- Burundi’s economy remains resilient, although facing headwinds from the effects of the war in Ukraine. Real GDP is projected to continue to grow in 2022 and beyond. Inflationary pressures remain high, driven by rising food and energy prices.
- The current account deficit is projected to widen in 2022 mainly owing to a higher import bill for fuel, consumer, and capital goods. Foreign exchange reserves have fallen.
- The fiscal deficit is estimated to have narrowed in 2021/22, driven by lower current spending, especially transfers, and strong revenue collection, supported by revenue measures.
Bujumbura – September 30, 2022: A team from the International Monetary Fund (IMF) led by Ms. Mame Astou Diouf, Mission Chief for Burundi, visited Burundi during September 26−30, 2022, to discuss recent macroeconomic and policy developments and engage with the new leadership at the Ministry of Finance, Budget, and Economic Planning and the central bank (Bank of the Republic of Burundi). At the end of the mission, Ms. Diouf issued the following statement:
“IMF staff held productive discussions with the authorities on recent macroeconomic and policy developments, and the authorities’ key policy priorities, including how to deal with persisting fuel shortages and food inflation.
“Burundi’s economy remains resilient despite headwinds from the effects of the war in Ukraine. Higher commodity (food and fuel) prices have increased inflation (19.6 percent at end-August 2022), while compounding the country’s vulnerable external position. Foreign exchange reserves have fallen to 1.6 months of imports at end-June 2022 from 2.2 months at end-2021, as the increased import bill is not matched by capital inflows. Fuel shortages persist, despite an increase in imported volume. Economic activity is nevertheless continuing to recover from the COVID-19 shock, with agricultural production supported by government efforts to improve farmers’ access to fertilizers and better-quality seeds, public investment projects boosting secondary sector activities, and services benefitting from the easing of travel restrictions.
“Over the medium term, GDP growth is expected to strengthen as the effects of COVID-19 wane and ongoing investment projects and reforms start delivering the expected impact. Larger foreign financing resulting from Burundi’s reengagement with the international community would support GDP growth. However, there are downside risks to this outlook, including because of uncertainties about the war in Ukraine and the end of the pandemic.
“Accommodative monetary policy has supported the economy during the shocks. However, caution is required as inflation has remained high and inflationary pressures from the war in Ukraine are persistent.
“External sustainability challenges have worsened, and the current account deficit is projected to widen to 14.9 percent of GDP in 2022, mainly owing to higher fuel, consumer, and capital goods imports. The current account deficit, combined with unmatched FDIs and other external inflows would continue to put pressure on foreign exchange (FX) reserves.
“The fiscal deficit narrowed to 4.1 percent of GDP in 2021/22 (7.8 percent in 2020/21), thanks to a reduction in current spending, especially transfers, and strong revenue collection, notably higher income tax collection supported by recent revenue measures. Investment execution accelerated. Public finances have been resilient, despite the commodity price shock. The authorities have ensured a pass-through from global to local prices, including for regulated prices, thus containing subsidies. The government nevertheless decided to forego certain taxes on petroleum products, which has contributed to a drop in tax revenue from these products.
“Public investment is projected to further increase in 2022/23 and over the medium term, leading to a higher fiscal deficit in 2022/23. Strong donor financing and the impact of recent revenue measures and reform plans to enhance public financial management and spending efficiency would help contain the fiscal deficit in the medium term.
“The authorities implemented several measures to contain the spillovers from the war in Ukraine. In the first half of 2022, they used part of their SDR allocation (SDR 57 million) to alleviate import restrictions owing to limited FX availability. They started intervening in the fuel sector with direct fuel imports to circumvent fuel import bottlenecks and have lifted restrictions on the import of corn, seeds, flour, sugar, and cement to alleviate domestic shortages. However, the unintended effects of such measures may require mitigation.
“Going forward, Burundi will continue to grapple with the challenges of balancing priority social and development spending with the need to maintain macroeconomic stability and address debt vulnerabilities and the weak external position. A multi-pronged policy recalibration is critical, including (i) addressing inflationary pressures with a careful recalibration of the current accommodative monetary policy stance, (ii) a revenue-led fiscal consolidation and prudent borrowing to reduce debt vulnerabilities while creating fiscal space for development and social spending; and (iii) a recalibrated exchange rate policy and modernized monetary policy framework, while being attuned to FX-related financial sector vulnerabilities. An accelerated implementation of reforms to alleviate bottlenecks to inclusive growth, including improving competitiveness and further enhancing the governance framework will be key.
“The IMF remains committed to supporting the efforts of the Burundian authorities for a prosperous future, including through a Fund-supported program requested by the authorities at the end of the staff visit, macroeconomic surveillance, and capacity development.
“The mission met with H.E. President Evariste Ndayishimiye; H.E. Prime Minister Gervais Ndirakobuca; a delegation of the Parliament; H.E. Audace Niyonzima, Minister of Finance, Budget and Economic Planning (MFBPE); H.E. Mr. Ibrahim Uwizeye, Minister of Hydraulics, Energy and Mines; Mr. Dieudonné Murengerantwari, Governor of the Bank of the Republic of Burundi (BRB); Mr. Désiré Musharitse, First Vice-Governor of the BRB; Ms. Francine Inarukundo, Permanent Secretary of the MFBPE. The mission also met with other officials of the government and the BRB, as well as representatives of commercial banks, the private sector, non-governmental organizations, and the donor community.
“The mission would like to take this opportunity to warmly thank the Burundian authorities for their hospitality and for their cooperation and fruitful and open discussions.
Source: International Monetary Fund
Ahead of Elections, Peacekeeping Mission Drawdown in Democratic Republic of Congo, Security Situation Still Dire, Special Representative Tells Security Council
Despite progress in preparations for its general elections, as well as in its financial governance, the Democratic Republic of the Congo continues to face a deteriorating security situation amid ongoing violence by armed groups against civilians, the top United Nations official in the country told the Security Council today ahead of ongoing plans for the mission’s withdrawal.
