The Executive Board of the International Monetary Fund (IMF) today completed the fifth review of Burkina Faso's performance under an economic program supported by a Poverty Reduction and Growth Facility (PRGF) arrangement. The Executive Board also approved an augmentation of access of SDR 33.11 million (about US$ 52.52 million; and 55 percent of quota) to help cushion the adverse impact of the global economic crisis and recent flooding that have put a significant strain on the government budget. The completion of the review enables the disbursement of SDR 34.114 million (about US$54.11 million), bringing total disbursements under the program so far to about SDR 47.156 million (about US$74.80 million).
The PRGF arrangement for Burkina Faso was approved on April 23, 2007 (see Press Release No. 07/77) to support the government's economic reform program for 2007-10. The augmentation approved today will bring the total financial support under the PRGF arrangement to SDR 48.16 million (about US$76.40 million). On January 9, 2008, the Executive Board already approved an increase in access to help Burkina Faso address the impact of higher oil prices and the adverse shock to the cotton sector (see Press Release No. 08/04).
The Executive Board today also concluded the 2009 Article IV consultation with Burkina Faso. A Public Information Notice and the staff report will be published in due course.
Following the Executive Board's discussion on Burkina Faso, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated:
"The Burkinabè authorities are to be commended for good macroeconomic management in a challenging external environment, with the program supported by the PRGF arrangement implemented in line with expectations.
"An expansionary fiscal policy stance responded to the challenges posed by the economic downturn and the heavy flooding in Ouagadougou in September. The increase in public expenditure in 2009 has helped minimize the negative impact of shocks on the most vulnerable segments of the population while providing for reconstruction needs and growth-enhancing investment outlays. Consequently, notwithstanding the authorities' continued efforts to enhance revenue collection and to contain non-priority spending, the overall fiscal deficit has risen compared to the originally-envisaged level.
"Looking ahead, the Burkinabè authorities recognize the importance of fiscal consolidation to safeguard long term debt sustainability. The fiscal deficit is projected to decline in 2010 as the economy recovers and pressure from exceptional needs eases. Revenue mobilization efforts will benefit from the continued strengthening of the tax and customs administrations, and the implementation of a tax reform strategy covering an overhaul of corporate taxation, the streamlining of tax incentives, and the improved management of indirect taxes. In addition, the authorities' plans to improve expenditure and treasury cash management and accelerate civil service reform are welcome steps to enhance public financial management.
"Structural reforms will be key to accelerating economic growth and strengthening the resilience of the Burkinabè economy. In 2010, efforts will focus on the implementation of the recently completed financial sector reform strategy and on improving management of the largest cotton ginning company. In conjunction with ongoing diversification efforts and improvements to the business environment, these reforms will help place Burkina Faso on a sustainable growth path generating the additional resources required for poverty reduction," Mr. Portugal said.
IMF EXTERNAL RELATIONS DEPARTMENT