IMF Executive Board Completes Seventh and Final Review Under the Extended Credit Facility Arrangement for Burundi and Approves US$ 7.6 Million Disbursement

Press Release No. 12/January 13, 2012.The Executive Board of the International Monetary Fund (IMF) today completed the seventh and final review of Burundi’s economic performance under the economic program supported by the Extended Credit Facility (ECF) arrangement. Completion of the review allows for the final disbursement to Burundi of SDR 5 million (about US$ 7.6 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 51.2 million (about US$ 78.3 million).

The Executive Board also discussed a request by Burundi for a successor three-year arrangement under the Extended Credit Facility (ECF) and expressed general support for such a new arrangement, which would be approved once the existing ECF arrangement expires following the final disbursement thereunder.

The Executive Board approved a three-year arrangement under the ECF on July 7, 2008 (See Press Release No. 08/167). On July 11, 2011, the Board approved an augmentation of access by an amount equivalent to SDR 5.0 million to mitigate the impact of the food and fuel crisis on the balance of payments, and an extension of the ECF arrangement to end-January 2012.

Following the Executive Board discussion on Burundi, Naoyuki Shinohara, Deputy Managing Director and Acting Chair, issued the following statement:

“Burundi has made steady progress in implementing reforms under successive IMF programs in a difficult post-conflict environment. Against the backdrop of rising food and fuel prices and volatile aid flows, performance under the ECF-supported program was satisfactory.

“Stronger revenue mobilization efforts and public financial and debt management policies should continue to underpin fiscal policy. A broader revenue base should help cover the urgent infrastructure needs and increasing social demands, and reduce aid dependency. To safeguard fiscal and debt sustainability in the medium term, the authorities should continue to rely on grants and highly concessional loans.

“While interest rates have risen appropriately in light of the second round effects of the food and fuel prices shock, a further tightening of monetary policy will be necessary to reduce inflationary pressures and to anchor inflation expectations.

“Accelerating structural reforms focused on improving the business and regulatory climate, and reforming the coffee and electricity sectors, will be vital for enhancing Burundi’s growth prospects and reducing poverty and other vulnerabilities”, Mr. Shinohara added.

For more information about Projects in Burundi see Eastern Africa  Projects

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Burundi.Emergency Energy Project from IDA CRW

The project is designed to provide urgent assistance to REGIDESO, the state-owned water and power utility, in order to improve the capacity and reliability of electricity services in Bujumbura. The project was approved by the World Bank's Board of Directors in September 2010 and was declared effective in February 2011.

Burundi's chronic electricity demand supply deficit is continuing to put a high burden on the entire population and the economic development of the country, further enhanced by increased fuel prices. The project makes progress towards achievement of the project development objective.

During the first 6 months, REGIDESO has successfully undertaken the following major actions: (i) launch of bidding documents for the 5 MW extension of the Bujumbura Thermal Power Plant; (ii) launch of bidding documents for rehabilitation works for 2 hydropower plants; (iii) launch of bidding documents for MV network rehabilitation works in Bujumbura; and (iv) launch of bidding documents for the procurement of 15.000 prepayment meters.

World Bank.Author Mischke Peggy.Document Date:  2011/12/01.Document Type:  Implementation Status and Results Report.Report Number:  ISR4333

Burundi - Burundi - Emergency Energy Project from IDA CRW : P122217 - Implementation Status Results Report : Sequence 02

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IMF Concludes Staff Visit to Burundi

Press Release No. 11/429. November 22, 2011. A mission from the International Monetary Fund (IMF), led by Mr. Oral Williams, visited Bujumbura from November 8–21, 2011 to conduct the seventh review of the government’s economic and financial program supported by the IMF under the Extended Credit Facility (ECF). The mission also reviewed the authorities’ fiscal plans for 2012 and discussed the key elements of a successor ECF arrangement.1

The mission met with the Second Vice-President, Gervais Rufyikiri, the Minister of Finance, Clotilde Nizigama, the President of the Senate, Gabriel Ntisezerana, the Minister in Charge of Good Governance and Privatization, Jean Baptiste Gahimbare, the Governor of the Central Bank, Gaspard Sindayigaya, and other senior government officials. The mission had constructive discussions with members of the donor community, private sector, and civil society.

At the end of the mission, Mr. Williams issued the following statement:

“The economy is expected to grow by about 4.2 percent in 2011, lower than earlier projected, owing to a weakening in aggregate demand related to the food and fuel price shock. Although headline inflation rose sharply to 11.7 percent in September, core inflation remained in single digits. A rebound in coffee production and construction activity should contribute to a moderate pick-up in growth to 4.8 percent in 2012. The uncertainty in the external environment owing to weaker growth in trading partners, lower aid flows, and high oil prices remain key downside risks to the macroeconomic outlook.

“Performance under the ECF-supported program has been satisfactory, despite difficult economic conditions. There was good progress in the implementation of structural reforms focused on public financial management and the safeguard measures at the central bank and the treasury.

In 2012, budget support is expected to decline sharply reflecting uncertainties in the global economy. While revenue mobilization is likely to strengthen due to ongoing administrative reforms by the Burundi Revenue Authority, expenditures will have to be contained with a view to limiting recourse to domestic financing

“The mission reached agreements, ad referendum, on the key elements that would underpin a new ECF arrangement for 201214. These policies build on the ex-post assessment of longer term program engagement approved by the Executive Board of the IMF in July 2011 that highlighted the need for greater exchange rate flexibility, rebuilding of fiscal buffers and safeguarding fiscal sustainability. The mission discussed measures to increase revenue mobilization, strengthen public financial management, and improve regulations hampering private sector activity.

“The IMF's Executive Board is scheduled to discuss the seventh review of Burundi’s economic program under the ECF and the authorities’ request for a new ECF arrangement for 2012–14 in January 2012. The mission would like to thank the authorities for their warm hospitality and very close and constructive cooperation.”

The ECF is a concessional IMF facility for low-income countries. ECF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in the country's Poverty Reduction Strategy Paper. ECF loans carry a zero interest rate until end-2011 and an annual interest rate of no more than 0.5 percent thereafter. The loans are repayable over 10 years with a 5½ -year grace period on principal payments.

http://www.imf.org/external/np/sec/pr/2011/pr11429.htm