Burundi : the IMF concludes that there is a generalized economic crisis

A team from the International Monetary Fund (IMF) led by Mame Astou Diouf, head of mission for Burundi, stayed in Bujumbura from September 25 to 29 to inquire about the economic situation in the country. The observation is that it is at a standstill. INFO SOS Médias Burundi

In addition to field visits, a team from the International Monetary Fund (IMF) also held virtual discussions with the Burundian authorities.

Among the authorities met are Prime Minister Gervais Ndirakobuca, Minister of Finance, Budget and Economic Planning, Audace Niyonzima, and the former governor of the Burundi’s central bank (BRB), Dieudonné Murengerantwari, in detention since last October 7.

The mission also met with other officials from public administrations and the BRB, as well as representatives of commercial banks, the private sector, the civil society and donors.

“The interviews conducted during the mission focused on recent macroeconomic developments and the measures implemented by the public authorities, progress in the implementation of the reform agenda of the FEC program, as well as on the macroeconomic outlook and actions planned in the short term”, underlines the IMF.

The Bretton Woods institution seems to have been surprised by economic growth that is not growth.

“Economic growth is slowed by shocks. Indeed, the harmful effects of the late arrival of the rains at the end of 2022 have had repercussions on the 2023 harvests. In addition, trade and distribution of agricultural products within the country have been hampered by fuel shortages caused by limited availability of foreign currency for import purposes, high fuel import prices and supply problems”, notes the IMF mission.

“Price pressures continued, driven by food prices. Average inflation stood at around 29% over the period from January to August 2023, despite a slight slowdown between March and July. The beneficial effects of the new agricultural harvest on prices were offset by high import prices due to the war in Ukraine and domestic factors”, IMF analysts said.

External sustainability and foreign currency shortages remain a pressing challenge.

“Foreign reserves continued to decline, standing at $59.7 million (around 0.5 months of imports) in mid-September (compared to 1.3 months of imports at the end of March 2023), due to the import bill and the postponement of gold exports”, they specify.

Timid remedies

Burundian authorities are committed to implementing an expanded program of macroeconomic reforms aimed at addressing the main challenges, at the end of the IMF’s mission.

“Relaunching the budgetary consolidation to promote debt sustainability while protecting vulnerable populations, measures to increase revenues and restrict current expenditures, while preserving social spending and public investment, public debt should also decrease in the medium term”, promised the Burundian interlocutors to the IMF.

“The central bank is committed to restructuring domestic and external monetary policies in order to replenish foreign currency reserves and improve the efficiency of the foreign currency market. These rebalancing measures essentially consist of liberalizing the foreign exchange market, tightening monetary policy and limiting monetary financing of the budget. They will help stem inflationary pressures”, explained the Burundian authorities to the IMF mission.

As for the IMF, the mission affirmed that it remains determined to support the efforts of the Burundian authorities to reduce external imbalances, control inflation, preserve debt sustainability, promote good governance and promote sustainable and inclusive growth.

Last July, the Executive Board of the International Monetary Fund (IMF) approved a 38-month Extended Credit Facility (ECF) arrangement providing access to more than $261.7 million . However, the IMF did not specify whether at the end of this investigative mission, the sum will be disbursed or not.

The authorities of the small East African nation, the poorest country in the world, are still struggling to gain the trust of donors and attract foreign investors despite the reforms “touted” by President Évariste Ndayishimiye.

At the beginning of last May, António Guterres, the Secretary General of the United Nations, called on donors to “support the efforts of the Burundian government”. He was participating in a summit on the Congolese crisis in the commercial city Bujumbura.