An International Monetary Fund (IMF) team led by Ms. Laure Redifer visited Ouagadougou from March 14-26 to carry out discussions with the Burkinabè authorities on the first review of their economic and financial program supported by the IMF under the Extended Credit Facility (ECF) and a surveillance review required every two years.
The mission met with Mr. Luc-Adolphe Tiao, Prime Minister; Mr. Lucien Bembamba, Minister of Economy and Finance; Mr. Salif Kaboré, Minister of Mines; Ms. Clotilde Ki-Nikiéma, Minister of the Budget; and Mr. Charles Ki-Zerbo, National Director of the Central Bank of West African States, as well as other senior officials, parliamentarians, private sector and civil society representatives, and development partners.
At the end of the mission, Ms. Redifer, issued the following statement in Ouagadougou:
"Burkina Faso has experienced several years of rising and less volatile growth despite numerous shocks, thanks to strong economic and structural reform policies.
Despite slight downward revisions, growth remains strong for the period 2013-14. Estimates for 2013 growth were revised to 6.6 percent, based on flat growth in grain production due to erratic rainfall. For 2014, growth is projected at 6.7 percent, and could be higher in case of good rainfall and strong domestic demand.
These more cautious projections reflect the outlook for continued subdued international prices for gold and cotton, which are also expected to cause a further deterioration in external balances.
The deterioration would be worse in the absence of stronger exports of cash crops (cotton and sesame) and new minerals (zinc). In December, inflation was 0.5 percent, influenced primarily by lower food prices than a year previously, and should remain below 2.0 percent in 2014.
"Revenue collection was somewhat lower than anticipated in 2013. This, combined with delayed disbursements of external budget support, required additional domestic financing to maintain planned spending, as well as additional spending undertaken in the course of the year, including 1 percent of GDP in additional social spending undertaken in the second half of the year.
Revenue shortfalls and additional transfers to public enterprises meant that two end-December 2013 targets of the IMF-supported program were not met, although all other quantitative targets were met and all structural reforms for end-January 2014 were implemented.
"For 2014, large spending increases linked to wage bill negotiations and additional social measures total approximately 2 percent of GDP. To finance these expenditures and maintain the fiscal deficit around 3 percent of GDP, the authorities are identifying spending offsets in other non-priority areas.
In addition, they are considering other measures to ensure sustainability of the wage bill and the budget over the medium term, and preserve sufficient resources for valuable investments in people and infrastructure.
"The mission particularly encouraged the authorities to make more transparent budgetary transfers to support the operations of public enterprises facing fixed consumer prices.
These untargeted subsidies constitute a growing share of budgetary resources that could be better directed to social spending and investment to create jobs and growth.
"In discussions with the authorities, the mission expressed concern that the new Mining Code had not been passed by Parliament by the end of the year.
The mission strongly urged that the new Mining Code be formulated to ensure optimal resource mobilization needed to finance growth-enhancing investment and to ensure that the majority of Burkinabe - in this generation and in those to come -- benefits from the extraction of these non-renewable resources.
"The mission had fruitful and collaborative discussions with the authorities on these and other topics. Discussions will continue in the coming weeks to finalize the policy framework for 2014 that would form the basis for completion of the first review of the program supported by the IMF Extended Credit Facility and regular surveillance under the IMF's Article IV. "