Abstract
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.
The Executive Board of the International Monetary Fund (IMF) today completed the fourth review of Burundi’s economic performance under a program supported by the Extended Credit Facility (ECF)1. The Board’s decision enables the government to request a disbursement for an amount equivalent to SDR 6.6 million (about US$10 million), bringing total disbursements to Burundi under the program to an amount equivalent to SDR 33 million (about US$49.9 million). The Executive Board also approved the modification of performance criteria.
The Executive Board also concluded the 2010 Article IV consultation. Details of the findings of the Article IV will be published in a Public Information Notice in due course.
The ECF arrangement for Burundi was approved in July 2008, (see Press Release. No 08/167) for an amount equivalent to SDR 46.2 million (about US$69.9 million).
At the conclusion of the Board’s discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated:
“The Burundian authorities are to be commended for the strong performance under their ECF-supported program against the backdrop of the global financial crisis and a difficult post-conflict environment. Burundi’s economic outlook is positive, supported by strengthened reforms and governance, as well as efforts to continue to improve security conditions. Solid policy implementation will be key to meeting Burundi’s economic challenges over the medium term, and continued donor assistance will be necessary to support the authorities’ efforts.
“Given the high risk of debt distress, it is important to anchor medium-term fiscal policy to debt sustainability and rely on grant and concessional financing. Improvements in governance, including strengthened public financial management, will be critical. The authorities plan to further align spending with the PRSP priority sectors and enhance capacity in social services delivery, with support from the international community.
“Decisive progress on structural reform will be critical to raise Burundi’s competitiveness and achieve sustained growth and poverty reduction. The authorities’ plan to refocus capital spending on key infrastructure is appropriate. It will also be important to enhance the business environment, strengthen the financial sector, continue reforms in the coffee sector, and proceed with integration into the East African Community”, Mr. Portugal added.
The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design features, and more focused streamlined conditionality Financing under the ECF currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years The Fund reviews the level of interest rates for all concessional facilities every two years.