Burundi receives Sh750m from IMF after progress in reforms

Burundi, the smallest economy in the East African Community, has received Sh750 million ($10 million) as part of a Sh3 billion ($40.5 million) package from the International Monetary Fund having made progress in reforms after years of conflict.

The country, which buys Sh3.5 billion of Kenyan goods annually, got the funds after IMF completed the third review of Burundi’s economic performance under the lender’s Extended Credit Facility (ECF) arrangement.

Burundi, with a GDP of $3 billion, had earlier agreed with the international lender that it should strengthen public financial management (PFM) and good governance, strengthen the internal control systems of the central bank, return to single-digit inflation and improve the composition of public spending to the benefit of priority sectors while preserving fiscal sustainability.

Minister of Finance Clotilde Nizigama and the governor of the Bank of Burundi Gaspard Sindayigaya said in a letter earlier sent to the IMF managing director Dominique Strauss-Kahn that peace issues were being addressed and a national poll would be done in the course of the year.

Their letter read: “On the political front, the government of Burundi continues to make every effort to consolidate the peace process by implementing the agreements signed between Burundi and the warring parties. Moreover, the government is taking the necessary steps to organise the elections in 2010.”

The functionaries said that the with the continued improvement in the security situation, the macroeconomic objectives were GDP growth average of four per cent over the medium term compared to the 2004–07 average of 3.6 per cent, inflation should slow to about six per cent in 2011 and gross official reserves should stabilise at coverage of four months of imports.

Post-conflict environment

The loan disbursement was made under the ECF which is a successor to the Poverty Reduction and Growth Facility (PRGF), the programme started in the 1990s in a bid to alleviate the plight of the poor.

The IMF said: “In a difficult post-conflict environment, performance under the ECF-supported programme was satisfactory. Burundi met all of its quantitative performance criteria and structural reforms are on track. Most monetary and fiscal reforms have progressed well, and steady progress has been made in implementing key structural reforms.”

ECF-supported programmes are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and donors and articulated in the Poverty Reduction Strategy Paper (PRSP) to ensure that the programmes are consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty.