The International Monetary Fund (IMF) has approved a US$7.63-million grant under its Catastrophe Containment and Relief Trust (CCRT) to cover Burundi’s debt service falling due from July 21 to October 13, 2020.
In a statement on Monday, the IMF said additional relief covering the period from October 14, 2020, to April 13, 2022, would be granted subject to the availability of resources in the CCRT, potentially bringing total relief on debt service to US$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 minus 3.2% in 2020.
According to the IMF, the pandemic has exacerbated pre-existing economic challenges and has created significant external financing needs for 2020/21, mainly as a result of lower exports, elevated imports and reduced remittances inflows.
The pandemic has also created sizeable fiscal financing needs that will have to be met mainly from external sources.
Deputy managing director and acting chairman at the IMF Mitsuhiro Furusawa 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."
He said the IMF’s debt service relief under the CCRT will free up public resources to help address the pandemic.
The authorities are committed to using the additional resources to address the Covid-19 pandemic in a transparent manner and have committed to undertake and publish an ex-post audit of Covid-19-related spending.
It will be important to reprioritise 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," said Furusawa.