Front Matter

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© 2012 International Monetary Fund

June 2012

IMF Country Report No. 12/159

Burkina Faso: Fourth Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for Modification of Performance Criteria and Augmentation of Access—Staff Report; Debt Sustainability Analysis; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Burkina Faso.

In the context of the fourth review under the three-year arrangement under the extended credit facility and request for modification of performance criteria and augmentation of access, the following documents have been released and are included in this package:

  • The staff report for the Fourth Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for Modification of Performance Criteria and Augmentation of Access, prepared by a staff team of the IMF, following discussions that ended on April 4, 2012, with the officials of Burkina Faso on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on May 24, 2012. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.

  • A Joint IMF/World Bank Debt Sustainability Analysis.

  • A Press Release summarizing the views of the Executive Board as expressed during its June 8, 2012 discussion of the staff report that completed the request and/or review.

  • A statement by the Executive Director for Burkina Faso.

The documents listed below have been or will be separately released.

  • Letter of Intent sent to the IMF by the authorities of Burkina Faso*

  • Memorandum of Economic and Financial Policies by the authorities of Burkina Faso*

  • *Also included in Staff Report

The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.

Copies of this report are available to the public from

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700 19th Street, N.W. • Washington, D.C. 20431

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International Monetary Fund

Washington, D.C.

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Prepared by the African Department (In consultation with other departments)

Approved by Michael Atingi-Ego and Thomas Dorsey

May 24, 2012

Discussions and outreach: Held in Ouagadougou during March 21–April 4. The mission met with Economy and Finance Minister Bembamba, Deputy Minister in charge of Budget Zoundi, BCEAO National Director Ki-Zerbo, other senior officials, private sector representatives, development partners, and the local press. The mission did presentations on the global outlook, selected country responses to higher international fuel prices, and the FARI model for mining revenues. The mission held a press conference and issued a press statement at its conclusion.

IMF team: Ms. Redifer (head), Ms. Adenauer (resident representative), Mr. van Houtte, Ms. Diouf, and Mr. Wiseman (all AFR), and Mr. Ouattara (local IMF office). Mr. Tall (OED) joined in policy discussions, and Mr. Atingi-Ego (AFR) joined policy discussions in the final days of the mission.

Fund relations: The three-year ECF-supported program was approved by the Executive Board on June 14, 2010 in an amount of SDR 46.15 million (77 percent of quota). The Executive Board approved the first three reviews of the program and discussions for the 2011 Article IV consultation took place in December 2011.

Fourth review of the ECF-supported program: All end-December quantitative performance criteria were respected. Most structural benchmarks were met, although some with a delay. The authorities have implemented significant fiscal adjustment and sought new donor commitments to meet new needs arising from a food security crisis and an influx of Malian refugees, but this will not be enough to meet the large external and fiscal needs. To catalyze additional donor financing and safeguard implementation of their development program, the authorities are therefore requesting an augmentation of program access in the amount of 60 percent of quota. The augmentation would be disbursed in two tranches, with a larger tranche disbursed with this review to meet immediate external financing needs and catalyze additional external support. Staff supports the authorities’ request and proposes modified targets and structural benchmarks for end-June 2012.


  • Executive Summary

  • I. Recent Developments

  • II. Program Performance

  • III. Outlook and Policy Discussions

    • A. Overview

    • B. Outlook

    • C. Fiscal policy

    • D. Balance of Payments

    • E. Financial Sector Policies

    • F. Debt Sustainability and External Borrowing

  • IV. Program Issues

  • V. Staff Appraisal

  • Tables

  • 1. Selected Economic and Financial Indicators, 2010–15

  • 2a. Consolidated Operations of the Central Government, 2010–15

  • 2b. Consolidated Operations of the Central Government, 2010–15

  • 3. Monetary Survey, 2010–15

  • 4. Balance of Payments, 2010–15

  • 5. Financing Requirements, 2011–14

  • 6. Quantitative Assessment Criteria and Indicative Targets, 2011

  • 7. Structural Benchmarks: December 2011

  • 8. Poverty-Reducing Social Expenditure, 2005–12

  • 9. Indicators of Capacity to Repay the Fund, 2010–19

  • 10. Schedule of Disbursements Under the ECF Arrangement, 2010–13

  • 11. Financial Soundness Indicators (2007–11)

  • Boxes

  • 1. Coping with Food Insecurity and Malian Refugees

  • 2. The Strategy for Accelerated Growth and Sustained Development (SCADD)

