BURUNDI

Key conditions andchallenges

Table 12023

Population, million

13.2GDP, current US$ billion

3.5

GDP per capita, current US$267.3

International poverty rate ($2.15)

a62.1

Lower middle-income poverty rate ($3.65)
Gini index

aa86.2
37.5

School enrollment, primary (% gross)b103.9b61.7

Total GHG emissions (mtCO2e)9.3Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2020), 2017 PPPs.
b/ WDI for School enrollment (2022); Life expectancy(2021).

In 2023, economic growth rebounded to
2.7 percent from 1.8 percent in 2022,
spurred by robust agricultural production. However, inflation spiked, thenmoderated late in the year. Poverty ratewould remain stable in 2024, due to the
combination of insufficient growth, projected to improve to 3.8 percent, andrapid population expansion. Risks include regional turmoil, closure of the
Burundi-Rwanda border, delayed exchange rate unification, and limited
external financing.

Burundi’s economic landscape is marred bya fragility trap, with entrenched poverty.
Political instability, weak institutions, rapid
population increase, and environmental
degradation are persistent vulnerabilities.
Economic challenges include low productivity, high dependence on foreign aid, inadequate infrastructure, and limited diversification. Agriculture contributes 40 percent toGDP and engages over 90 percent of theworkforce. Industrialization is minimal,and exports are confined largely to coffee
and tea. Despite possessing significant reserves of minerals critical for the energy
transition, the mining sector is stunted, stifled by uncompetitive business environment, thus making an insignificant contribution of less than 1 percent to GDP. The export-to-import coverage hovers between
15-20 percent, signaling structural external
imbalances. Environmental issues, including land degradation and deforestation,
threaten to keep agricultural production
low. High population growth strains resources and infrastructure, exacerbating
conflicts amongst local communities while
impeding sustainable development.
Since the 2015 political crisis, macroeconomic imbalances have persisted, ranging
from high fiscal and current accountdeficits, and inflated currency value to limited external financing and fiscal dominance of monetary policy, compounded bysoaring public debt and scant investment

in infrastructure and human capital. The
provision of basic public services needs tokeep pace with rapid population growth.
Secondary school enrollment is a mere 48
percent, and 30 percent of adolescent girls
are not in school. Chronic malnutrition is
widespread, with stunting affecting 55.8
percent of children under five, a figure
likely to have worsened by recent foodinflation. As of 2023, poverty afflicts 62
percent of the population (at US$ 2.15
per capita/day in 2017PPP).
Continued re-engagement with the international community and the government’s commitment to reforms, throughthe completion of the exchange rate unification reforms, modernization of themonetary policy framework, fiscal consolidation, governance reforms, andgrowth-enabling
structuralreforms,
would help change the country’s growthtrajectory while boosting social spending
and productive investments.

Recent developments
Economic growth picked up in 2023
against a backdrop of high inflation andwidening fiscal and current accountdeficits. Growth accelerated to 2.7 percent, up from 1.8 percent in 2022, buoyedby favorable rains and robust public investment. Industry and services felt thepinch of high inflation, fuel shortages,
and flaring premium on the forex parallelmarket. On the demand side, growth wasunderpinned by government and private
sector spending.

FIGURE 1 Burundi / Fiscal and current account deficit

FIGURE 2 Burundi / Actual and projected poverty rates andreal private consumption per capita

Percent of GDP
18

Poverty rate (%)

1690

1480

1270

14500060

140000Real private consumption per capita (constant LCU)

10010155000
15000050

8640

13500030130000420210125000

0012000020132017 2018 2019 2020 2021 2022 2023 2024 2025 2026

2015

2017

2019

International poverty rate

Fiscal deficit

Current account deficit

Real priv. cons. pc

Sources: Official statistics and World Bank staff estimation.

Source: World Bank. Notes: see Table 2.

MPO

1

Apr 24

2021

2023

2025

Lower middle-income pov. rate

Aided by expenditure cutbacks, the fiscal
deficit fell to 7.7 percent of GDP, downfrom 10.7 percent the previous year. Thedeficit was predominantly financed
through domestic shorter-maturity higherinterest loans from banks and Central
Bank advances, reflecting a reliance on domestic debt instruments. Subsequently,
public debt climbed to 72.4 percent of GDP
from 68.4 percent in 2022. The current account deficit (CAD) remained high at 13.9
percent of GDP in 2023, pressured by soaring oil prices and sluggish exports amid
delayed mining contract negotiations. Remittances fell, reducing net current transfers, but capital account balances benefited
from increased project grants. Trade credits are the mainstay of financing the current account deficit.
By December 2023, Burundi’s international reserves could cover just 0.8 monthsof imports, a significant drop from 1.8
months the previous year. The foreignexchange market saw a parallel premiumsoaring to 75.0 percent in March 2023,
up from 62.0 percent a year prior. Inflation peaked to an average of 27.1 percent
in 2023 due to escalating food and fuel costs—but softened in the final quarteras food prices declined. Inflation’s bite is
sharpest for the poor, who allocate morebudget to food. This trend may swellpoverty rates in the short term and erodehuman capital long-term, as families cutmeals, liquidate assets, or resort to childlabor. International poverty rate ($2.15 in2017 PPP) is estimated to remain elevated at 62 percent in 2023.

