United States : IMF Executive Board Completes Fifth Review Under Extended Credit Facility Arrangement, Approves US$7.6 Million Disbursement, and Concludes 2014 Article IV Consultation with Burundi
On August 25, 2014, the Executive Board of the International Monetary Fund (IMF) completed the fifth review of Burundi s economic performance under a three-year program supported by the IMF s Extended Credit Facility (ECF) arrangement, and also concluded the 2014 Article IV Consultation1 with Burundi. The completion of the fifth review enables the immediate release of an amount equivalent to SDR 5 million (about US$7.6 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 25 million (about US$38.1 million).
In completing the fifth review, the Executive Board also approved the authorities requests for a modification of performance criteria and indicative targets for September December 2014 for net foreign assets and net domestic assets of the central bank and net domestic financing of the government, as well as for gross fiscal revenue and reserve money.
The three-year ECF arrangement in the amount equivalent to SDR 30 million (about US$ 45.7 million) was approved by the Executive Board on January 27, 2012.
Following the Executive Board's discussion on Burundi, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair issued the following statement:
Burundi has made satisfactory progress under the ECF-supported program. Economic growth is expected to pick up to about 4.7 percent in 2014, while inflation has been declining aided by moderating international food and fuel prices and stable monetary conditions. However, the medium-term economic outlook remains difficult, with downside risks arising from political uncertainties ahead of the 2015 elections, vulnerabilities to external shocks given Burundi s narrow export base, and the large influx of refugees.
Revenue slippages that emerged in the first quarter of the year were addressed through corrective measures which formed the basis for a revised budget that was adopted by parliament. Sustaining revenue mobilization, enhancing tax administration, and rationalizing discretionary exemptions are critical to the success of the economic program.
Monetary policy should continue to focus on stabilizing inflation expectations. While underlying inflation has declined in recent months, a potential fiscal deterioration financed by recourse to central bank financing could reignite inflation and reverse recent gains.
Debt sustainability remains the anchor underpinning medium-term fiscal policy. Burundi continues to be at high risk of debt distress, therefore, it is important to rely mainly on grants and highly concessional loans. The new debt law will provide an overarching framework for effective public debt management and policy. The Executive Board also completed the 2014 Article IV consultation.