Abstract
Spending on social sectors has remained a top priority in Burundi, despite the economic challenges of recent years, including from the COVID-19 pandemic. As a result, key indicators in the health and education sectors point to notable improvements. Measures have also been taken to support employment.
Protecting Social Sectors and Strengthening Fiscal and Governance Frameworks1
A. Government Spending on Social Sectors
Spending on social sectors has remained a top priority in Burundi, despite the economic challenges of recent years, including from the COVID-19 pandemic. As a result, key indicators in the health and education sectors point to notable improvements. Measures have also been taken to support employment.
1. Social sectors (health, education, water, hygiene, sanitation, and social protection) are one of the priorities of the Burundian government retained in the National Development Plan of Burundi 2018–2027. The authorities have taken significant measures in recent years in favor of these sectors, notably: (i) providing free primary education; (ii) creating the education support fund; (iii) providing free health care for children under five and women giving birth; (iv) providing social protection to state pensioners and vulnerable people; (v) providing free care and medication for certain diseases such as malaria, leprosy, tuberculosis, HIV/AIDS; and (vi) revitalizing the institutional, legal and regulatory framework for social protection. In addition, considerable efforts have been made to strengthen the health infrastructure, including extending hospitals in all municipalities in the provinces. In the education sector, the authorities have built and equipped schools, provided free textbooks to students, recruited new teachers, and integrated graduates into higher education.
2. As a result, certain indicators in the health and education sectors have improved. According to WHO indicators, between 2018 and 2020 (the latest year available) for example, (i) neonatal mortality rate (per 1000 live births) decreased from 21.8 to 20.9; (ii) the infant mortality rate (probability of dying between birth and age 1 per 1000 live births) decreased from 41.3 percent to 38.6 percent; and (iii) under-five mortality rate (probability of dying by age 5 per 1000 live births) decreased from 59 percent to 54.4 percent. Immunization coverages for children have also been high. According to UNESCO indicators, the gross enrollment rate in pre-primary education increased from 15.4 percent in 2018 to 16.5 percent in 2019 (the latest year available), and up from 8.1 percent in 2011. In primary education, gross enrollment rates have remained well above 100 percent. In secondary education, the gross enrollment rate slightly declined between 2018 and 2019 (from 48.5 percent to 45.1 percent) but significantly increased from the 2011 level of 26.1 percent. Gross enrollment rates in tertiary education have remained low in recent years (around 5 percent or below).
3. The COVID pandemic has added significant pressures on health spending. Since July 6, 2020, a national mass screening campaign for COVID-19 for people showing signs of this disease was launched, under the theme “I protect myself, I don’t contaminate anyone and once contaminated, I must heal". A single common COVID-19 response fund has also been set up for any partner wishing to support Burundi and a related account has been opened at the Bank of the Republic of Burundi. As of October 8, 2021, inflows to this account (BIF 58.9 billion or 0.9 percent of GDP) were from the Government (BIF 15 billion or 0.2 percent of GDP), IMF CCRT grants (BIF 39.3 billion or 0.6 percent of GDP) and fees collected for COVID tests (BIF 4.6 billion or 0.07 percent of GDP). Spending from this account starting on December 24, 2020, and ending on October 8, 2021, total about BIF 25 billion or 0.4 percent of GDP.
4. The authorities are also taking initiatives to support employment. In particular, they created the Investment Bank for Young People (Banque d’Investissements pour les Jeunes), the Investment and Development Bank for Women (Banque d’Investissement et de Développement pour les Femmes) and the Guarantee and Support Impulse Fund to support cooperatives in young people (Fonds d’Impulsion de Garantie et d’Accompagnement). Other projects supporting employment are also being implemented by the authorities with donor support, notably the economic transformation and employment project in Burundi, which is supported by the World Bank, the rural entrepreneurship, which will be financed by IFAD, as well as the agro-pastoral entrepreneurship and professional development project for young people, which is supported by the African Development Bank.
5. Budget allocations to social sectors in recent years are presented in Text Table 1. In general, budget execution rates have exceeded 90 percent in social sectors, reflecting a relatively high absorption capacity of budget appropriations. Budgeted spending was significantly affected by the 2015 political crisis and the subsequent withdrawal of donor support. It declined from 12.8 percent of GDP in 2015 to 7.3 percent of GDP in 2016, before resuming its increase to stabilize around 9 percent of GDP or about a third of total spending since 2017. Most of the spending is allocated to the education and health sectors, which accounts for almost all of social spending.
Burundi: Budget Allocation for Social Sectors1
(In percent of GDP)
Includes spending from both domestic resources and donor support.
