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Sunday, August 25, 2019

INTERNATIONAL MONETARY FUND: IMF Executive Board Completes the Second Review under the Extended Credit Facility Arrangement and Approves US$25 Million Disbursement to Burkina Faso

International Monetary Fund issued the following announcement on July 19.

On July 19, 2019, the Executive Board of the International Monetary Fund (IMF) completed the second review of Burkina Faso’s economic performance under a three-year program supported by the IMF’s Extended Credit Facility (ECF). Completion of the review enables the disbursement of the equivalent of SDR18.06 million (about US$25 million), bringing total disbursements under the arrangement to the equivalent of SDR54.18 million (about US$75 million). The Board also approved the authorities’ request for waivers for nonobservance of two performance criteria.

Burkina Faso’s three-year ECF-supported program for the equivalent of SDR108.36 million (about US$149.9 million or 90 percent of the country’s quota at the time of approval of the arrangement), was approved on March 14, 2018 (see Press Release No. 18/86). A key objective of the program is to create fiscal space for priority spending by strengthening revenue mobilization, containing current spending and improving the efficiency of public investment.

Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, made the following statement:

“Performance under the ECF-supported program has been broadly satisfactory. Economic activity remains resilient in the face of increased security and social tension pressures. Burkina Faso continues to pursue its development goals, and further support from the international community to address security and development needs is important. Additional effort is required to create fiscal space to support further progress in priority areas of development.

“Burkina Faso is expected to meet the WAEMU convergence criteria of fiscal deficit of 3 percent of GDP in 2019. Policy efforts underpinning this objective should focus on broadening the tax base – including by reducing exemptions – improving tax administration, and enhancing the efficiency of expenditure, including by containing the wage bill and subsidies. Public financial management reforms are advancing, and further progress could be achieved by strengthening the coordination between departments of the Ministry of Finance and other institutions.

“In light of the political uncertainty surrounding the adoption of the authorities’ public sector pay reform package, they are now focusing on a two-pronged approach to contain the wage bill. First, in the near term, the authorities will implement transitional measures to keep the wage bill in line with understandings reached at the last review. In this respect, it is of utmost importance that the authorities eschew any new pay awards until a broad reform package is in place, and that they build consensus around the appropriate level of public pay, through the articulation of a public pay strategy to the wider public. Second, in the meanwhile, the authorities will pursue politically feasible ways to adopt their reform package.

“The authorities are taking steps to strengthen the implementation of the automatic fuel price adjustment mechanism while developing social safety nets for the most vulnerable. In this respect, greater transparency, improved communication and the avoidance of discretionary implementation of the mechanism are crucial.”

Original source can be found here.

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