major macro economic indicators
|2020||2021||2022||2023 (e)||2024 (f)|
|GDP growth (%)||0.3||3.1||1.8||3.0||4.0|
|Inflation (yearly average, %)||7.3||8.3||18.7||16.0||13.0|
|Budget balance (% GDP)||-7.8||-5.0||-11.5||-5.5||-3.0|
|Current account balance (% GDP)||-10.2||-12.4||-15.6||-17.0||-13.0|
|Public debt (% GDP)||66.0||66.6||68.0||70.0||65.0|
(e): Estimate (f): Forecast *1st July N-1 / 30th June N **Grants included
- Rich subsoil (rare earths, nickel) largely unexploited and agricultural potential (coffee, tea)
- Potential gains in agricultural productivity
- Fragile political institutions in a country marked by ethnic conflicts, attempted coups d'état, a strong military presence and authoritarianism
- Widespread extreme poverty
- Low productive capacity and subsistence farming
- Remote location and lack of road and health infrastructure
- Dependence on international aid and the recent end of diplomatic and financial isolation
- High risk on debt and external accounts
- Corruption and ineffective macroeconomic policy
A rebound in growth subject to the vagaries of the weather and the recovery of the mining sector
Already weakened by the political crisis and internal security unrest of 2015, which led to the withdrawal of most external aid, and by the Covid-19 pandemic, Burundi's economy was affected in 2022 by the inflationary consequences of the Russian-Ukrainian conflict, which resulted in soaring food and fuel prices. Nevertheless, the country's growth should rebound in 2023 and continue into 2024. Impacted in 2022 by fertiliser shortages linked to international sanctions against Russia and Belarus, as well as by delayed rainfall, the agricultural sector (one-third of GDP and 80% of jobs in 2022) should be the driving force behind this rebound, subject to an improvement in fertiliser and seed supplies linked to local production and the availability of foreign currency. Nevertheless, Burundi's agricultural sector, which is characterised by low productivity, is expected to suffer in 2024 from the consequences of the heavy floods of 2023. On the other hand, the country will benefit from high coffee and tea prices, which, together, accounted for a third of the country's exports in 2022. High gold prices (27% of exports in 2022) will also contribute to renewed growth, which will be accentuated by the recovery of the mining sector. In April 2021, the activities of foreign mining companies were suspended in order to renegotiate rare earth mining contracts and increase the public benefits derived from this activity. Negotiations between the government and the various stakeholders were completed in early 2023, with the publication of a new Mining Code in June, which should prompt the return of foreign investors to the sector. At the same time, growth will be supported by the resumption of public infrastructure projects and programmes financed by international donors, particularly in the energy sector. That said, the outlook for growth, although positive, is subject to rising oil import prices. In addition, inflation, driven by food prices, will remain high in 2023 and 2024, while more than half the population is affected by food insecurity. Against this backdrop, the Banque de la République du Burundi (BRB) is expected to continue raising its key rate in 2024, a trend that was already under way in early 2023 to combat rising prices and the depreciation of the Burundi franc.
Crucial aid from the IMF
The deterioration of the already massive current account deficit in 2022 continued into 2023. Export earnings from gold, coffee and tea were insufficient to offset high oil prices (23% of imports in 2022) and increased imports of capital and consumer goods. Burundi's external financial position will improve in 2024 thanks to the stimulation of exports. The surplus on the secondary income account, via remittances from expatriate workers and official bilateral and multilateral transfers, will help to reduce the current account deficit. The granting of an Extended Credit Facility (ECF) by the IMF in July 2023 will contribute to this improvement. The $271 million facility, which will be delivered over 38 months, will help Burundi to meet its import requirements in a context where foreign exchange reserves stood at just 1.3 months of imports in March 2023. The ECF will also enable the government to continue its reform of the exchange rate regime, which notably aims to reduce the differential between the official rate and the premium on the parallel market (102% in April 2023) by 2024. Furthermore, after having deteriorated sharply in 2022 due to a fall in public revenues associated with delays in the introduction of electronic VAT invoicing and fertiliser subsidies, the budget deficit will improve in 2023 and 2024 via an increase in public revenues. The public debt burden will continue to rise in 2023 as a result of the increase in its domestic share (70% of total debt), before falling in 2024 as a result of renewed growth and a reduction in the deficit. The external public debt, 60% of which is held by multilateral creditors and 40% by bilateral creditors, is deemed sustainable by the IMF. However, Burundi's exposure to the risk of debt distress is high due to the vulnerability of debt servicing to commodity prices and growth.
Improved external relations
President Pierre Nkurunziza's decision in 2015 to seek a third term in office, despite the constitutional ban, unleased a strong wave of popular protests that were reprimanded in bloody retaliation. The ensuing international sanctions caused severe economic hardship, including major food shortages. Following Nkurunziza's death in 2020, his successor Evariste Ndayishimiye, leader of the Conseil National pour la Défense de la Démocratie - Forces pour la Défense de la Démocratie (CNDD-FDD) party, sought to re-engage with international donors by showing improvement in the human rights situation. The withdrawal of sanctions by the US in November 2021 and by the European Union in February 2022 enabled international aid to resume in 2022. Burundi will remain vulnerable to epidemics because of the weakness of its health infrastructure and public services, at a time when almost half the population lives below the poverty line. Nevertheless, a new railway line between neighbouring coastal Tanzania and Burundi, the construction of which is scheduled to start in 2024, will make it easier to supply the country with foodstuffs and export minerals. In addition, following the signing of a bilateral defence cooperation agreement in March 2023, Burundi's enhanced military coordination with its neighbour, the Democratic Republic of Congo (DRC), should continue in 2024 to combat border attacks by Congolese rebel militia. The good relationship existing between Burundi and Russia will continue in 2024 with the signing of cooperation agreements, particularly in the field of nuclear energy. Relations with neighbouring Rwanda, frozen since 2015, have also resumed.
Last updated: September 2023