Authors

Overview

Recent Developments & Prospects

Macroeconomic Policy

Fiscal Policy

Monetary Policy

Economic Cooperation, Regional Integration & Trade

Debt Policy

Economic & Political Governance

Private Sector

Financial Sector

Public Sector Management, Institutions & Reform

Natural Resource Management & Environment

Political Context

Social Context & Human Development

Building Human Resources

Poverty Reduction, Social Protection & Labour

Gender Equality

Thematic analysis: Structural transformation and natural resources

Authors: Sibaye Joël Tokindang, Daniel Gbetnkom

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  • Estimated at 4.7% in 2014, GDP growth should rise to 5% in 2016, thanks to the implementation of infrastructure projects in the energy and mining sectors.
  •  Institutional weakness in tax administration still hampers the deployment of internal resources, despite significant structural reforms undertaken by the government.
  • There has been substantial progress in the elimination of regional disparities, but spatial inclusion remains a major issue for the country because of land issues and related conflicts.

Since 2010, Burundi has recorded average annual growth of 4% despite difficult international conditions. These have been characterised by rising world prices for fuel and food, leading to significant inflationary pressure. In 2014, real GDP growth was estimated at 4.7% compared to 4.5% in 2013, due mainly to agriculture through an upturn in coffee production and a dynamic construction sector implementing large-scale infrastructure projects (fibre optic, roads, etc.).
Thanks to the tightening of monetary policy and falling international petrol prices in the second half of the year, inflation fell year on year from 9.0% in 2013 to 6.7% in 2014. Prudent management of monetary policy stabilised the Burundian franc against the US dollar for the whole of 2014. With regard to the budget, Burundi makes poor use of internal resources (12.4% of GDP in 2014 compared to 13.1% in 2013 and 14.2% in 2011) and external aid fell from 5% of GDP in 2010 to 2% of GDP at the end of 2013. The budgetary balance fell from 0.4% of GDP in 2013 to -1.2% of GDP in 2014. Externally, the current account deficit, including transfers, worsened from 8.3% of GDP in 2013 to 9.5% of GDP in 2014.

The implementation of the second generation strategic framework for growth and poverty reduction, adopted in February 2012, brought significant progress in human development. With regard to investment, major energy, transport and telecommunications projects were started and new programmes were submitted to the country’s technical and financial partners for 2015-16. However, spatial inclusion is a major concern, because of the associated problems with property rights. As well as the shortage of land, excessive subdivision and land degradation, Burundi is faced with many land governance problems. Demand for land is exacerbated by the return to the country of hundreds of thousands of refugees whose land has been occupied. In such a situation, rising numbers of land disputes, which alone account for 80% of court cases, is a potential source of socio-economic instability.

As the 2015 elections approach, political tensions are the main short-term risk that might lead to violence and hamper the attainment of the growth goals set by the authorities. Moreover, delays in implementing public finance management reform and shrinking political space might both act to discourage donors.

Table 1: Macroeconomic indicators

 20132014(e)2015(p)2016(p)
Real GDP growth4.54.74.75
Real GDP per capita growth1.31.61.61.9
CPI inflation96.74.95.7
Budget balance % GDP0.4-1.2-0.4-0.4
Current account balance % GDP-8.3-9.5-4.5-6.1

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.

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