- The Executive Board of the International Monetary Fund (IMF) approved today a disbursement of US$80.77 million (SDR60.2 million, 50 percent of Burkina Faso’s IMF quota) under the Food Shock Window of the Rapid Credit Facility (RCF)
- This emergency financing under the Food Shock Window will help Burkina Faso address urgent balance of payment needs related to the global food crisis and mitigate the impact of the food shock on the most vulnerable.
- The post-COVID economic recovery was disrupted by deteriorating security conditions, political uncertainty, and rising foodstuff prices as a result of Russia’s war in Ukraine, worsening the ongoing food crisis and weighing on the budget. Economic recovery in 2023 will depend on financing conditions, the security situation, and on efforts to mobilize domestic revenues to ensure priority public expenditure and public debt sustainability.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved today a disbursement of US$80.77 million (SDR60.2 million) under theFood Shock Windowof the Rapid Credit Facility to help Burkina Faso address urgent balance of payment needs related to the global food crisis.
Food insecurity in Burkina Faso has increased significantly owing to deteriorating security conditions, which led to the displacement of about 2 million people; unfavorable climate events; supply-chain disruptions following the COVID-19 pandemic; Russia’s war in Ukraine; and increasing prices for food and agricultural inputs such as fertilizer and seed. As a result, about 16 percent of the population is in acute food insecurity conditions.
The authorities also face significant macroeconomic challenges. External and fiscal buffers eroded substantially in 2022, as the current account deficit reached 5.2 percent of GDP while the overall fiscal balance widened to 10.3 percent of GPD. Both deteriorations reflect persistent and overlapping exogenous shocks, including a volatile political environment; fragile and deteriorating security conditions; the war in Ukraine; and the post-pandemic disruptions in international supply-chains. All these shocks adversely affected economic activity in Burkina Faso, where growth in 2022 decelerated to 2.5 percent year-on-year, after 6.9 percent of GDP in 2021, and widened macroeconomic imbalances.
Following the Executive Board’s discussion, Mr. Kenji Okamura, Deputy Managing Director and acting Chair, issued the following statement:
“Burkina Faso has been hit by several shocks, including deteriorating security conditions, unfavorable climate events, and Russia’s war in Ukraine, which triggered higher energy and agricultural input prices and reduced food access for poor households. Emergency financial assistance under the RCF’s Food Shock Window (RCF-FSW) would help address urgent balance-of-payments needs and mitigate the impact of the food crisis on the most vulnerable.
“The authorities’ crisis response appropriately focuses on providing immediate food assistance to affected households, preventing malnutrition and improving drinking water supply, and protecting livestock and animal husbandry. Measures to enhance transparency and governance in the use of Fund resources allocated under the FSW are needed. The authorities are committed to improving Public Financial Management practices and progressing toward the establishment of the Treasury Single Account. The plans to prepare progress reports and audits on the implementation of the cash transfer program and all food emergency spending are important. Identification and publication of the beneficial owners of entities awarded public procurement contracts related to measures to address the food crisis would be key.
“The authorities recognize that stronger engagement with the IMF would support their efforts to achieve macroeconomic stability, obtain additional external support, and build foundations for long-term development. Their longer-term focus on building fiscal space to support higher growth and poverty reduction and durably improving food security is appropriate.