IMF approves $7.6m debt relief for Burundi under Catastrophe Containment and Relief Trust
The International Monetary Fund (IMF) approved a grant under the IMF’s Catastrophe Containment and Relief Trust (CCRT) to cover Burundi’s debt service falling due to the IMF from July 21, 2020 to October 13, 2020, the equivalent of $7.63 million.
Additional relief covering the period from October 14, 2020 to April 13, 2022 will be granted subject to the availability of resources in the CCRT, potentially bringing total relief on debt service to the equivalent of $24.97 million. The debt service relief will help free up resources for public sector health needs including other emergency spending and help mitigate the balance of payments shock resulting from the COVID-19 pandemic.
The pandemic is affecting Burundi through an evolving domestic outbreak and economic spillovers from the global and regional environment. Economic growth projections for 2020 have been revised down by 5.3 percentage points to -3.2 percent in 2020. The pandemic has exacerbated preexisting economic challenges and creates significant external financing needs in 2020 and 2021, mainly as a result of lower exports, elevated imports needs, and reduced remittances inflows. The pandemic has also created sizable fiscal financing needs, which will have to be met mainly from external sources.
Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, said: “The COVID-19 pandemic is having an adverse economic impact on Burundi, creating exceptional fiscal and balance of payments needs. The economy has slowed sharply. The authorities have implemented containment measures consistent with their pandemic response plan that focuses on strengthening the health care system, the social safety net, and parts of the road network to facilitate access to sick people.
The IMF’s debt service relief under the Catastrophe Containment and Relief Trust will free up public resources to help address the pandemic. The authorities are committed to using the additional resources to address the COVID pandemic in a transparent manner and have committed to undertake and publish an ex-post audit of COVID-related spending. It will be important to reprioritize fiscal spending for health and other priority social spending as needed.
Looking ahead, it will be important to resume Article IV consultations with the Fund. Further improvement of data provision and coverage will be key for policy development and engaging with multilateral agencies and donors.’’