Burundi: Budget Allocation for Social Sectors1
(In percent of GDP)
| 2015 | 2016 | 2017 | 2018/19 | 2019/20 | 2020/21 | 2021/22 | |
|---|---|---|---|---|---|---|---|
| Health | 4.9 | 2.0 | 3.0 | 3.1 | 3.0 | 3.6 | 3.3 |
| Education | 6.7 | 5.0 | 5.2 | 5.5 | 5.6 | 5.1 | 5.0 |
| Water, hygiene and sanitation | 0.8 | 0.1 | 0.3 | 0.2 | 0.2 | 0.2 | 0.2 |
| Social protection | 0.5 | 0.2 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 |
| All social sectors | 12.8 | 7.3 | 8.9 | 9.0 | 9.1 | 9.2 | 8.8 |
| Share in total spending (in percent) | 39.4 | 27.7 | 35.5 | 34.4 | 33.0 | 36.6 | 36.3 |
| Total budget spending | 32.4 | 26.5 | 24.9 | 26.3 | 27.5 | 25.2 | 24.2 |
Includes spending from both domestic resources and donor support.
Burundi: Budget Allocation for Social Sectors1
(In percent of GDP)
| 2015 | 2016 | 2017 | 2018/19 | 2019/20 | 2020/21 | 2021/22 | |
|---|---|---|---|---|---|---|---|
| Health | 4.9 | 2.0 | 3.0 | 3.1 | 3.0 | 3.6 | 3.3 |
| Education | 6.7 | 5.0 | 5.2 | 5.5 | 5.6 | 5.1 | 5.0 |
| Water, hygiene and sanitation | 0.8 | 0.1 | 0.3 | 0.2 | 0.2 | 0.2 | 0.2 |
| Social protection | 0.5 | 0.2 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 |
| All social sectors | 12.8 | 7.3 | 8.9 | 9.0 | 9.1 | 9.2 | 8.8 |
| Share in total spending (in percent) | 39.4 | 27.7 | 35.5 | 34.4 | 33.0 | 36.6 | 36.3 |
| Total budget spending | 32.4 | 26.5 | 24.9 | 26.3 | 27.5 | 25.2 | 24.2 |
Includes spending from both domestic resources and donor support.
B. Recent Revenue, Spending, and PFM Measures
The authorities have recently taken measures to increase revenue and rationalize public expenditure within the framework of a general program of actions to strengthen the fiscal framework, including public financial management (PFM). The measures were taken in the context of the FY2020/21 and FY2021/22 budgets, though some of them are not yet fully implemented and their potential impact on public finances has not been estimated by the authorities. Staff expect these measures to improve the path of revenue and help contain spending as a share of GDP, which has been incorporated in staff’s baseline projections.
Revenue Measures
6. On revenue, the authorities have taken the following administrative measures: (i) revision of the legal texts relating to municipal taxation, the land domain, in particular the texts on real estate expertise and those relating to the rental and sale of state land; (ii) strengthening the collection of taxes on mining sector activities; (iii) decision to reduce the informal sector through local taxation; (iv) strict application of the law concerning dividends to be paid to the government; (v) initiation of the revision of texts and the procedure for granting exemptions; (vi) acceleration of the process of recovery of arrears by the Burundi Revenue Authority; (vii) transfer of the collection of non-tax revenue, hitherto carried out by administrations in violation of the Law, to the Office Burundais des Recettes (OBR); (viii) improvement of revenue collection tools, namely revised laws and IT infrastructure at the Commissariat des Douanes et Accises; (ix) strengthening of mechanisms to fight against corruption, fraud and smuggling; (x) strengthening of the monitoring of the granting of exemptions; (xi) improvement of mechanisms for broadening of the tax base, in accordance with the new Laws on Tax Procedures and VAT; (xii) strengthening mechanisms for verifying and recovering arrears; and (xiii) strengthening of the monitoring of VAT reimbursements.
7. The 2021/2022 budget in particular introduces new tax and nontax measures to boost revenue. Tax measures with high revenue potential include: (i) a new tax on mobile phone megabits (18 percent of the cost); (ii) the non-exemption from income tax and VAT on sales made by companies; (iii) a new anti-pollution tax on imported used vehicles; (iv) a new road fee; and (v) the widening of the rental tax base to include land leases. Non-tax measures include the shift of the management of proceeds from the sale of health insurance cards from the health centers to the OBR, a new annual flat-rate road charge, and new or increased fees for issuance of exemption certificates, changes of tax declarations already processed, and reactivation of a customs agency deactivated due to an infringement.
