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Burundi: Burundi Economy Profile

2013/08/16

The Arusha agreements in 2000 gave the country a period of stability. However, opposition boycotts of the presidential election in 2010 aroused critical political tensions. Since again there have been human rights violations, with extrajudicial political killings, torture and restrictions of civil liberties. There are still worries over the possibility of a return to armed rebellion.

In this disturbed political climate, Burundi has made headway, albeit in an unbalanced way, towards political and social development. Increase of gross domestic product (GDP) in real terms is estimated at 4 % in 2011, slightly above the 2010 level of 3.9 %. Inflation stood at 8.3 % at the beginning of 2011, before reaching a peak of 13.3 % at the end of the last quarter 2011. This drastic rise was due to a rapid increase in the cost of foodstuffs and fuel.

National gain exclusive of foreign aid remained at about 19 % of GDP. However 53.5 % of the total budget for the financial year 2011 came from aid. The seventh review of International Monetary Fund’s (IMF) Extended Credit Facility (ECF) for 2009-11 was satisfactory. An upturn in coffee production and construction should lead to a modest rise in increase of about 4.8 % in 2012 and 5.3 % in 2013. However increase remains vulnerable in the context of volatile oil prices, an uncertain international trade situation and uncertain foreign aid.

The country has made substantial evolution in the implementation of structural reforms in the management of public finance and measures to protect the Central Bank and the Treasury. These reforms should continue, particularly the liberalisation of the coffee sector and the development of the energy sector. Within a strategy of poverty reduction, additional resources were provided for agriculture, water, and rural infrastructure, health and education in the 2011 budget . In 2012 and 2013, external aid to the budget is expected to fall, reflecting uncertainties in the world economy, particularly the European financial crisis. But the international situation is not the only factor; sometimes the discontinuation of aid is due to poor governance by recipients, with cases of corruption, dysfunctional justice systems, etc.

Internal revenues will therefore need to be enhanced through the continuation of administrative reforms undertaken by the tax government, while spending will need to be constrained.

Significant social evolution has been made through the implementation of a policy of free education and health provision. Burundi has thus improved its Human Development Index (HDI) ranking since 2005, even if it is 183thout of 185 nations 2011. Like most vulnerable nations, and despite the resources deployed, it will not be able to reach the Millennium Development Goals by 2015. Generally speaking, the country’s economic development has not enabled sufficient job creation, and the resulting unemployment remains a worrying problem which affects the young particularly