Population 8.775 million
GDP 2.53 US$ billion
@rating
country
Business climate
assessment
| 2010 | 2011 | 2012(e) | 2013(f) | |
|---|---|---|---|---|
|
GDP growth (%)
|
3.8 |
4.2 |
4.2 |
4.5 |
|
Inflation (yearly average) (%)
|
6.4 |
9.7 |
17.5 |
10.0 |
|
Budget balance (% GDP)*
|
-26.4 |
-24.7 |
-18.5 |
-19.4 |
|
Current account balance (% GDP)
|
-27.4 |
-24.2 |
-19.6 |
-18.7 |
|
Public debt (% GDP)
|
37.0 |
35.9 |
35.6 |
34.7 |
| (e) Estimate (f) Forecast * grants excluded |
||||
STRENGTHS
- Natural resources (coffee, tea, minerals)
- Support of financial backers
- Cancellation of 75% of external public debt in 2009
- Membership of the Community of West African States
WEAKNESSES
- Geographic isolation
- Economy hampered by lack of infrastructures and access to electricity
- Poorly diversified economy vulnerable to external shocks (fluctuation of coffee price, climatic vagaries)
- Dependence on international aid
- Poverty and lack of access to healthcare, education and water
- Great political instability
Risk assessment
Growth dependent on coffee price
Growth remained moderate in 2012, supported by exports of tea and, above all, coffee (60% of exports). These products are benefitting from a rebound of their production after a relatively disappointing crop in 2011, linked to aging plantations. However, international coffee prices are not as high as in 2011 (nearly 273 US cents/pound), although still twice as high as in 2006. Exports of these products will continue to drive growth in 2013. Inflation is expected to fall by about 10% after a record level reached in 2012, thanks to an easing of taxes on imports of foodstuffs and lower international raw materials prices. This situation is expected to lead to a revival of domestic demand. On the supply side, growth is expected to be driven by the agricultural sector, modernisation of which is expected to accelerate, as well as with construction and implementation of major infrastructure projects (hydropower, roads) stimulated by financial support from the IMF Extended Credit Facility (ECF) (for the period 2012-2014).
External and public accounts supported by international aid
In 2012 the country continued to import more than five times as much as it exports. Burundi imports mainly capital goods, services (for the construction sector) and oil products. International aid is down (-22%) but, nevertheless, together with other current transfers (expatriate workers’ remittances), it covers two thirds of the trade deficit. Thus, including aid, the current account deficit is no more than 11.6% of GDP. Imports of oil products are expected to decline in 2013, enabling, with a slight rebound of international aid (+6%) linked to a renewal of the international community’s confidence following the implementation of the ECF reforms, a slight reduction in the current account deficit (11% of GDP including aid).
The improvement in the management of public finances, particularly in tax collection, since the creation of the Burundi revenue office in 2009 is expected to lead to an increase in tax revenues in the future. Aid remains essential: in 2012, it covered around 50% of the budget, bringing the deficit down to 2.7% of GDP. This budget is mainly devoted to public investment projects, notably in infrastructures and improved social protection for the population’s most vulnerable groups under the second strategic growth and poverty reduction plan (GPRSF II). This programme is expected to continue in 2013, which will mark a distinct increase in spending in relation to revenues (+17% against +14%), linked in part to a very probable increase in military spending in a context of sharp political tensions. Though revenues and donations (financial support from the World Bank, ADB and other private donors for the GPRSF II) are expected to increase considerably, this will not be enough to cover all this expenditure. The budget deficit is expected to widen (4.6% including donations). This coexistence of a public and current account deficit with heavy dependence on international aid increases the risk of over-indebtedness in the years to come.
Significant political risk
The political tensions, renewed since the election of President Pierre Nkurunziza in 2010, have intensified due to the harder tone adopted by the presidential party (CNDD-FDD) towards the opposition represented by the rebel Hutu movement, the National Liberation Forces (NLF). In September 2012, an NLF leader effectively declared war on the CNDD-FDD and, although this was not supported by the party’s spokesman, it increases anxiety concerning an escalation of violence in the near term. Moreover, assuming that the president will stand for a third term in 2015, which would involve an amendment of the constitution, there is a high risk of armed conflict with the NLF. Civil society is also worried about the recent media and press restrictions.
Meanwhile, the country suffers from opaque national statistics and a difficult business environment marked by a high level of corruption. The country is ranked 172nd out of 183 countries according to Transparency International’s corruption perception index.