  • 3. Eliminating Fuel Price Subsidies

  • 4. Projections for Gold Production

  • Figures

  • 1. Real Sector Developments

  • 2. Fiscal Developments

  • Appendix I. Letter of Intent

    • Attachment I. Memorandum on Economic and Financial Policies for 2012–13

    • Attachment II. Technical Memorandum of Understanding

List of Acronyms


Central Bank of West African States


Country Policy and Institutional Assessment


Debt Management Performance Assessment


Memorandum of Economic and Financial Policies


Millenium Development Goals


Medium-Term Debt Strategy


Net Present Value


Public Financial Management


Quantitative Performance Criterion


Stratégie pour une Croissance Accélérée et pour le Développement Durable (Strategy for Accelerated Growth and Sustainable Development)


sub-Saharan Africa


Société Burkinabè des Fibres Textiles (the largest cotton ginning company)


Société Nationale des Hydrocarbures (public oil importing company)


West African Economic and Monetary Union

Executive Summary

Burkina Faso faces a very challenging policy environment, with multiple exogenous shocks. Drought in 2011 created a food shortage that has placed about 10 percent of the population in a situation of food insecurity. An influx of refugees from Mali (56,700 as of mid-May) is exacerbating the shortages. The authorities devised a well-targeted and phased program to handle domestic food shortages, but only about half of the needed financing has been secured. The refugees are currently receiving international humanitarian aid, but aid provision is inadequate and living conditions are growing increasingly dire.

Near term policy discussions focused on specifying 2012 financing needs arising from the shocks to help prevent crowding out the authorities’ development program, the SCADD. After taking into account spending needs, domestic adjustment measures and new donor financing, estimated remaining financing needs are roughly CFAF 55.7 billion (1 percent of GDP), but could be higher if the refugee situation worsens. If the resources cannot be mobilized or come very late in the year, spending for the development program would likely need to be reallocated to meet crisis needs.

The authorities have implemented decisive adjustment measures, without which financing needs would be much higher. Most notable was the authorities’ decision to increase retail fuel prices, halving an implicit subsidy, and set in place an automatic price adjustment mechanism to gradually eliminate the remaining subsidy and enable full pass-through of international prices. Tax administration measures and higher mining royalties have enhanced revenues, combined with measures to contain public wages.

Program performance was strong in 2011, despite domestic social unrest and political turmoil in Côte d’Ivoire, the main coastal access. All quantitative performance criteria were met, as were almost all indicative targets. Most structural reforms were met, albeit with some delay. Revenue reached 16.5 percent of GDP, compared to 15.1 percent anticipated, and the fiscal deficit was reduced from 4.5 percent of GDP in 2010 to 2.5 percent.

Over the medium term, the SCADD provides a good platform for sound macroeconomic policy, improving resilience to shocks, and accelerating progress toward the MDGs. The authorities’ priority for the medium term is implementation of SCADD and creation fiscal space to accommodate it. To this end, they have specified medium-term measures to boost revenues further and contain non-priority current spending. The SCADD includes immediate measures to diversify agricultural production, expand irrigation, and improve food distribution, while establishing a targeted social safety net.

Staff supports the authorities’ request to complete the fourth review and augment program access by 60 percent of quota. Balance of payment needs reflect higher food imports to respond to the crises. A new joint DSA with the World Bank indicates much lower risk of debt distress, suggesting that additional IMF borrowing would put a negligible strain on debt sustainability.

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Informational Annex

Prepared by the African Department

Approved by Michael Atingi Ego and Thomas Dorsey

May 24, 2012

  • Relations with the Fund. Describes financial and technical assistance from the Fund and provides information on the safeguards assessment and exchange rate system. Outstanding purchases and loans amounted to SDR 91.76 million (152.43 percent of quota) at end-March 2012.

  • JMAP Implementation. Describes Bank-Fund collaboration.


  • I. Relations with the Fund

  • II. Joint Management Action Plan (JMAP) Implementation

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Prepared by the staffs of the International Monetary Fund and the International Development Association

Approved by Michael Atingi-Ego and Thomas Dorsey (IMF) and Jeffrey D. Lewis and Marcelo Giugale (IDA)

May 24, 2012

This joint World Bank/ IMF DSA has been prepared in the context of authorities’ request to augment access under their program supported by the IMF’s Extended Credit Facility (ECF). It indicates a significant improvement in Burkina Faso’s debt dynamics, based on updated gold export projections and new end-2011 debt data.1 While none of the external debt ratios under the baseline scenario or standardized stress tests breach their respective indicative debt distress thresholds, a country-specific stress test that better reflects the high dependency on projections for gold prices does result in a minor breach of the indicative debt distress threshold for the NPV of debt-to-exports. As a result, Burkina Faso’s risk rating for external debt distress shifts to moderate from high.


  • I. Relations with the Fund

  • II. Joint Management Action Plan (JMAP) Implementation

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Press Release No. 12/214


June 8, 2012

International Monetary Fund

Washington, D.C. 20431 USA