period debt stock.

Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.

Defined as grants, concessional loans, and debt relief.

Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).

Table 4.Burkina Faso: External Debt Sustainability Framework, Baseline Scenario, 2014-2035 1/(In percent of GDP, unless otherwise indicated)
ActualEstimateProjections
2015-20
201220132014201520162017201820192020Average202520302035
Public sector debt 1/28.328.728.533.532.333.334.235.436.042.951.962.4
of which: foreign-currency denominated22.621.421.723.623.824.525.525.826.130.735.839.8
Change in public sector debt−1.50.3−0.24.9−1.21.00.91.20.61.62.21.8
Identified debt-creating flows−0.21.03.52.60.30.91.20.90.71.41.81.4
Primary deficit2.63.01.21.82.43.23.63.53.53.03.94.64.9
Revenue and grants22.423.921.422.322.623.023.023.023.021.420.220.7
of which: grants4.95.44.25.04.74.54.34.14.13.63.33.2
Primary (noninterest) expenditure25.026.922.624.025.026.226.626.526.525.324.925.6
Automatic debt dynamics−2.7−2.02.30.9−2.0−2.3−2.4−2.5−2.7−2.5−2.9−3.6
Contribution from interest rate/growth differential−2.8−1.0−0.1−1.0−1.9−2.0−2.2−2.2−2.3−2.5−2.9−3.6
of which: contribution from average real interest rate−1.00.71.00.40.0−0.1−0.1−0.1−0.10.00.0−0.1
of which: contribution from real GDP growth−1.8−1.8−1.1−1.4−1.9−2.0−2.1−2.1−2.2−2.5−2.9−3.4
Contribution from real exchange rate depreciation0.1−0.92.41.9−0.2−0.2−0.3−0.3−0.4
Other identified debt-creating flows0.00.00.00.00.00.00.00.00.00.00.00.0
Privatization receipts (negative)0.00.00.00.00.00.00.00.00.00.00.00.0
Recognition of implicit or contingent liabilities0.00.00.00.00.00.00.00.00.00.00.00.0
Debt relief (HIPC and other)0.00.00.00.00.00.00.00.00.00.00.00.0
Other (specify, e.g. bank recapitalization)0.00.00.00.00.00.00.00.00.00.00.00.0
Residual, including asset changes−1.3−0.7−3.72.3−1.50.1−0.30.3−0.10.20.40.4
Other Sustainability Indicators
PV of public sector debt21.025.424.325.225.927.127.834.142.653.0
of which: foreign-currency denominated14.315.515.816.417.217.517.821.926.630.4
of which: external14.315.515.816.417.217.517.821.926.630.4
PV of contingent liabilities (not included in public sector debt)
Gross financing need 2/4.04.83.64.55.25.55.55.34.95.16.37.2
PV of public sector debt-to-revenue and grants ratio (in percent)98.3113.9107.4109.6112.5117.7120.7159.5210.9256.1
PV of public sector debt-to-revenue ratio (in percent)122.0146.6135.6136.2138.4143.2146.8191.3251.6302.0
of which: external 3/82.689.788.188.891.892.594.3122.7156.8173.2
Debt service-to-revenue and grants ratio (in percent) 4/6.67.511.112.312.510.08.27.86.45.68.410.9
Debt service-to-revenue ratio (in percent) 4/8.59.613.715.815.812.410.19.57.86.710.012.9
Primary deficit that stabilizes the debt-to-GDP ratio4.02.71.4−3.23.52.22.72.32.82.32.53.1
Key macroeconomic and fiscal assumptions
Real GDP growth (in percent)6.56.64.05.06.06.56.66.66.66.26.36.26.0
Average nominal interest rate on forex debt (in percent)1.21.01.01.21.31.51.71.81.91.62.32.62.8
Average real interest rate on domestic debt (in percent)−0.86.07.36.01.30.6−0.3−0.4−1.01.0−1.0−1.1−1.4
Real exchange rate depreciation (in percent, + indicates depreciation)0.5−4.311.29.0
Inflation rate (GDP deflator, in percent)5.8−0.8−1.61.31.92.02.02.02.01.92.02.02.3
Growth of real primary spending (deflated by GDP deflator, in percent)17.515.1−12.611.510.211.68.36.16.69.04.16.46.3
Grant element of new external borrowing (in percent)41.435.733.333.733.632.735.129.526.622.6
Sources: Country authorities; and staff estimates and projections.

[Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.]

Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.

Revenues excluding grants.

Debt service is defined as the sum of interest and amortization of medium and long-term debt.

Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.

Sources: Country authorities; and staff estimates and projections.

[Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.]

Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.

Revenues excluding grants.

Debt service is defined as the sum of interest and amortization of medium and long-term debt.

Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.

Table 5.Burkina Faso: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2015-35(In percent)
Projections
20152016201720182019202020252035
PV of debt-to GDP ratio
Baseline1616161717182230
A. Alternative Scenarios
A1. Key variables at their historical averages in 2015-2035 1/1615151516171924
A2. New public sector loans on less favorable terms in 2015-2035 21617182021223045
B. Bound Tests
B1. Real GDP growth at historical average minus one standard deviation in 2016-20171616171818192332
B2. Export value growth at historical average minus one standard deviation in 2016-2017 3/1618222222222632
B3. US dollar GDP deflator at historical average minus one standard deviation in 2016-20171617181920202534
B4. Net non-debt creating flows at historical average minus one standard deviation in 2016-2017 4/1617181919202331
B5. Combination of B1-B4 using one-half standard deviation shocks1616181919202433
B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/1622232425253143
PV of debt-to-exports ratio
Baseline737681848587114175
A. Alternative Scenarios
A1. Key variables at their historical averages in 2015-2035 1/73737575778099140
A2. New public sector loans on less favorable terms in 2015-2035 273808997101106154261
B. Bound Tests
B1. Real GDP growth at historical average minus one standard deviation in 2016-2017737781858687115177
B2. Export value growth at historical average minus one standard deviation in 2016-2017 3/7397142145144144176242
B3. US dollar GDP deflator at historical average minus one standard deviation in 2016-2017737781858687115177
B4. Net non-debt creating flows at historical average minus one standard deviation in 2016-2017 4/738190939495121179
B5. Combination of B1-B4 using one-half standard deviation shocks737684878890117178
B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/737781858687115177
PV of debt-to-revenue ratio
Baseline908889929294123173
A. Alternative Scenarios
A1. Key variables at their historical averages in 2015-2035 1/908482828488106139
A2. New public sector loans on less favorable terms in 2015-2035 2909298106110116165258
B. Bound Tests
B1. Real GDP growth at historical average minus one standard deviation in 2016-2017909093969799129182
B2. Export value growth at historical average minus one standard deviation in 2016-2017 3/9099118119118119144181
B3. US dollar GDP deflator at historical average minus one standard deviation in 2016-20179093100103104106138195
B4. Net non-debt creating flows at historical average minus one standard deviation in 2016-2017 4/909499102102103131177
B5. Combination of B1-B4 using one-half standard deviation shocks909198101102103134187
B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/90125126131132135175248
Debt service-to-exports ratio
Baseline555655612
A. Alternative Scenarios
A1. Key variables at their historical averages in 2015-2035 1/55555559
A2. New public sector loans on less favorable terms in 2015-2035 2555666818
B. Bound Tests
B1. Real GDP growth at historical average minus one standard deviation in 2016-2017555655612
B2. Export value growth at historical average minus one standard deviation in 2016-2017 3/567887917
B3. US dollar GDP deflator at historical average minus one standard deviation in 2016-2017555655612
B4. Net non-debt creating flows at historical average minus one standard deviation in 2016-2017 4/555665612
B5. Combination of B1-B4 using one-half standard deviation shocks555665612
B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/555655612
Debt service-to-revenue ratio
Baseline666665612
A. Alternative Scenarios
A1. Key variables at their historical averages in 2015-2035 1/66666559
A2. New public sector loans on less favorable terms in 2015-2035 2666676917
B. Bound Tests
B1. Real GDP growth at historical average minus one standard deviation in 2016-2017666666612
B2. Export value growth at historical average minus one standard deviation in 2016-2017 3/666776713
B3. US dollar GDP deflator at historical average minus one standard deviation in 2016-2017666776713
B4. Net non-debt creating flows at historical average minus one standard deviation in 2016-2017 4/666666712
B5. Combination of B1-B4 using one-half standard deviation shocks666666713
B6. One-time 30 percent nominal depreciation relative to the baseline in 2016 5/688988917
Memorandum item:
Grant element assumed on residual financing (i.e., financing required above baseline) 6/2727272727272727
Sources: Country authorities; and staff estimates and projections.

Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.

Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.

Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly a an offsetting adjustment in import levels).

Includes official and private transfers and FDI.

Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.

Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.

Sources: Country authorities; and staff estimates and projections.

Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.

Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.

Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly a an offsetting adjustment in import levels).

Includes official and private transfers and FDI.

Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.

Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.

Table 6.Burkina Faso: Sensitivity Analysis for Key Indicators of Public Debt, 2015-35(In percent)
Projections
20152016201720182019202020252035
PV of Debt-to-GDP Ratio
Baseline2524252627283453
A. Alternative scenarios
A1. Real GDP growth and primary balance are at historical averages2524232323222226
A2. Primary balance is unchanged from 20152524242323232428
A3. Permanently lower GDP growth 1/2524262628293866
B. Bound tests
B1. Real GDP growth is at historical average minus one standard deviations in 2016-20172525272830314062
B2. Primary balance is at historical average minus one standard deviations in 2016-20172529333334343956
B3. Combination of B1-B2 using one half standard deviation shocks2526292931323959
B4. One-time 30 percent real depreciation in 20162530303031313554
B5. 10 percent of GDP increase in other debt-creating flows in 20162532323233343956
PV of Debt to Revenue Ratio 2/
Baseline114107110113118121160256
A. Alternative scenarios
A1. Real GDP growth and primary balance are at historical averages114104101989896103123
A2. Primary balance is unchanged from 201511410510310010199111137
A3. Permanently lower GDP growth 1/114108111115121126177313
B. Bound tests
B1. Real GDP growth is at historical average minus one standard deviations in 2016-2017114110117122129135185299
B2. Primary balance is at historical average minus one standard deviations in 2016-2017114126143144147148183270
B3. Combination of B1-B2 using one half standard deviation shocks114116123127133137181284
B4. One-time 30 percent real depreciation in 2016114134132131133133166259
B5. 10 percent of GDP increase in other debt-creating flows in 2016114140141141145146182269
Debt Service-to-Revenue Ratio 2/
Baseline121210886611
A. Alternative scenarios
A1. Real GDP growth and primary balance are at historical averages12121087532
A2. Primary balance is unchanged from 201512121087534
A3. Permanently lower GDP growth 1/121310887614
B. Bound tests
B1. Real GDP growth is at historical average minus one standard deviations in 2016-2017121310997714
B2. Primary balance is at historical average minus one standard deviations in 2016-201712121112118612
B3. Combination of B1-B2 using one half standard deviation shocks1213101097613
B4. One-time 30 percent real depreciation in 201612131210109817
B5. 10 percent of GDP increase in other debt-creating flows in 20161212111398612
Sources: Country authorities; and staff estimates and projections.

Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.

Revenues are defined inclusive of grants.

Sources: Country authorities; and staff estimates and projections.

Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.

Revenues are defined inclusive of grants.

Burkina Faso’s public debt statistics cover external debt issued by the general government (including fully stateowned enterprises) and domestic debt contracted by the central government. External debt is defined on a currency basis, except for liabilities to the BOAD which register as external debt despite being denominated in CFA given the international standing of the institution. Burkina Faso’s policy performance is ranked “strong” by the CPIA with a score of 3.8, stable over the last 5 available rankings (2009-2013).

Other Resources Citing This Publication