IMF Executive Board Completes First Review Under the Extended Credit Facility and Approves US$25.1 Million Disbursement for Burkina Faso | WPN World People News

● Burkina Faso faces large social and physical infrastructure gaps, a deteriorating security situation, and unease among the rapidly-expanding population about economic prospects.

● Burkina Faso’s program aims to create fiscal space for priority spending.

On December 21, 2018, the Executive Board of the International Monetary Fund (IMF) completed the first review of Burkina Faso’s economic performance under a three-year program supported by the IMF’s Extended Credit Facility (ECF). Completion of the review enables the disbursement of the equivalent of SDR18.06 million (about US$25.1 million), bringing total disbursements under the arrangement to the equivalent of SDR36.12 million (about US$50.1 million). The Board also approved the authorities’ request for a waiver for nonobservance of a performance criterion, and the modification of performance criterion.

Burkina Faso’s three-year ECF-supported program for the equivalent of SDR108.36 million (about US$150.3 million or 90 percent of the country’s quota at the time of approval of the arrangement), was approved on March 14, 2018. A key objective of the program is to create fiscal space for priority spending by strengthening revenue mobilization, containing current spending and improving the efficiency of public investment.

The Board also concluded the 2018 Article IV consultation. A press release will be issued separately.

Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair, made the following statement:

“With recent policy actions, performance under the ECF-supported program is broadly on track. Burkina Faso is a low-income country with significant development challenges. Despite some improvements in recent years, Burkina Faso’s human development indicators remain among the lowest in the world and poverty remains high. Priority areas for reform include alleviating infrastructure bottlenecks, notably in energy and transportation, increasing productivity and value-added in the agricultural sector, diversifying the economy, and enabling the financial sector to better support inclusive growth.

“The Burkinabe authorities remain strongly committed to the ECF-supported program despite difficult challenges and risks to the outlook, including from security shocks and social tensions. The immediate challenge for the Burkinabe authorities is to pursue development and security objectives in a manner consistent with the authorities’ commitment to achieving a fiscal deficit of no more than 3 percent of GDP by 2019.

“Burkina Faso’s growing security spending needs combined with the large social and development agenda make the acceleration of reforms critical. For the short and medium term, efforts should focus on creating fiscal space for priority investment, social, and security spending through additional revenue mobilization; containment of recurrent spending, particularly the wage bill; and improved spending efficiency.

“The authorities are encouraged to expedite the comprehensive reforms of public-sector compensation already underway to stem the unsustainable rise of the public-sector wage bill. In the short term, efforts should be made to contain the growth of the wage bill, including from reducing recruitments in nonpriority sectors and examining the scope to rationalize allowances and bonuses.”

Source: International Monetary Fund