Expenditure and PFM Measures
8. Significant expenditure and PFM measures have also been taken:
After June 30, 2021, implementation of a new “fair wage policy” started in the public sector. Under this new policy, salaries are based on the classification and rating of jobs. Under the previous policy, the same types of jobs could earn different salaries. In 2016, such unfair wage disparities were recognized and the compensation for the adjustment of wage disparities was granted for 5 years from 2016 with an overall budgetary impact of 120 billion BIF (1.8 percent of GDP) over the entire period. An allocation of BIF 34 billion (0.5 percent of GDP) was set aside in the FY2021/22 budget to pay for the impact of the new wage policy. As of July 1, 2021, a hiring freeze was imposed in all government sectors, except in defense and security, education, health, and the revenue administration.
Starting with the 2021/2022 budget year, and in order to allow better visibility and better control of the management of investments and their financing, a separation into commitment appropriations and payment appropriations has been made for investment projects running over a period of two years. The commitment appropriation corresponds to the overall cost of the investment project to be launched during the financial year concerned and the payment appropriation corresponds to the cost of the phase of work that will actually be carried out during the same financial year. The procurement plan is based on payment appropriations and not commitment appropriations.
In order to ensure long-lasting and sustainable financing for the maintenance of the national road network currently in an alarming situation, a road maintenance fund has been created for the financing of the road network maintenance campaign “Zero Potholes” (" Zéro nids de poule ”). The budget allocated to road maintenance increased from 8.2 billion (0.1 percent of GDP) to around 28 billion BIF (0.4 percent of GDP). To this end, the FY2021/22 budget introduced a financing mechanism to supply this fund with fees previously allocated to the financing of road maintenance expenditure.
In order to limit the cost of rentals for the Burundi Road Agency as part of the implementation of the campaign called “Zero Potholes", tax exemptions were decided for the acquisition of new machinery and equipment intended for the construction and maintenance of roads, road work sites, maintenance, repairs, and spare parts for road work.
In the energy sector, the FY2021/22 budget favored the financing of electrification projects in rural centers, villages, health centers, municipal colleges, trading centers and certain public infrastructures, such as municipalities isolated from the electricity network. This would contribute to improving the living conditions of the population and support the fight against poverty and help to achieve the Millennium Development Goals (MDGs). Only thirteen percent of the Burundian population has access to electricity, which is very low compared to other countries of the East African Community.
In the health sector, the FY 2021/22 budget provided funding to adapt the existing health centers in all the municipalities of the country to the standards that can allow the reception of COVID-19 patients in the municipal health care structures.
C. Key Features of the Public Procurement Law in Burundi
Burundi’s public procurement law (Law No 1/04 of January 29, 2018, amending law No 1/01 of February 04, 2008, on the public procurement code), which was promulgated on January 29, 2018, aims at strengthening public procurement procedures. Its key features are described in this section.
9. Purpose, Scope and Definition of Thresholds. The law establishes the rules governing the award, execution, control, regulation of public contracts and the delegation of public services. The law applies to public contracts whose value excluding taxes is equal to or greater than the regulatory thresholds as defined in the implementing texts. The choice of the applicable procedure for determining the thresholds is made according to the nature of the public tender.
10. Public Procurement Bodies. The bodies for awarding, controlling, and regulating public contracts are: (i) the bodies in charge of awarding contracts set up with the Contracting Authority; the National Public Procurement Control Directorate or Direction Nationale de Contrôle des Marchés Publics (DNCMP) ; and (iii) the Public Procurement Regulatory Authority or Autorité de Régulation des Marchés Publics (ARMP).
11. The DNCMP is responsible for the a priori control of the procedure for awarding an amount greater than a threshold set by regulation and public service delegations, and for the a posteriori control of the procedures for awarding contracts for an amount below the said threshold. Its control is done through notices of non-objection and the necessary authorizations at the request of the contracting authorities when they are provided for by the regulations in force. It also provides follow-up missions for the execution of public contracts and public service delegations.
12. The ARMP regulates the public procurement system for sound application of legislation on public procurement and public service delegations. In particular, it develops, distribute sand updates standard documents, procedures manuals, evaluation guides and appropriate software packages. Dispute resolution and disciplinary committees exist within the ARMP to resolve disputes or take sanctions against those who violate the procurement law and regulations. The decisions of these committees may be subject to legal appeal in courts.
13. Public Procurement Procedures. Before the end of February of each year, the contracting authorities are required to draw up annual provisional plans for the award of public contracts on the basis of their activity programmes. The contracting authorities, once their annual provisional procurement plans have been approved, publish no later than March 31 of each year, by means of a general invitation to tender, the essential descriptive characteristics of the works contracts, supplies and services whose estimated amounts excluding tax reach the DNCMP’s a priori control threshold.
