- IMF staff and the Burkinabè authorities have reached staff-level agreement on economic policies and reforms to be supported by a new four-year arrangement under the Extended Credit Facility (ECF) of about US$[305] million.
- The authorities' strong reform program aims at restoring macroeconomic stability, preserving debt sustainability while protecting the vulnerable, and laying the foundation for strong growth while creating fiscal space for priority spending.
- In addition to a gradual fiscal consolidation to create fiscal space and reducing debt vulnerabilities, the program envisages reforms to strengthen resilience to shocks while reducing poverty and inequality, as well as strengthening fiscal discipline and governance.
Ouagadougou, Burkina Faso: An International Monetary Fund (IMF) team led by Mr. Martin Schindler, Mission Chief for Burkina Faso, visited Ouagadougou during June 20 – 29, 2023, to discuss with the Burkinabè authorities IMF support for their policy and reform plans.
At the end of the mission, Mr. Schindler issued the following statement:
"I am pleased to announce that the IMF team reached staff-level agreement with the Burkinabè authorities on a four-year program supported by an arrangement under theExtended Credit Facility (ECF)in the amount of SDR 228.76 million, or about US$305 million. The economic program aims to restore macroeconomic stability and debt sustainability while laying the foundation for stronger and more inclusive growth. The staff-level agreement is subject to IMF Management and Executive Board approval and sufficient financing assurances by Burkina Faso's development partners.
"The Burkinabè authorities have committed to a wide-ranging economic reform program, which builds on the government's Action Plan for Stabilization and Development (PA-SD) and tackles the challenges facing the country.
"Key reforms aim to ensure reducing the budget deficit to 3 percent of nominal GDP by 2027 while protecting the most vulnerable and creating fiscal space for priority spending. The fiscal strategy relies on measures to increase domestic resource mobilization and rationalize public expenditure. In addition, the authorities have committed to strengthening social safety nets, including setting up a nation-wide targeted cash-transfer program for the most vulnerable households. Finally, the authorities are continuing to implement measures to address the ongoing food insecurity crisis, including the sale of food and agricultural inputs at subsidized prices, the distribution of free food to combat acute malnutrition, as well as conditional and unconditional cash transfers to the affected populations.
"Structural reforms will be introduced to underpin the fiscal strategy and ensure a durable consolidation. These include improving the efficiency of state-owned companies operating in the energy sector, ensuring that wage bill growth is commensurate with fiscal resources, and advancing reforms to bolster tax compliance and intensifying efforts to collect tax arrears. These measures will help create space for growth-enhancing measures and social spending.
"Efforts will also be made to improve fiscal transparency, including the publication of budget execution reports. The authorities are committed to appropriately balancing security-related, development, and social expenditures. They will strengthen public expenditure commitment controls (including the publication of audits on spending to address the food insecurity crisis), tackle structural challenges in the energy sector, improve the efficiency of public investment, and intensify efforts to address financial integrity challenges.
"To support the authorities program request, sufficient financial assurances will be needed before the proposed Fund-supported program can be presented to the IMF Executive Board for approval.
"IMF staff held meetings with President of the Transition Traoré, Prime Minister Tambela, Finance Minister Nacanabo, and BCEAO National Director Ki Zerbo, and their teams, as well as other members of the government and directors of various government agencies. The IMF team has also continued to engage with other stakeholders and development partners. Staff would like to express their gratitude to the Burkinabè authorities, and all representatives of the international community, for their open and constructive engagement over the past few months."
