Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved a disbursement of SDR 53.9 million (35 percent of quota, about US$76.2 million) under theRapid Credit Facility(RCF). This emergency financial assistance will support the implementation of Burundi’s COVID-19 response plan and contribute to financing the country’s urgent balance of payment and fiscal needs stemming from the pandemic.
The COVID-19 pandemic and associated border closure led to a sharp economic slowdown, notably in services. Real GDP is estimated to have contracted by 1 percent in 2020 and growth is expected to remain subdued in 2021. The pandemic has put Burundi’s fragile health system under pressure and the economic slowdown threatens to lower living standards and reverse the hard-won recent improvements.
The authorities prepared a COVID-19 response plan to limit the disease spread and mitigate the macroeconomic and social impacts of the pandemic. The disbursement under the RCF will support the COVID-19 response and is expected to help catalyze donor support. The authorities are committed to pursuing economic and financial policies appropriate for addressing the impact of the pandemic. They have also committed to preparing and publishing audited reports on COVID-19 spending and collecting information on the ultimate beneficiary ownership of companies awarded COVID-related contracts.
Following the Executive Board’s discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued the following statement:
“The COVID-19 pandemic and associated border closures have led to an economic slowdown and created urgent balance of payments and fiscal needs. The authorities have prepared a COVID-19 response plan to limit the spread of the virus, mitigate its macroeconomic impact, and support the vulnerable population.
“The IMF emergency assistance under the Rapid Credit Facility would help to support the response plan, replenish reserves, and catalyze donor support. Further re-engagement with the Fund and the broader international community would help to alleviate residual financing gaps and support longer-term reforms and objectives.
“Ensuring strong transparency and governance of the COVID-19 spending is important. Measures to strengthen domestic revenue mobilization would help to create fiscal space for priority spending and preserve debt sustainability. Donor support in the form of grants and concessional financing remains essential.
“Accommodative monetary and regulatory policies are helping to support the economy. The authorities have provided liquidity to the financial sector and continued to monitor financial sector vulnerabilities. They stand ready to recalibrate policies contingent on macroeconomic and financial sector conditions. The authorities are committed to undergoing a safeguards assessment.
“Strengthening external sustainability is an important policy priority. This requires a multi-pronged policy package focused on improving exchange rate management and alleviating distortions in the foreign exchange market.”