Executive committee completes fourth and fifth revisions under Extended Credit Facility (ECF) agreement and approves $ 51.28 million outlay for Burkina Faso HTML file

IMF Executive Board Completes Fourth and Fifth Revisions Under Extended Credit Facility (ECF) Agreement and Approves $ 51.28 Million Disbursement for Burkina Faso

November 13, 2020

• The board’s decision allows for an immediate outlay of $ 51.28 million.

• The performance of the ECF program was satisfactory despite being hampered by the COVID-19 pandemic and the security crisis.

• Burkina Faso also benefited from a second debt service relief tranche of approximately $ 14.52 million, provided by the IMF Catastrophe Containment and Relief Trust (CCRT).

Washington DC: The Executive Board of the International Monetary Fund (IMF) today completed the fourth and fifth revisions of Burkina Faso’s economic program under the Extended Credit Facility (ECF). The completion of these reviews, which constitute the last two under the ECF-backed program, unlocks access to SDR 36.12 million (approximately US $ 51.28 million), bringing the total outlays under the agreement to SDR 108.36 million (approximately US $ 152.58 million). Burkina Faso’s three-year ECF agreement was approved by the IMF Executive Board on March 14, 2018. It aims to maintain macroeconomic stability, reduce poverty and create fiscal space for priority spending.

The Executive Committee also approved the requests of the waiver authorities for the non-compliance with the performance criterion of the program on the roof of the government’s net internal financing and for the power factor correction of the access for the fifth revision to make the sixth disbursement available on 13 November 2020 .

In addition, Burkina Faso benefited from a second debt cancellation tranche on its debt service due to the IMF from 14 October 2020 to 13 April 2021 (SDR 10.3 million or approximately US $ 14.52 million), in the form of an assistance grant under the Catastrophe Containment and Relief Trust. This relief follows that granted for debt service due between April 14 and October 13, 2020 (approximately $ 12 million).

The economic impacts of global and domestic measures to contain the COVID19 pandemic have been stronger than expected. Real GDP is expected to contract 2.8% in 2020, compared to a forecast of 6.0% expansion before the pandemic. The fiscal deficit in 2020 is expected to increase to around 5.3% of GDP, to accommodate an effective response to the fallout from COVID19 and security shocks. The main risks to the outlook are the uncertainty surrounding the duration of the pandemic and the ongoing security crisis.

Following the Executive Committee discussion on Burkina Faso, Mr Mitsuhiro Furusawa, Deputy Director General and Acting President, made the following statement:

‘The COVID19 pandemic and the security crisis continue to have a negative impact on the economy of Burkina Faso. Authorities have taken swift action to contain the spread of the pandemic and implement accommodative fiscal measures, including additional healthcare spending and support for vulnerable families and affected businesses. Performance under the ECF-supported program was satisfactory despite the challenging political environment.

A widening of the fiscal deficit in 2020 and 2021 is warranted to meet COVID19 spending, additional security needs and post-COVID19 recovery. Such spending should be cost-effective and properly targeted, safeguarding macroeconomic stability and debt sustainability. In addition, efforts should focus on increasing domestic revenue mobilization, which has suffered from the sharp contraction in economic activity.

“Good governance remains of paramount importance, even in the context of emergency COVID19 related spending. In this regard, the authorities released the asset statements of government members and completed a verified report on COVID19 related expenses at the end of June. 2020. They also committed to publish further reports along with all procurement contracts related to the pandemic and their beneficial owners. The shortcomings identified in the spending report at the end of June 2020 are expected to be addressed quickly.

‘Addressing the security crisis and promoting higher and more inclusive growth will remain crucial for Burkina Faso in the medium term. Consequently, a gradual return of the budget deficit to the regional target of 3% of GDP (2024 – one year after the regional target) is important and will preserve the policy space to balance the impact on growth and fiscal adjustments related to shocks associated with security spending needs and pandemics.

“The authorities should work to promptly adopt and implement the necessary reforms to bring the wage bill on a sustainable path.”

More information

IMF Lending Tracker (emergency funding application approved by the IMF Executive Board)

https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker

IMF Executive Committee Calendar

https://www.imf.org/external/NP/SEC/bc/eng/index.aspx