major macro economic indicators
|2020||2021||2022 (e)||2023 (p)|
|GDP growth (%)||0.3||2.0||2.3||3.0|
|Inflation (yearly average, %)||7.3||8.3||18.5||13.5|
|Budget balance (% GDP)||-7.8||-5.0||-7.4||-6.2|
|Current account balance (% GDP)||-10.2||-13.4||-14.4||-14.0|
|Public debt (% GDP)||66.0||66.6||66.9||67.7|
(e): Estimate (f): Forecast *1st July N-1 / 30th June N **Grants included
- Natural resources (coffee, tea, gold)
- Member of the East African Community (EAC)
- World’s second-largest nickel reserves (6% of the total) and rare earth development
- Extreme poverty: In 2020, more than 85% of Burundians lived below the extreme poverty line (USD 1.90 per day) and the country was ranked 185th out of 189 countries on the Human Development Index.
- Entrenchment of the political crisis that began in 2015
- International aid reduced because of the political crisis
- Border tensions with Rwanda
- Poorly diversified economy, vulnerable to external shocks
- Unproductive agricultural sector (30% of GDP and 90% of the workforce)
- Geographically isolated
- Activity hampered by lack of infrastructure and access to electricity (only 11% of the population has access)
Growth still fragile in 2022
Burundi’s economy, already weakened following the 2015 political crisis that led to the withdrawal of most external aid, was rocked by the COVID-19 pandemic in 2020. The timid recovery in 2021 is expected to continue with a modest pickup in 2022, fuelled mainly by the primary sector via agriculture (30% of GDP and 80% of jobs), with rising global demand supporting the production of coffee, tea and cotton. Exports, driven by these products (coffee accounted for 19% of exports in 2020 and tea for 13%), will increase accordingly, while at the same time being constrained by mining exports. Although the sector has immense potential, the country being the only African producer of rare earths, the dispute between the authorities and mining companies will have an adverse impact. In April 2021, the government suspended the operations of foreign mining companies in order to renegotiate contracts and boost profits from sub-surface resource development. In particular, a row has broken out with UK-based Rainbow Rare Earths, which operates a rare earth mining project in Gakara. These disputes could dampen future investment in the sector, notwithstanding its potential. While the secondary sector will therefore limit growth, support will come from the recovery of the services sector (38% of GDP). The reopening of the borders with Rwanda and the Democratic Republic of Congo, which were closed to contain the spread of COVID-19, will allow transport services to resume. Other services such as trade, telecommunications, banking and insurance will get going again if the health situation stabilises. Nevertheless, the country is highly exposed to a resurgence of the pandemic, as the vaccination campaign remains at a standstill, with only 0.1% of the population fully vaccinated by December 2021.
Twin deficits still very large
In 2020, weak global demand led to a drop in the export prices of coffee and tea, the country's main export products along with gold (28% of exports in 2020). This led to a deterioration in the trade deficit and, subsequently, in the current account deficit. The latter was substantial in 2021 and should remain large in 2022, due to the country's dependence on imports, as domestic production capacity is low. The virtually uninterrupted depreciation of the Burundian franc will continue to push up the share of imports. Surpluses on the primary income account, owing to the remuneration of foreign workers by non-resident companies, and on the secondary income account will not be enough to balance the current account deficit. Foreign exchange reserves, which barely covered one month of imports, have been bolstered, thanks in particular to an allocation of special drawing rights by the IMF (about USD 200 million). The current account deficit is part of an extremely challenging external situation marked by recurrent foreign exchange shortages and continued currency depreciation. The lack of attractiveness to investors and the delicate political situation contribute to this situation and have done so particularly since 2015.
The budget deficit, which worsened during the pandemic due to the loss of government revenue, will remain high owing to heavy capital expenditure (37% of government expenditure in 2020/21), including on the construction of schools and hospitals. To finance itself, the country will rely on domestic debt (70% of public debt) from commercial banks, which will increase debt service. After the country benefited from emergency aid to respond to the pandemic, the authorities' attempts to re-engage with major international creditors may pave the way for greater recourse to concessional external financing. Through to April 2022, under the IMF's Catastrophe Containment and Relief Trust fund, the government is receiving debt relief totalling USD 25 million (0.8% of GDP). In addition, in 2021, the IMF provided USD 76 million under the Rapid Credit Facility to support the economy.
Pace of reform still very slow despite the new president's desire to re-engage
Following the 2020 presidential elections and the sudden death of the outgoing president Pierre Nkurunziza, President-Elect Evariste Ndayishimiye, from the National Council for the Defence of Democracy-Forces for the Defence of Democracy (CNDD-FDD), took office early in June 2020. Since doing so, he has signalled his commitment to modernising the country, improving governance and curbing corruption. Nevertheless, the UN and international observers continue to warn about persistent acts of violence and human rights abuses committed against the population by the country's defence forces. Thus, despite Burundi’s stated desire to improve relations with other countries, the European Union renewed its sanctions against certain Burundian individuals and entities until October 2022, due to human rights violations and incitement to violence. However, the United States announced in November 2021 that it would lift its sanctions, praising the improvements made since the election of Evariste Ndayishimiye. Regionally, the president wishes to renew dialogue with partners such as Tanzania and Uganda. In February, the heads of state of the East African Community chose him as rapporteur for the 2021-2022 term and as the next president for the 2022-2023 period. Finally, tensions with Rwanda seem to have eased since 2020 and the meeting of the two countries’ foreign ministers. In particular, cooperation to combat rebel forces in both countries has been stepped up.
Last updated: February 2022