The International Monetary Fund (IMF) has announced the approval of a 38-month credit agreement worth $271 million in favor of Burundi. This agreement aims to support the country’s economic reforms as it faces prolonged challenges in its balance of payments and significant development needs.
On Tuesday, the Central Bank of Burundi announced that the International Monetary Fund had approved a 38-month program under the Extended Credit Facility to support the country’s economic reforms. This agreement will provide financing of approximately $271 million, including an immediate disbursement of nearly $62.6 million.
According to the IMF, Burundi faces prolonged needs in its balance of payments, with a growing current account deficit and low foreign exchange reserve coverage. The country also confronts significant development needs and macroeconomic challenges resulting from the spillovers of the war in Ukraine, domestic climate shocks, and the livestock health crisis.
The Covid-19 pandemic has slowed down Burundi’s economic recovery, although it remains overall stable. The consequences of the war in Ukraine have led to a sharp increase in commodity prices and internal inflationary pressures. Additionally, internal shocks such as delayed rainfall, limited availability of fertilizers, and livestock fever outbreaks have affected the country’s primary sector.
It is worth noting that this IMF credit agreement represents the first upper credit tranche-quality program granted to Burundi since 2015. It also marks the IMF’s return to Gitega, the Burundian capital, after a little over a year since the lifting of European Union sanctions against the country.
According to Boaz Nimpe, an expert in public finance, this IMF credit agreement is seen as a positive signal for Burundi as it paves the way for other financial partners to support the country. In 2016, the European Union suspended its direct financial aid to the Burundian government due to the violence caused by the political and security crisis stemming from the contested third term of the late President Pierre Nkurunziza.