Bintou Keita, Special Representative of the Secretary-General in the Democratic Republic of the Congo and Head of the United Nations Organization Stabilization Mission in the Democratic Republic of the Congo (MONUSCO), noting the promulgation of the revised electoral law, commended the work of the Government, Parliament and the Independent National Electoral Commission to establish the legal framework and conditions for the proper conduct of the elections. The adoption of the 2023 budget of $14.6 billion will provide the Electoral Commission with the necessary means for the electoral process.
Highlighting the persisting security challenges in the eastern part of the country due to abuses perpetrated by various armed groups, she called for the strengthening of the Armed Forces of the Democratic Republic of the Congo (FARDC). “An estimated 27 million people are in need of humanitarian assistance,” she said, adding that the surge in internal displacement since January 2022 has brought the total number of displaced people to 5.5 million — the largest caseload in Africa. She called on Congolese authorities to ensure the safety of humanitarian personnel and safe delivery of assistance.
Regional initiatives are under way to support stabilization in the east and the easing of regional tensions fueled by the M23’s resurgence, she pointed out. The operational means and other resources necessary must be mobilized to ensure that the provincial authorities have the capacities required to implement the Disarmament, Demobilization, Community Recovery and Stabilization Programme. The Mission is continuing to discharge its mandate so that its withdrawal from the three last provinces where it remains can occur in a calm, responsible and sustainable manner, she affirmed.
Michel Xavier Biang (Gabon), Chair of the Security Council Committee established pursuant to resolution 1533 (2004) concerning the Democratic Republic of the Congo, briefed the Council on the Committee’s work since 5 October 2021. Together with Committee members, he will visit the Democratic Republic of the Congo, Rwanda and Uganda to obtain first-hand accounts concerning the implementation of the sanctions measures imposed by resolution 2360 (2017), he said. The notification requirements for the delivery of materiel to Congolese forces — except for five categories of weapons listed in an annex to resolution 2641 (2022) — were abolished with the adoption of that resolution on 30 June.
Emery Mudinga, Director of the Angaza Institute, pointed out that the Democratic Republic of the Congo has the largest amount of tropical forest in the Congo Basin. However, many armed groups operating in the forests of the eastern part of the country are involved in various illegal exploitation activities, causing the forest to shrink by 1 million hectares each year, posing consequences for food security and agricultural production. Citing possible measures to address the problem, he said the Council could finance projects and road infrastructure in forested areas to facilitate the monitoring of illicit activity and adopt sanctions to end the purchase and sale of wood by rebel groups and the Government.
In the ensuing discussion, delegates urged support for regional cooperation initiatives and offered ways to remedy the security situation. Speakers also stressed the need to protect civilians while underscoring that MONUSCO’s withdrawal is contingent on the achievement of benchmarks set forth in the transition plan.
Kenya’s representative, also speaking for Gabon and Ghana, stressed that MONUSCO must prioritize the protection of civilians and improve troop preparedness through capacity-building and training. Voicing concern over the strained relations and hostilities between MONUSCO and the local populations, he urged greater effort to rebuild trust and confidence between them. He backed the Congolese Government’s call for MONUSCO to review the joint transition plan and ensure the benchmarks encompass, among others, strengthening key defense and security institutions.
The delegate for the United States, pointing out that the 23 March Movement remains designated under the 1533 sanctions regime, said Member States are obligated to freeze the armed group’s assets and ensure that no funds or economic resources are made available to it. Noting the tragic deaths of United Nations peacekeepers and civilians in recent months, he said it is vital to speak out against anti-United Nations rhetoric, which undermines the ability of peacekeepers to carry out their mandates.
In the same vein, the speaker for Mexico condemned the disinformation campaigns that led to violent protests against MONUSCO and the killing of peacekeeping personnel and civilians. He stressed the need to prevent the illicit flow of weapons to strip illicit armed groups of their capacity to destabilize the country.
Burundi’s representative expressed support for regional approaches, particularly the Nairobi process, which aim to bring peace between the armed forces and Government on one hand and between the warring local communities on the other. His country, as a rotating Chair of the East African Community, will do everything in its power to actively participate in all United Nations and African initiatives aimed at restoring peace and international security.
The representative of the Democratic Republic of the Congo called for the withdrawal of occupying forces from the east, particularly the M23 supported by Rwanda. On the Nairobi process, he said that while the political track is under way, with respect to the incorporation of rebel groups into the Demobilization, Disarmament, Community Recovery and Stabilization Programme, the comprehensive operationalization of that process requires funding. On the military track, there is a need to tackle defiant negative elements such as the M23, the Cooperative for Development of the Congo (CODECO) in Ituri and the Mai-Mai in South Kivu, he said, calling on the countries of origin of those negative elements to implement the process to reabsorb those fighters.
Further, the plan for MONUSCO’s drawdown must be reevaluated, he said, stressing the need to protect civilians, and for sufficient means to purchase equipment. He called on the Council to support, among others, the inviolability of his country’s borders, the immediate withdrawal of forces from Bunagana, and the stepping up of sanctions against groups exploiting his country’s natural resources.
Rwanda’s representative pointed out that some Congolese leaders’ tendency to scapegoat Rwanda for political attention only serves to deepen anti-Rwandan sentiment. If this hate speech continues, it will exacerbate the problems in the eastern part of the Democratic Republic of the Congo and further divide the country by deepening hatred and mistrust among Congolese communities. Blaming others for that country’s internal failures is problematic, he said, calling on the Government to accept its obligations and implement existing, signed peace agreements.
Source: UN Security Council