- ■ Performance under the Extended Credit Facility (ECF)-supported program remains satisfactory.
- ■ Growth is expected to stabilize at 6.0 percent in 2019 and over the medium term, but downside risks are high, given the security challenges the country is facing.
- ■ The budget deficit is expected to remain anchored by the West African Economic and Monetary Union (WAEMU) limit of 3 percent of GDP in both 2019 and 2020.
The Executive Board of the International Monetary Fund (IMF) completed today the third review of Burkina Faso’s performance under the program supported by the Extended Credit Facility (ECF) on a lapse-of-time basis1. The completion enables the release of SDR18.06 million (about US$24.9 million), bringing total disbursements under the arrangement to SDR72.24 million (about US$99.5 million).
Burkina Faso’s three-year ECF arrangement for SDR108.36 million (about US$149.3 million or 90 percent of the country’s quota) was approved on March 14, 2018 (see Press Release No. 18/86). The program aims at creating fiscal space for priority spending by strengthening revenue mobilization, containing current spending and improving the efficiency of public investment.
Policies and reform implementation under the ECF-supported program have been satisfactory. All end-June 2019 quantitative performance criteria and indicative targets were met as well as all, but one, structural benchmarks throughout end-November 2019.
Notwithstanding security challenges, economic growth remains resilient and is expected to stabilize at 6 percent in 2019 and over the medium term. Inflation is expected to be negative in 2019, owing to food price deflation following recent good harvests, and to rebound in 2020. However, the security crisis poses risks to the growth outlook and to the authorities’ reform agenda.
The fiscal stance is expected to remain anchored in 2019 and 2020 by the WAEMU convergence criterion for the fiscal deficit of 3 percent of GDP. Budget implementation in 2019 has been broadly in line with program targets, partially helped by windfall nontax revenue. Sustained revenue and expenditure efforts in 2020 should partly offset the expected decline in windfall nontax revenues, thereby creating fiscal space for critical public investment, social sector priorities, and security spending. The authorities are committed to step up efforts to broaden the tax base through further simplification and computerization of the tax system, to establish a treasury single account to improve cash management, and to strengthen institutional capacity and coordination for public financial management reforms.
Reforms to curb wage bill growth are advancing in some areas, including the implementation of transitional measures to help bring down the wage bill relative to tax revenues. However, progress toward the adoption of the overall reform package is limited. Pending approval of this overall reform package, the authorities are committed to refrain from any new agreements on wages or allowances outside of the security sector. In the meantime, dialogue with stakeholders should continue with a view to building consensus around the authorities’ medium-term reform package.
The gradual implementation of the fuel price adjustment mechanism is expected to reduce the burden of fuel subsidies on the state budget. With a view to improving the government’s ability to provide timely and targeted support for the most vulnerable, the authorities intend to step up efforts to rationalize existing social safety net programs and improve the targeting of beneficiaries.
Broader structural reforms are required to boost productivity, competitiveness, and inclusive growth. In this context, the authorities are committed to expand financial inclusion, a key policy priority for poverty reduction and private sector-led growth.
The Executive Board takes decisions under its lapse-of-time procedure when a proposal can be considered without convening formal discussions.