Abstract
IMF Country Report No. 22/258
Copyright Page
IMF Country Report No. 22/258
BURUNDI
SELECTED ISSUES
July 2022
This Selected Issues paper on Burundi was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member countries. It is based on the information available at the time it was completed on July 7, 2022.
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Title page
BURUNDI
SELECTED ISSUES
July 7, 2022
Approved By
The African Department
Prepared By Jacques Bouhga-Hagbe, Mouhamadou Moustapha Ly, Jocelyn Koussere, Belyse Kwizera, and Nikhil Patel. Assistance was provided by Sandrine Ourigou, Rohan Ahluwalia, Jorge Guzman, Cecilia Prado, and Hatem Alsokhebr (all AFR).
Contents
ECONOMIC GROWTH, FRAGILITY, AND NON-PRICE COMPETITIVENESS
A. Growth Dynamics
B. Drivers of Fragility
C. Non-Price Competitiveness
FIGURES
1. Evolution of Real GDP per Capita, 2005–20
2. Baseline Average Real GDP Growth and Sector
3. Growth Accounting, 2000–19
4. Climate Shocks, Agriculture, and Real GDP, Growth, 2000–20
5. Overall Macroeconomic Competitiveness in 2019
PROTECTING SOCIAL SECTORS AND STRENGTHENING FISCAL AND GOVERNANCE FRAMEWORKS
A. Government Spending on Social Sectors
B. Recent Revenue, Spending, and PFM Measures
C. Key Features of the Public Procurement Law in Burundi
D. Governance Institutions in Burundi
THE PARALLEL FOREIGN EXCHANGE MARKET IN BURUNDI AND THE PATH TOWARDS REFORM
A. Overview
B. Parallel FX Markets: Occurrence, Pros, and Cons
C. Channels of Transmission of Exchange Rates
D. Equilibrium Exchange Rate
E. Speed of Adjustment and Managing the Transition
F. Importance of a Robust and Sustainable Macroeconomic Framework
BOX
1. Quantifying Nominal Exchange Rate Adjustments to Address a Given Real Misalignment
FIGURES
1. Historical Occurrences of Large FX Market Premia
2. FX Mismatches in the Financial Sector
3. Exchange Rate Premiums and Passthrough in Peer Countries
4. Central Bank Tightening to Curb Inflation
References
FINANCIAL SECTOR: CURRENT LANDSCAPE AND VULNERABILITIES
A. Key Features of the Banking Sector
B. Non-Bank Sector Landscape
C. Efficiency in Financing the Economy
FIGURE
1. Sectoral Shares and Maturity Profile of Outstanding Credit, 2021
MONETARY POLICY FRAMEWORK AND OPERATIONS DURING THE PANDEMIC
A. Monetary Policy Objectives
B. Policy Instruments
C. Monetary Policy Operations and Stance in 2021
FIGURE
1. Volume of BRB Interventions, 2019–21