Burkina Faso is a low-income Sahelian country with limited natural resources. Its economy is largely based on agriculture, although gold exports are on the rise. More than 40% of the population lives below the poverty line. Burkina Faso ranks 184th out of 191 countries in the 2021-2022 HDI report of the United Nations Development Programme (UNDP).
Following the coup d’état of January 24, 2022 that ousted President Roch Marc Christian Kaboré, Lieutenant Colonel Paul Henri Sandaogo Damiba, the leader of the Patriotic Movement for Preservation and Restoration (MPSR), was sworn in as President of the Transition on March 2, 2022. Under the Transition Charter adopted by a national conference, Damiba will not be eligible to run in the next presidential elections.
The transitional bodies are the Transition Policy and Monitoring Council (conseil d’orientation et de suivi de la transition), the transitional government that comprises 25 ministers and includes a civilian prime minister, and a 71-member transitional legislative assembly.
In the wake of the coup, the Economic Community of West African States (ECOWAS) and the African Union have suspended Burkina Faso from their decision-making bodies until constitutional order is restored. However, ECOWAS and the transitional authorities have agreed to a 24-month transition timetable, starting on July 1, 2022.
Since 2015, the country has been the target of terrorist attacks that have resulted in population displacements. While there were fewer than 50,000 internally displaced persons (IDPs) in the country in January 2019, this number stood at roughly 1.5 million on April 30, 2022.
In April 2022, more than 4,000 schools (more than 16% of educational facilities) were closed as a result of insecurity, affecting more than 700,000 students.
The economy recovered strongly in 2021, growing by an estimated 6.9% (4% per capita). This growth was driven by a rebound in services (+10.4%) and a steady increase in gold exports. However, low rainfall led to a decline in agricultural production, resulting in a 4.1% contraction in the primary sector.
Buoyed by the gold sector, exports grew by 6.5% in 2021 and imports also increased by 15.5%, driven mainly by purchases of electricity and hydrocarbons. This has widened the current account deficit, estimated at 3.0% of GDP, compared to just 0.1% in 2020.
Strong domestic demand driven by growth in 2021, coupled with the effects of congestion on global supply chains throughout the year, led to record inflation of 3.9%, the highest in 10 years.
Lastly, as a result of the sharp increase in defense and security-related expenditure (20% of total expenditure), a structurally high public wage bill, and ever-increasing humanitarian needs, the fiscal deficit increased to
6.0% of GDP in 2021 (compared to 5.7% in 2020). At the same time, public debt topped the 50% of GDP mark (55.5%), with domestic debt now accounting for a majority share (54%).
Over the medium term, and against a backdrop of uncertainty, real growth is expected to continue on its pre-COVID-19 trajectory. While the medium-term outlook is generally positive, real GDP growth is nevertheless expected to slow in 2022, owing mainly to (i) an anticipated decline in private investment (including in the mining sector); (ii) the spread of insecurity in certain mining and agricultural areas, and lastly (iii) the Russia-Ukraine war and its impact through higher prices for food, fertilizers, and petroleum products.
Growth in 2022 is projected at 4.3% (1.4% per capita) and is expected to be driven by private consumption as well as exports, while investment could decline amid increased insecurity and uncertainty. With high oil prices and a decline in grants as a result of the political context, the current account deficit could widen to 6.0% of GDP and inflation could reach 7%.
In the medium term, growth is expected to return to its potential level of 5.3% (2.4% per capita). Services and the secondary sector are expected to remain the main drivers of this growth, while agricultural production is expected to continue its historical cyclical trend.
In light of the security, humanitarian, and social challenges (including those related to the food crisis) and the ongoing COVID-19 pandemic, the fiscal deficit could reach 7.4% of GDP in 2022 (compared to the initial projection of 6.5%). Its gradual return to the WAEMU ceiling of 3% is not expected before 2025.
Last Updated: Sep 21, 2022