For the first time in eight years, Burundi has received $261 million from the International Monetary Fund (IMF), which will help with its economic recovery.
Following their February visit to Bujumbura, the IMF team met with Mame Astou Diouf, the mission chief for Burundi.
The IMF said in a statement that it has reached a staff-level agreement with Burundian authorities on a 40-month arrangement under the Extended Credit Facility (ECF) with access to $261.7 million. The ECF offers low-income countries (LICs) with ongoing balance of payments issues financial assistance over the medium term.
“For the first time in eight years, Burundi has received $261 million from the International Monetary Fund (IMF), which will help with its economic recovery. Following their February visit to Bujumbura, the IMF team met with Mame Astou Diouf, the mission chief for Burundi” the IMF noted.
The economy of Burundi has seen a number of shocks that have slowed its recovery from the Covid-19 outbreak and exacerbated its macroeconomic imbalances.
Agriculture production was hindered by delayed rainfall in the last quarter of 2022 and limited fertiliser supply due to higher prices in the context of limited foreign exchange (FX) availability for imports, supply disruptions related to the conflict in Ukraine, and insufficient domestic production to meet local farmers' demand.
Additionally. higher import prices triggered by the war in Ukraine have pushed up inflation, widened the fiscal deficit, and heightened current account pressures.
The IMF projects that Burundi's fiscal position will deteriorate in the fiscal year 2022–2023 as a result of sluggish revenue collection from actions taken under the country's most recent two budget laws and spending overruns, which include significant fertilizer subsidies.
The IMF also pointed out that a return to fiscal consolidation is anticipated to begin in the 2023–24 fiscal year, building on current spending restraint and strengthened efforts to increase revenue collection, while preserving social spending and the scaling up of effective investments under the authorities' Public Investment Plan.