BUJUMBURA, September 16, 2014— If Burundi’s economy continues to grow at an annual rate of 5% over the next decade (2015-2025), per capita income will increase from US$280 in 2013 to US$344 by 2025, leaving the country among the world’s poorest nations according to the World Bank’s first Burundi Economic Update report published today.
“Growth must be accelerated, and to do this, the Burundian economy must find another engine of growth in addition to aid to achieve this goal, while strengthening macroeconomic stability,” said Philippe Dongier, World Bank Country Director for Burundi, Tanzania, and Uganda. This report points out that international experience has shown that the revival of exports must serve as this engine, in particular regional exports.
Rachidi B. Radji, World Bank Country Manager for Burundi, noted that “reducing the isolation of Burundi through the promotion of regional infrastructure, including transport and energy, and eliminating non-tariff barriers are critical to enabling Burundi to reap the full benefits of regional integration.”
In the first monitoring report on the economic and financial situation in Burundi titled From Aid to Trade: Regional Integration as an Engine of Growth, the World Bank recommends diversifying the economy through development of specific value chains where the country has competitive advantages.
This report highlights the importance of competition in economic development and recommends scaling up efforts to remove the non-tariff barriers that are hindering regional trade. Beyond the East African Community (EAC), Burundi must also deepen its trade relations with the Democratic Republic of the Congo.
Chronic deficit in the trade balance
In 2013, Burundi recorded impressive macroeconomic results of a 4.5% economic growth rate, an inflation rate of 7.9%, and a budget deficit of 1.6%, thereby reducing the debt burden on the economy. However, the trade balance continues to deteriorate caused by weak exports. “In 2012 and 2013, the sharp drop in exports led to an increase in the current account deficit from 17.5% to 21.3% of GDP,” said Mamadou Ndione, World Bank Senior Economist in Burundi.
“Burundi’s accession to the EAC in 2009 and the priority given to reforms improving the business environment, including those related to Doing Business, are a critical step toward diversifying the economy and reviving exports, especially for goods to surrounding countries,” declared Gervais Rufyikiri, the second Vice-President of the Republic of Burundi.
Albert Zeufack, World Bank Sector Manager for macroeconomic and budget management, noted that “the mining sector provides a unique opportunity for Burundi to quickly ramp up exports and earn adequate budget revenues to develop the much-needed economic and social infrastructure that will allow the country to better position itself with its neighbors in the region.”