IMF Approves US$7.6 Million Debt Relief to the Republic of Burundi

Washington, USA

The Executive Board of the International Monetary Fund (IMF) Monday July 20 approved a grant under the IMF’s Catastrophe Containment and Relief Trust (CCRT) to cover Burundi’s debt service falling due to the IMF from July 21, 2020 to October 13, 2020, the equivalent of US$ 7.63 million (14.68 billion Burundian Franc).

According to the Deputy Managing Director and Acting Chair of the Executive Board,  Mitsuhiro Furusawa, additional relief covering the period from October 14, 2020 to April 13, 2022 will be granted subject to the availability of resources in the CCRT, potentially bringing total relief on debt service to the equivalent of US$24.97 million (SDR 17.96).

The debt service relief will help free up resources for public sector health needs including other emergency spending and help mitigate the balance of payments shock resulting from the COVID-19 pandemic.

“The COVID-19 pandemic is having an adverse economic impact on Burundi, creating exceptional fiscal and balance of payments needs, the economy has slowed sharply.” Said Furusawa adding that the authorities have implemented containment measures consistent with their pandemic response plan that focuses on strengthening the health care system, the social safety net, and parts of the road network to facilitate access to sick people.

He said that the IMF’s debt service relief under the CCRT will free up public resources to help address the pandemic. The authorities are committed to using the additional resources to address the COVID pandemic in a transparent manner and have committed to undertake and publish an ex-post audit of COVID-related spending.

It will be important to prioritize fiscal spending for health and other priority social spending as needed.

"Looking ahead, it will be important to resume Article IV consultations with the Fund. Further improvement of data provision and coverage will be key for policy development and engaging with multilateral agencies and donors.’’ He stressed.

The pandemic is affecting Burundi through an evolving domestic outbreak and economic spill overs from the global and regional environment. Economic growth projections for 2020 have been revised down by 5.3 percentage points to -3.2 percent in 2020.

The pandemic has exacerbated pre-existing economic challenges and creates significant external financing needs in 2020 and 2021, mainly as a result of lower exports, elevated imports needs, and reduced remittances inflows.

The pandemic has also created sizable fiscal financing needs, which will have to be met mainly from external sources.

Under new President, Evariste Ndayishimiye, the Burundian government has launched a three-month nation-wide coronavirus screening campaign following the death of former President, Pierre Nkurunziza who in May this year, expelled World Health Organization's representatives from the East African country.

"We were pleasantly surprised by the response of the population because we had planned to screen 250 people per day but we noticed that we can take more than 419 samples, which shows that the population responded massively to the appeal launched by His Excellency the President of the Republic," Health Minister Dr. Thaddee Ndikumana was quoted as saying.

With a population of 11 million, Burundi has confirmed 322 virus cases so far, including one death and 207 recoveries, according to the Africa Centres for Disease Control and Prevention. - Africa