Statement by Mr. Yambaye, Executive Director for Burkina Faso and Mr. Diakite, Advisor to the Executive Director, June 10, 2016

Growth is projected to increase moderately from 4 percent in 2014-15 to 5.2 percent in 2016, as the broad-based recovery anticipated in the wake of the November elections has been dampened by the January terrorist attacks. Following almost two years of political crisis and transition, the central policy challenge facing the authorities is to create the necessary fiscal space to deliver tangible improvements in the quality of life of the Burkinabè people.


Growth is projected to increase moderately from 4 percent in 2014-15 to 5.2 percent in 2016, as the broad-based recovery anticipated in the wake of the November elections has been dampened by the January terrorist attacks. Following almost two years of political crisis and transition, the central policy challenge facing the authorities is to create the necessary fiscal space to deliver tangible improvements in the quality of life of the Burkinabè people.

Our Burkinabe authorities are thankful to the Executive Board, Management, and staff for the valuable policy advice, as well as for the technical and financial assistance they receive from the Fund. It is worth stressing that despite the period of instability in 2014 and 2015, and the degradation of the security situation following the terrorist attack of January 2016, the transition authorities have been able to maintain a satisfactory macroeconomic performance. The fourth and fifth reviews under the program supported by the Extended Credit Facility (ECF) have shown that all the performance criteria and indicative targets except one were met and that continued progress was made with regards to most structural benchmarks.

The current Government appointed after the presidential and legislative elections of November 2015 is determined to continue implementing sound economic and financial policies in the context of their new national economic and social development plan (PNDS 2016-20). The social expectations in the country are very high and the PNDS is intended to be the basis of the Government’s medium-term economic policies and will prioritize its efforts to fight poverty and create the conditions for inclusive growth. The authorities will seek the support of the international community for their development plans at a roundtable conference they intend to organize later this year.

Recent Economic and Financial Developments and Performance under the ECF.

Recent economic and financial developments

In 2015, Real GDP growth remained steady at 4 percent as economic activity continued to feel the various chocks experienced during the preceding year. In 2014, the economy was adversely impacted by the unfavorable rainfall, the fall in cotton and gold prices, the Ebola epidemic in the region and the appreciation of the dollar against the CFA franc. Furthermore, the wait-and-see attitude of major private actors during the transition period became more pronounced following the attempted putsch of September 2015. The secondary and tertiary sectors were the most impacted while agricultural output declined (6.3 percent for cereal production and 11 percent for cash crops). Despite the slight increase in the CFA value of gold and cotton prices as the dollar appreciated, this was not sufficient to accelerate growth which remained below its ten-year average for the second consecutive year. Annual inflation remained very moderate at 0.9 percent at end 2015.

This sluggish economic situation was reflected in the credit to the private sector which increased by only 7 percent compared to 20-25 percent in recent years. Net foreign assets increased by 72.9 percent at end-December 2015 and correspondingly, broad money increased by 19.9 percent during the same period.

In the external sector, the current account of the balance payment improved significantly in 2015 with a deficit of 6.4 percent of GDP compared to 11 percent in 2013. Exports increased by 3.1 percent and the appreciation of the dollar compensated partially the fall in cotton and gold prices. Imports increased by 2 percent in spite of the drop in oil prices.

With regard to the fiscal sector, the overall fiscal deficit (commitment basis) improved during the period 2013 to 2015 from 3.5 percent of GDP to 2.1 percent, mainly due to a significant decrease in public investment (both externally and domestically financed) which fell from 8.5 percent of GDP in 2014 to 7 percent in 2015 (compared to 14.2 percent in 2013).

Performance under the ECF program

Despite the difficult political and security situation, the performance under the ECF program continues to be satisfactory. All quantitative performance criteria (PCs) at end-June and December 2015 were met. Regarding indicative targets, they were all met with the exception of the floor on Government revenue.

With regards to structural benchmarks, seven out of the 11 benchmarks for 2015 were completed and most of the remaining benchmarks are being implemented. This is the case notably for the standardized invoicing which will be required of medium and large enterprises, as well as the technical measure aimed at securing the transport of hydrocarbons by the public company SONABHY. Of the additional four benchmarks planned during the period January to March 2016, three are being implemented and one was completed.

Medium-term economic and financial policies.

National economic and social development plan (PNDS)

The PNDS being finalized will be the new reference framework for all development interventions. It will aim at implementing during the period 2016-2020 the vision “Burkina 2025” of the authorities while integrating the changes which occurred in recent years in the global and national development agenda. It follows the strategy for accelerated growth and sustained development (SCADD) which covered the period 2011-2015. The SCAAD focused on the four strategic axes: (i) developing the engines of accelerated growth; (ii) consolidating human capital and promoting social protection; (iii) strengthening governance; and (iv) addressing cross-cutting priorities in development policies and programs.

The PNDS will build on the achievements of the SCAAD as well as identify new growth initiatives. It will be the reference to guide national stakeholders as well as development partners in the policy dialogue and the mobilization of resources for financing development.

Economic and financial policies for 2016

Real GDP projections for 2016-17 have been revised downwards due to the persistence of the effects of shocks, notably the terrorist attacks and low prices for primary commodities. Growth is projected at 5.2 percent in 2016 compared to 6 percent expected during the second and third reviews. The rebound of economic activity relative to the 2015 should be fueled by the manufacturing and services sectors following the successful political transition and the operations of 2 new mining companies. In 2017, real GDP growth is projected at 6 percent pulled by the mining sector and the implementation of the public investment projects envisaged in the new PNDES. Although the economic landscape will remain difficult due to the low prices of cotton and gold, they are committed to implement the PNDES to respond to the basic needs of the population and also pursue the efforts started during the transition period in the areas of public finance management and governance.

In the fiscal sector, the authorities intend to maintain a prudent fiscal policy in compliance with the convergence criteria of the West African Economic and Monetary Union (WAEMU) and debt sustainability. The revised budget law (LFR) approved in April 2016 aims at increasing the fiscal space for priority social, infrastructure and security investments. On that basis, the authorities will strive to increase revenue notably by stepping up their efforts to broaden the tax base through the new segmentation of enterprises, strengthening tax inspections, improving revenue collection and cross checking systematically tax and customs information provided by tax payers. In order to reduce fiscal risks, the authorities will closely monitor the mobilization of additional revenues and identify non-priority expenditures that could be put on hold.

With regards to spending, several reforms are envisaged in order to streamline current expenditures and generate savings including on fuel, vehicles, telecommunications and missions. The authorities also intend to pursue their efforts to control the wage bill notably by consolidating the biometric enrolment of government employees, computerize the payroll, and increase efficiency by redeploying staff from redundant to underserved areas.

Other reforms are envisaged to build on the progress made in the payment of arrears in 2015. The authorities will continue their efforts to improve cash management and planning to minimize the risks of accumulating new arrears. The actions taken to make available treasury assets held by the postal agency (SONAPOST) will be pursued including the suspension of compensation operations, repatriation of assets, and the completion of an audit to assess the capacity of the SONAPOST to return treasury assets.

On debt policy, the authorities will aim at maintaining debt ratios at sustainable levels while implementing their priority investments projects in energy, telecommunications, hydraulic, agriculture and road infrastructure. They will continue to diversify borrowing sources and rely primarily on grants and concessional loans in addition to increasing the non-concessional debt ceiling to CFA 230 billion to account for new projects. With regards to bonds and treasury bills issuance, the authorities took advantage of favorable conditions on the regional financial market and began to extend maturities from 3 to 6 months to 1 to 2 years. At the same time, they are cognizant of the need to strengthen the planning and monitoring of these operations and reinforce the capacities of the Debt Directorate in this regard. On a larger scale, the authorities intend to build the capacities of all stakeholders involved in the domestic and external debt process and update analytical and management tools.

With regards to structural reforms, the authorities will continue to implement important measures in support of private sector development, notably in the energy and cotton sectors. One of the main priorities will be to improve the financial situation of the public electricity company (SONABEL), clarify and simplify the financial relations between SONABEL and the State and the oil importing company (SONABHY) and the government. The measures envisaged should allow SONABEL to benefit from the decline in oil prices, manage efficiently the new investments in the energy sector and prevent the accumulation of arrears. The authorities will also work towards restoring the financial viability of the cotton sector. They intend to recapitalize the stabilization fund and make it financially sustainable in the long term to be able to address the cyclical fluctuations in cotton prices.


Our Burkinabe authorities remain committed to the objectives of the ECF program. As noted in the staff report, the authorities’ commitment to the program has remained exemplary under difficult circumstances. The authorities will continue to implement the reforms aimed at achieving strong economic growth, preserve macroeconomic stability and improve public financial management as well as the business environment. In view of the satisfactory progress under the ECF arrangement and the commitment of the authorities we would appreciate Directors’ support for the completion of the fourth and fifth reviews and modification of performance criteria.