By Judith Ugwumadu | 26 August 2014
The International Monetary Fund has approved a $7.6m loan for Burundi to help the landlocked southeastern African country strengthen its public finances and address weaknesses in debt management.
Following a review of Burundi’s economy, the IMF said it would release the amount immediately under the Extended Credit Facility. This brings the total IMF funding released under its three-year programme in the country to about $38.1m.
Burundi, one of the five poorest countries in the world, has seen moderate growth in the last few years amid declining donor support, and growth is expected to pick-up to about 4.7% in 2014, the IMF said. It also noted that inflation continued to decline, underpinned by changing international food and fuel prices and monetary conditions.
However IMF deputy managing director Naoyuki Shinohara highlighted that the medium-term economic outlook remained difficult.
This was due to risks arising from political uncertainties ahead of the country’s 2015 presidential elections, as well as vulnerabilities to external shocks given Burundi’s narrow export base, and the large influx of refugees.
Burundi has already had it policies closely monitored by the IMF and the fund welcomed the country’s progress in implementing a public financial management law, but said further action was needed to maintain debt stability.
The current account deficit is projected to about 17% of gross domestic product this year and is forecast to fall over the medium-term as a result of greater exports and moderate growth following earlier increases associated with humanitarian assistance.
Shinohara said the new debt law would provide an overarching framework for effective public debt management and policy, and moves to achieve sustainability remained the anchor underpinning medium-term fiscal policy, he added.
The fund also stressed that refocusing public spending and enhancing tax administration would be critical to the success of its work in the country. There was a need to step up revenue collection in the run-up to the elections next year to ensure that rising demand for public services from a rapidly growing population can be met.