An International Monetary Fund (IMF) mission led by Ms. Corinne Deleacute;chat, visited Ouagadougou during October 18-29, 2016, to conduct discussions on the sixth review of Burkina Faso’s economic and financial program supported by an IMF Extended Credit Facility (ECF), and to conduct the Article IV Consultation. At the end of the visit, Ms. Deleacute;chat made the following statement:
The team reached staff-level agreement with the authorities on economic and financial policies that could lead to the completion of the sixth review of the three-year program. Despite a difficult start to 2016 marked by terrorist attacks in January, program implementation at end-June 2016 remains very satisfactory. All the quantitative criteria and most of the program’s structural benchmarks were met. The IMF Executive Board is expected to discuss the sixth review of the ECF, as well as the Article IV Consultation, in December.
The Burkinabe economy began to recover in 2016, and real GDP growth of at least 5.4percent is projected for the year, compared to 4 percent in 2015. This commendable performance is mostly attributable to the restoration of political stability following two years marked by uncertainty, and is also supported by relatively low oil prices, the solid performance of gold and cotton prices, and favorable rainfall conditions.
In 2017 and for the medium term, the recovery is expected to strengthen and expand to all sectors. Economic activity would be driven in the short term by the opening of new mines, a favorable agricultural outlook, and a dynamic tertiary sector. In the medium term, improvements in electricity supply and a better transport and telecommunications infrastructure, as provided for in the National Economic and Social Development Plan (PNDES), will facilitate private sector development and inclusive growth. These favorable perspectives are nonetheless fraught with a number of domestic and external risks, including a further deterioration of the regional security situation, a decline in gold and cotton prices, an increase in international fuel prices, weather shocks or a prolonged recession in Europe. Remaining absorption capacity bottlenecks could also delay budget execution.
The draft 2017 budget was prepared on the basis of the priorities outlined in the PNDES, and the mission welcomes the fiscal stance which aims at expanding fiscal space for productive investments. Domestic revenue is expected to grow by 12 percent following a series of determined efforts by the government to mobilize domestic resources. Forceful measures to contain wage bill growth and curb spending would support a small decline in current expenditure excluding interest, in real terms. The reforms implemented to streamline procurement procedures, as well as measures to improve the prioritization, planning and execution capacity of productive investments would expedite their implementation while maintaining project quality. However, to fully achieve the budget’s objectives in terms of public investment, additional external resources will be needed. A Conference of the Partners of Burkina Faso to be held in Paris on December7 and 8 will provide an opportunity for the government to present the PNDES and discuss how the partners can best support the government in its vision for the country’s development.
The limited availability of electricity is the main obstacle to sustained, inclusive growth. The authorities have indicated their determination to continue the reforms under way to strengthen the energy sector and support new investment in renewable and imported energy, which will boost output and lower production costs. The success of the structural transformation also depends on the formulation of an agricultural diversification policy, and on improvements in the population’s access to financial services.
As the current program is expected to conclude in December 2016, the authorities have indicated that they would like to ask the IMF Executive Board for an extension, in order to allow sufficient time to initiate discussions on the shape of the future relation between the IMF and the government.
The staff team thanks the authorities for their warm hospitality and productive discussions.rdquo;
The team met with His Excellency Paul Kaba Thieacute;ba, Prime Minister; Ms. Hadizatou Rosine Sori/Coulibaly, Minister of Economy, Finance, and Development; Mr. Cleacute;ment Sawadogo, Minister of the Civil Service; Mr. Alpha Dissa, Minister of Energy, Mines, and Quarries; as well as Ms. Edith Cleacute;mence Yaka, Minister Delegate responsible for the budget. The mission also met with Mr. Charles Luanga Ki-Zerbo, National Director of the Central Bank of West African States, a number of senior government officials, representatives of parliament, the private sector, and development partners.
Source: International Monetary Fund (IMF).