"Burundi's economy remains resilient despite challenges stemming from the effects of the war in Ukraine. The rise in commodity prices (food and petroleum products) has increased inflation (19.6% as of end-August 2022), while increasing the vulnerability of the country's external position. Foreign exchange reserves have declined to 1.6 months of imports as of end-June 2022 compared to 2.2 months at end-2021, as the increase in the import bill was not offset by substantial capital inflows. Fuel shortages persist, despite an increase in the quantities of petroleum products imported," said Mame Astou Diouf.

According to her, economic activity continues to recover from the shock of COVID-19. Agricultural production, supported by the government's efforts to improve access to fertilizers and better quality seeds for farmers, while public investment projects are stimulating activities in the secondary sector, and the services sector is benefiting from the easing of travel restrictions.

According to the IMF, accommodative monetary policy has supported the economy during external shocks. However, caution should be exercised as inflation remains high and inflationary pressures from the war in Ukraine are persistent. Moreover, challenges to external sustainability have deepened and the current account deficit is expected to rise to 14.9% of GDP in 2022.

"The budget deficit narrowed to 4.1% of GDP in 2021-22 (compared to 7.8% in 2020-21), thanks to a reduction in current expenditures (in particular transfers) and strong revenue mobilization, notably from income taxes, supported by recent revenue measures. Public investment execution has accelerated. Public finances were largely protected from the effects of the commodity shock," said Mame Astou Diouf.

She specified that public investment should increase further in 2022-23 and in the medium term, resulting in a larger budget deficit in 2022-23. Strong donor contributions, as well as recent fiscal measures and reform plans aimed at improving public financial management and spending efficiency, should help contain the budget deficit in the medium term.

The IMF remains determined to restore relations with the country

"The IMF remains determined to continue working with Burundian authorities for a more prosperous future, notably through an IMF-supported program, for which a request was made by the authorities at the end of this courtesy visit, as well as through consultations on macroeconomic surveillance and capacity-building activities," said Mame Astou Diouf.

According to the IMF, Burundi should continue to strive to strike a balance between the need to finance its priority social and development expenditures and the need to preserve macroeconomic stability, while addressing vulnerability factors related to debt and the weakness of its external position.

Pacifique Gahama