Burundi: Economic Outline

Economic Indicators

Burundi's economic environment is characterized by a fragility trap, compounded by entrenched poverty. Persistent vulnerabilities include political instability, weak institutions, rapid population growth, and environmental degradation. Economic hurdles encompass low productivity, heavy reliance on foreign aid, insufficient infrastructure, and limited diversification. Agriculture constitutes 40% of GDP and employs over 90% of the workforce, while industrialization remains minimal, with exports primarily focused on coffee and tea. In 2023, economic growth picked up pace to reach 2.7%, marking an increase from 1.8% in 2022. This was supported by favorable rainfall and ongoing public and private investment. Economic growth is forecasted to reach 3.8% in 2024, driven by favorable rainfall, a gradual revival of investment in the mining sector, strategic public investment initiatives, and the cascading impacts of reforms in fiscal, monetary, and foreign exchange policies (World Bank).

In 2023, expenditure cutbacks contributed to a reduction in the fiscal deficit to 7.7% of GDP, down from 10.7% the previous year. The deficit was mainly funded through domestic short-term, high-interest loans from banks and Central Bank advances, indicating a reliance on domestic debt instruments. Consequently, public debt increased to 72.4% of GDP from 68.4% in 2022. The current account deficit (CAD) remained elevated at 13.9% of GDP in 2023, driven by surging oil prices and sluggish exports due to delayed mining contract negotiations. Remittances declined, leading to a reduction in net current transfers, although the capital account balances benefited from increased project grants. The fiscal deficit is anticipated to decrease to 4.7% of GDP in 2024 and further to 3.2% by 2026, driven by the digitization of tax administration and a reevaluation of non-essential expenditures, with support from the IMF ECF program. Public debt is forecasted to decline by 6 percentage points from its 2022 level, reaching 58.8% of GDP by 2026. Inflation averaged 27.1% in 2023, up from 18.8% the previous year. However, it is expected to decrease in 2024 and beyond, partly due to lower food prices resulting from favorable agricultural production and the declining trend in commodity prices. The government's priorities remain supporting economic and social recovery and addressing external financing and fiscal needs. The macroeconomic policies focus on a prudent fiscal policy, price and financial sector stability, external sustainability, and increased foreign exchange reserves coverage, improved competitiveness, and stronger governance (IMF).

The weak economic growth in relation to population growth is leading to a continuous rise in the poverty rate, with 62% of the population living below the World Bank's poverty measure of USD 2.15 per day in 2023. Based on the current trajectory, poverty is expected to persist at 61.9% in 2024. Significant structural reforms are imperative to stimulate growth in the private nonfarm sector, enhance agricultural productivity, and ensure a well-educated and healthy population. The country’s GDP rate per capita (PPP) was estimated at USD 836 in 2022 by the World Bank, the lowest level in the world. Unemployment is also rampant, especially among young citizens, although official World Bank figures point to a 0.9% unemployment rate in 2023.

Monetary Indicators	2016	2017	2018	2019	2020
Burundi Franc (BIF) - Average Annual Exchange Rate For 1 GHS	414.69	397.43	377.51	354.92	342.24

Source: World Bank - Latest available data.

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Latest Update: May 2024