Africa > East Africa > Burundi > Burundi Outlook for 2016-17

Burundi: Burundi Outlook for 2016-17

2016/09/03

Burundi is a small landlocked country with a total area of 27,830 square kilometers. Densely populated, it has a people of approximately 10.6 million inhabitants. The economy is dominated by subsistence agriculture, which employs 90% of the people, though cultivable land is extremely scarce. Additional than a decade of conflict has devastated much of the country’s physical, social and human capital however substantial improvements have occurred over the completed decade, thanks to a relatively well performing demobilization program.

The army has largely retreated back to its barracks, roadblocks and checkpoints have been disassembled, and night curfews were lifted. Security and legal entities are under the government’s control and the army is presently seen as one of the major stabilizing institutions. A reform of the police is as well underway, with the aim of making it additional professional, in order to replace the people's trust in the institution. Economic reforms and institution building are as well ongoing.

Political Context

The preparations for next year’s elections have begun, with several agreements reached recently amongst key stakeholders. However, there are concerns about the possibility of President Nkurunziza running for a third term. The international community continues to call for a additional equitable and inclusive process and has expressed concern regarding the narrowing space for opposition parties to freely carry out their activities. In this context, a roundtable fostering an open and frank dialogue on the politico-economic developments since the October 2012 Geneva conference took place in Bujumbura on December 11and 12, 2014.

Social Context

Burundi is enjoying its initial decade of moderate economic increase however poverty remains widespread. The share of the people deprived of basic food needs declined by 6 % points between 2006 and 2012 but remains high at 60%. Inequalities between the capital, Bujumbura, and the rest of the country, remain high but are decreasing despite rapid economic increase in urban areas. In rural areas, 61.5% of the people cannot meet their basic needs in terms of calorie intake, versus 41% in Bujumbura. Burundi’s ranking on the UNDP’s Human Development Index increased by 2.5% per year between 2005 and 2013 as education and health outcomes have significantly improved over the period from presently on the country still ranks low at 180th out of 187 nations in 2013. Per capita gross national gain additional than doubled between 2005 ($130) and 2013 ($280).

Economic Overview

Burundi completed average annual increase of 4% between 2010 and 2014, but due to the social and political environment in 2015, the increase rate fell and GDP is estimated to have dropped by 4.1%. The deterioration in public finances led to large-scale recourse to advances from the central bank (Banque de la République du Burundi) to finance the budget deficit in 2015.


Continuation of the current socio-political climate and the accompanying fall in support from donors could do critical damage to the country’s remarkable advances in development and poverty reduction since 2005.

The socio-political strains from which Burundi has suffered since April 2015 have created major difficulties for economic activity, which has slowed markedly, interrupting the increase dynamic of the start of this century. New estimates suggest that increase of real gross domestic product (GDP) was negative, at around -4.1% in 2015 as against 4.7% in 2014 and 4.5% in 2013. This contraction was chiefly the consequence of a drop in activity in the secondary sector, in particular in industry and construction. Inflation remained steady at an average 5.5% in 2015, compared with 4.4% in 2014, thanks to the relative stability of the exchange rate, good harvests and the continuing drop in international oil prices. In respect of the budget, Burundi continues to suffer from a weak mobilisation of internal resources (11.7% of GDP in 2015 compared with 12.9% in 2014 and 13.1% in 2013) and from a substantial fall in foreign aid (-33% in 2015), according to the Finance Ministry. The budget deficit rose from 1.2% of GDP in 2014 to 5.7% in 2015. The deterioration in the public finances was strongly reflected in the accounts of the central bank (BRB), in particular with a steep fall in the official reserves (less than two months of import cover in 2015, compared with four months in 2014), mainly because of broad government recourse to BRB advances to finance the deficit. This financing, which amounts to an injection of liquidity into the economy, resulted in a better request for foreign exchange. The current account deficit, transfers included, is estimated at 4.5% of GDP in 2015 compared with 9.5% of GDP in 2014.

The implementation of the second-generation strategic framework for increase and poverty reduction, adopted in February 2012, brought significant evolution in human development. The present political context, however, could call into question much of what has been completed. The prolonged absence of support from technical and financial partners has negative consequences for the country and risks endangering the evolution that has been made, particularly in social dimensions. Renewed engagement by these participants is largely dependent on a political solution to political tensions, which would make it possible to avoid an even additional critical deterioration in the socio-economic situation. The whole international community is worried by the persistent tensions in the country, which as well carry risks for all sub-region. Several Western nations have by presently announced the suspension of support to Burundi. Furthermore, the problems observed in 2015 surrounding the implementation of reforms supported by the extended credit facility (ECF) could as well have a negative impact on the budget in the short and medium term.

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