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 144th among 157 countries in the World Bank’s Human Capital Index.
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 on March 2, 2022, for a period of three years. 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.
Since 2015, the country has been the target of terrorist attacks that have resulted in population displacements. There were 50,000 internally displaced persons in the country in January 2019. By January 2022, more than 3,000 schools (13% of educational institutions) were closed because of the insecure environment.
The economy rebounded strongly in 2021, with growth estimated at 8.5%. This solid performance is attributable to factors such as the recovery in services (+11.7%) and the steady increase in gold exports. However, agricultural production stagnated because of low rainfall.
While exports grew by 6.5% in 2021, imports of hydrocarbons and mining equipment increased by 15.5% and were largely responsible for widening the current account deficit, estimated at 3.0% of GDP. Measures to combat the pandemic and security-related spending helped maintain the fiscal deficit at 5.5% of GDP. This deficit, which could widen further this year to 6.6%, increased public debt to 47.4% in 2021.
In addition, strong growth and global supply problems drove inflation to a 10-year high of 3.9% in 2021. This rate is expected to worsen in the first half of 2022, owing to rising food prices in particular, before stabilizing at around 4% toward the end of the year.
As a result of the pandemic, inflation turned positive again in 2020 (3.2% compared to -3.2% in 2019). Solid growth in 2021, coupled with severe pressure on global supply chains, increased inflationary pressures (3.9% in 2021, a 10-year high). The hike in food prices was particularly notable (14.7%) and revealed food insecurity.
The fiscal deficit remained high at 5.5% of GDP in 2021 (compared to 5.7% in 2020), chiefly as a result of expenses related to COVID-19 and ever-increasing security costs.
The return to pre-COVID growth levels is expected to continue in 2022, as the economy is forecast to grow at a rate of 4.8%. Against the backdrop of insecurity, the January 2022 coup, and the war in Ukraine, growth is expected to be driven by the agricultural sector, services—including public administration—and gold exports, and reach its potential of about 5.3% in the medium term.
Driven by an even greater increase in food prices, inflation could worsen in the first half of 2022, before stabilizing at an annual average of around 4% toward the end of the year.
In light of the security, humanitarian, food, and social challenges and the ongoing COVID-19 pandemic, the fiscal deficit could reach 6.6% of GDP in 2022. Its gradual return to the WAEMU ceiling of 3% is not expected before 2025.
Last Updated: Apr 13, 2022