Social Context

Poverty still affects a major part of Burundi’s population. Food insecurity is alarming as the country ranks the lowest position in the 2013 Global Hunger Index. Almost one in two households (around 4.6 million people) are food insecure and over half of the children are stunted (WFP, 2014 and 2016). Access to water and sanitation is very low and less than 5 percent of the total population has access to electricity (World Bank, 2016).

Economic Overview        

Economic growth remains negative in 2016 due to a fragile political environment, private consumption likely weakened following a contraction in food production, due to climate shocks, a longer than expected lean season and forced migrations (refugees and IDPs).

Positive developments in the real sector included private investment growth improving in recent months as consumer agro-industries (soaps and edible oils, beverages, and cigarettes) and the cement industry found new domestic and external markets. These areas drove an increase in the average monthly industrial production index by 1.7 percent between 2015 and 2016. However, low execution of domestically financed public investments and a reduction in externally financed projects have altered prospects for a quicker growth rebound.

While headline inflation has remained moderate at 6.0 percent, standing below the 8-percent convergence level agreed within the East Africa Community’s regional integration arrangements, the dire situation of foreign exchange reserves contributed to raising inflation expectations observed over the past months.

The Government continued to find measures to partially offset the loss of external budget support, emphasizing domestic resources mobilization.

The Central Bank continued to implement a loosening monetary policy to finance the widening fiscal deficit. Currently, available estimations relying on Central Bank data suggest that the public debt ratio will soon exceed 45 percent of GDP.

With thanks to World Bank [source]