Outlook
Growth is forecasted to rise to 3.8 percent
in 2024, and to accelerate to 4.6 percent on
average in 2025-26, supported by robust
agricultural season, mining upticks, andgovernment spending. Favorable rainfall
will sustain agricultural growth, while services and industry should rebound due toeased forex restrictions and increased
power generation. High private consumption and public investment will likely continue, spurred by economic recovery.
The fiscal deficit is expected to narrow to
4.7 percent of GDP in 2024 and 3.2 percent by 2026, underpinned by the digitization of tax administration and a recalibration of non-essential spending, supported by the IMF ECF program. Public debt is projected to recede by 6 percentage points from its 2022 level, settling at 58.8 percent of GDP in 2026. The
CAD will remain high over 2024–2025

TABLE 2 Burundi / Macro poverty outlook indicators

before easing to 12.9 percent of GDP in2026, due to mining exports resumption
and positive impacts of foreign exchange
reforms. Burundi’s growth path is notmatching high demographic growth, andpopulation is set to double by 2050,
further exacerbating existing pressureson limited land resources and services.
Against the current trajectory, poverty is
projected to remain unchanged at 61.9
percent in 2024. Substantial structuralreforms are essential to expand the private nonfarm sector, boost agricultural output, and secure a well-educated,
healthy population.
A favorable review of IMF’s program
along with reducing the misalignment
between the official and parallel exchange
rates could improve external accounts,
with structural reforms likely enhancing
exports, foreign investment, and revenues. Conversely, agricultural setbacks
from adverse weather and a protracted
closure of the border with Rwanda could
cloud growth prospects. Failure to consolidate fiscal accounts or boost revenue
collection could heighten fiscal risks andexternal vulnerabilities. A disruption to
the IMF program might reduce accessto crucially needed concessional financing and aid, and spur a further deterioration of external accounts.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices
Private consumption
Government consumption
Gross fixed capital investment
Exports, goods and services
Imports, goods and services

2021
3.1
3.0
2.9
3.9
3.4
3.2

2022
1.8
2.4
5.9
4.0
5.8
7.0

2023e
2.7
2.7
5.4
8.1
7.8
7.0

2024f
3.8
3.0
5.1
10.5
13.8
7.1

2025f
4.4
3.2
5.2
12.3
14.2
7.3

2026f
4.8
3.4
5.0
13.2
15.2
7.5

Real GDP growth, at constant factor pricesAgriculture
Industry
Services

3.1
3.4
3.0
2.9

1.8
-0.8
3.2
3.1

2.7
2.8
2.7
2.6

3.8
3.8
3.8
3.8

4.3
4.0
4.9
4.3

4.8
4.2
5.3
4.9

Inflation (consumer price index)

8.3

18.8

27.1

22.8

20.4

16.2

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-11.9
0.3

-15.9
0.3

-13.9
0.0

-15.3
-0.1

-15.2
-0.1

-12.9
-0.1

Fiscal balance (% of GDP)
Revenues (% of GDP)
Debt (% of GDP)
Primary balance (% of GDP)

-4.6
23.8
66.6
-1.6

-10.7
22.8
68.4
-8.2

-7.7
22.3
72.4
-4.8

-4.7
23.0
69.9
-2.1

-4.2
23.4
64.8
-1.4

-3.4
23.6
58.8
-1.0

61.9
86.1

62.1
86.2

62.0
86.2

61.9
86.1

61.7
85.9

61.4
85.7

3.9
8.7

4.0
8.6

3.9
8.6

3.9
8.7

3.7
8.9

3.7
9.2

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower middle-income poverty rate ($3.65 in 2017 PPP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ Calculations based on 2020-EICVMB. Actual data: 2020. Nowcast: 2021-2023. Forecasts are from 2024 to 2026.
b/ Projection using neutral distribution (2020) with pass-through = 0.87 (Med (0.87)) based on private consumption per capita in constant LCU.

MPO2Apr 24