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.