By Maximilian Clarke
Burundi has secured a three-year credit facility worth US$46.5m (£29.4m) from the IMF (International Monetary Fund), with an immediate $1.6m payout to consolidate the counrty’s recent gains in poverty reduction and macroeconomic stability.
The landlocked African state has recently made significant gains in pursuit of democracy, having been embroiled in a lengthy civil war and severely affected by regional conflict.
But recent investment, coupled with political stability have seen the country’s GDP far outstrip population growth, helping the francophone republic achieve real reductions in poverty. It is these recent gains the IMF facility seeks to cement.
Economic growth is projected to reach 6.0% in 2014, supported by improved productivity and diversification of agricultural activity, and by increased investment in the electricity and tourism sectors. As a result of a prudent demand policy, inflation is expected to decline gradually to single digits. In the external sector, exports of coffee and other agricultural products should increase strongly and offset the expected increase in imports. Consequently, the external current account deficit is expected to improve and stand at 9.1% of GDP in 2014.
However, downside risks remain. Growth could be affected because of the security situation and the external environment characterized by high petroleum products prices, with negative consequences for inflation and budget execution. Moreover, the eurozone crisis could increase the uncertainties surrounding budget support.
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