14. Public Procurement Methods. Open bidding is the rule. In this case, public contracts are awarded after competition between potential candidates. The contracting authority chooses the offer, conforming to the technical specifications, evaluated to have the lowest price, and whose tenderer satisfies the qualification criteria. Public contracts may exceptionally be awarded by mutual agreement or direct agreement under the conditions defined by law and after authorization from the DNCMP and communication to the ARMP for information. Public contracts may be of a secret nature when the protection of the fundamental interests of national security requires this secrecy. These contracts can follow the over the-counter or direct agreement procedure, depending on the nature of the tender.
15. Candidates and Bidders. Any candidate who has the legal, technical and financial capacities necessary for the execution of a public contract or a delegation of public service, as well as the experience of the execution of similar contracts may participate in the procedures for awarding public contracts and public service delegations.
16. Award of Public Contracts. The report on the provisional award of public contracts is drawn up according to an established ARMP model. Any tenderer may request a copy of the award report and any other relevant information provided to him within three (3) working days of receipt of his written request. Unsuccessful bidders may challenge the provisional award of public contracts as described below (see section on Litigation). A notice of final award is published in the official journal of public contracts or any competent newspaper within a period not exceeding 15 calendar days from the entry into force of the contract.
17. Execution of Public Contracts. Holders of a contract are required to provide a financial collateral to guarantee good contract execution when the nature, size, and time of execution of the contract so require. It is fixed in the tender documents. It varies from 5 to 10 percent of the basic market price and is refunded within one month after the expiry of the warranty period or after final acceptance of the works, supplies or services if the contract does not include such a time limit. Holders of contracts for intellectual services are not subject to this obligation.
18. Public Contract Prices. Contract prices are deemed to be firm, unless the tender documents provide that they are revisable or updatable.
19. Reception of Public Contracts. Acceptance of the contract takes place when the holder of the contract finishes performing the contractual services. The acceptance decision is pronounced by the contracting authority when the service is deemed to confirm to the technical specifications of the contract. Acceptance without reservation entails the transfer of ownership.
20. Litigation. Candidates or bidders exercising a non-contentious or contentious appeal must first contact the person responsible for the contracts before contacting the dispute resolution committee of the ARMP. Whether non-contentious or contentious, the appeal has a suspensive effect of the procedure until the final decision of the body seized. The decision of the resolution committee of the ARMP is immediately enforceable. It may be appealed to a judicial body. However, this appeal has no suspensive effect except in the event of a court decision.
21. Ethics, Corruption and Sanctions. A Code of ethics and professional conduct for members of bodies involved in the award, execution, control, approval and regulation of contracts and public service delegations is drawn up by the ARMP. Violations of this Code can lead to sanctions, including exclusion from public contracts and prison sentences. The ARMP periodically draws up a list of natural and legal persons excluded from any participation in public procurement (see Sanctions disciplinaires (armp.bi)).
D. Governance Institutions in Burundi2
Burundi has set up key institutions to strengthen governance, including better controlling the budget process and fighting corruption.
22. Burundi’s fiscal governance system comprises internal and external audit institutions. Internal audits (accounting, administrative, technical, and physical) are conducted by the internal control department (Inspection Générale) of each public entity to ensure regularity, optimization of resources, improvement of performance, protection of assets, reliability of information and compliance of decisions with policies and rules. External audits are conducted by the “Inspection Générale de l’Etat (IGE)", which is under the supervision of the President’s Office, and the external auditing court “Cour des Comptes (CC)", an independent audit body. These two institutions help address potential conflicts of interest that may impede the efficiency of internal audits:
The IGE. It has several missions, including inspection and control over the operation and management of public services, institutions and bodies and private companies or associations legally place under its control (decree n° 100/09 of January 15, 2010). The IGE’s mission also covers all legal institutions and associations benefiting from financial assistance or guarantees from public entities, and it can carry out checks on companies and private associations deemed to be strategic for the government. The IGE’s reports are submitted to the President’s Office, which decides of their publication.
The Cour des Comptes. It is the supreme control and audit institution in Burundi’s institutional governance architecture (Law n° 1/002 of March 31, 2004). It is independent of the executive and reports to the national parliament which it assists in monitoring public fund management. The Auditors of the CC can examine and certify public accounts, audit the overall management of resources, recommend changes in the system, and monitor the implementation of these recommendations.
23. Beyond these two institutions, there are two other anti-corruption institutions. The anti-corruption court (Cour Anti-Corruption or CAC) is in charge of designing policies for the prevention and repression of corruption and related offenses and the anti-corruption police (Brigade Spéciale Anti-Corruption or BSAC) is in charge of combating corruption and other organized crimes using an interdisciplinary approach integrating intelligence, investigations, and prosecutions.