Burundi: US$ 10.8 Million ADF Grant for Economic Reform Support Program
Tunis, 8 November 2006 – The African Development Fund (ADF) is supporting Burundi’s economic reform programme with a loan of 7.3 million Units of Account (US$ 10.8 million or 11,4 billion Burundian francs), approved today by the Fund’s Board of Directors.
The government’s economic reform program for 2006-2008, supported by the Poverty Reduction and Growth Facility (PRGF), is designed to ensure macro-economic adjustment and stabilization with the implementation of structural reforms aimed at reducing poverty. It concerns public finance, monetary and exchange policy as well as structural reforms, notably coffee sector reform. It also involves the privatization program, transparency and good governance.
The ADF resources will be used to strengthen public finance management and private sector development. These two areas have been chosen because of their expected impact on economic recovery, which is conditional on the successful implementation of the poverty reduction strategy. The option complements activities by the other donors, notably the World Bank, the International Monetary Fund and the European Union.
The external financing requirements for 2006-2008 are estimated at USD 1,350 million and are essentially due to the current account deficit of up to USD 1,174.6 million (87.0%); to debt amortization of USD 106 million (7.9%) outstanding foreign debt of USD 5.6 million (0.4%); and the replenishment of reserves of USD 63.8 million (4.7%).
The identified financing for the program period, amounting to USD 1,186.3 million, covers nearly 87.9% of the requirements.
The government will mobilize additional resources from development partners to finance the residual financing gap, estimated at USD 163.6 million.
Burundi has made significant political progress, with the establishment of democratic institutions in August 2005. The consolidation of the peace process has enhanced the implementation of strategic macroeconomic and structural reforms, with the support of development partners, which have contributed to improve the country’s economic outlook. Nonetheless, there have been major delays in implementing structural reforms, notably the State’s divestiture from the productive and financial sectors.
The same applies to the implementation of institutional reforms to strengthen the laws and regulations governing the private sector. The implementation of the said reforms constitutes a major challenge that the country must meet in order to consolidate the gains made, and reduce poverty sustainably.
The ADB Group started operations in Burundi in 1974. To date, its commitments in the country stand at USD 394 million (401 billion Burundian francs) in 64 operations.
- Sources of financing: ADF, IMF, IDA, European Union, France and The Netherlands
- Estimated start-up date and duration: December 2006, for 14 months
- Executing Agency: Ministry of Finance
- Procurement of Goods and Services: International Competitive Bidding
* 1 UA = USD 1.48004 = BIF 1,559.63 as at 08/11/2006
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