The Executive Board of the International Monetary Fund (IMF) on Thursday approved the immediate release of an amount equivalent to Special Drawing Right (SDR) 2.55 million (about US$3.9 million) for Burkina Faso.
An IMF statement sent to PANA in New York, said the approval followed the completion of the first review of Burkina Faso’s economic performance under a three-year programme supported by the IMF’s Extended Credit Facility (ECF) arrangement, and also concluded the 2014 Article IV Consultation with the country’s authorities.
It said the approval brought the total disbursements under the arrangement to an amount equivalent to SDR 5.1 million (about US$7.9 million).
It stated: “The Executive Board also approved the authorities’ requests for a waiver for non-observance of the end-December 2013 performance criterion on net domestic financing and for modification of the continuous performance criterion on non-concessional external debt and modification of the performance criterion on net domestic financing for the end-June and end-December 2014 periods.”
The statement recalled that the 36-month ECF arrangement in the amount equivalent to SDR 27.09 million (about US$41.9 million, or 45 per cent of Burkina Faso’s quota at the IMF) was approved by the Executive Board on 27 December, 2013.
It quoted Mr. David Lipton, IMF’s Deputy Managing Director and the Acting Board Chair, as saying Burkina Faso had a long track record of strong macroeconomic policy management,
supported by IMF programmes.
“Structural reforms to improve productivity and resilience in agriculture and increased spending for poverty reduction and food security have resulted in robust growth rates and progress toward the Millennium Development Goals (MDGs),” he noted.
Mr. Lipton said Burkina Faso’s performance under the new ECF-supported programme had been satisfactory, with all structural reforms implemented and most quantitative targets
According to him growth had remained robust and the fiscal deficit had been contained. While the outlook for growth remained strong, there were challenges arising from unfavourable terms of trade in the near term.
“However, fiscal deficits should remain contained around 3 per cent of GDP, due to spending adjustment and increased grants. As gold prices recover over the medium term, external balances should improve. The risk of debt distress remains classified as ‘moderate’, ” he stressed.
The IMF official said that, the authorities had reaffirmed their strong commitment to the programme against the backdrop of a more challenging policy environment and three macroeconomic challenges had been identified to set the foundation for progress over the longer term.
First, is ensuring that the quality and composition of spending allows scaling up critical investment, both in infrastructure and people, needed to support private sector-led growth.
The second challenge is by accelerating investments for increased and more reliable electricity supplies to meet growing demand, while putting the energy sector on a more financially-sustainable footing and scaling down untargeted subsidies.
The last challenge is updating the mining code to harness natural resource revenues, and creating mechanisms, such as a fiscal rule, to direct them toward growth-enhancing spending over a multi-year horizon.