Friday, March 19, 2010

Assorted on Burundi Economics

Some items about the economy of Burundi from recent IMF reports and Government's letters of intents;

Fiscal policy is also geared to addressing debt sustainability concerns. Given Burundi’s debt burden, external financing of the budget should be strictly limited to grants and highly concessional loans.

The ratio of the government wage bill to GDP will decline less than anticipated in the medium term owing to higher payroll in the priority sectors, which are key for achieving progress toward the Millennium Development Goals. The ratio should remain below 11 percent of GDP toward the end of the program in 2011.

To contain the wage bill, the government will continue to draw on the findings of the Public Expenditure Management and Financial Accountability Review (PEMFAR) prepared jointly by the World Bank and the government of Burundi. In particular, with the census of civil servants having been completed and payroll management transferred to the Ministry of Finance, the government will proceed with the audit of the payroll to ensure that the calculated wages are indeed on a sound legal basis and that there are no abuses. This audit should precede the exercise to harmonize wages. To increase spending in the priority sectors, the government will implement a rationalization plan for nonpriority spending, in accordance with the PFM strategy.

Burundi will seek only concessional external financing or grants. The government will not contract nonconcessional foreign debt and will ensure that all loans contracted have a grant element of at least 50 percent. To make certain that the concessionality threshold is respected, the government will ensure compliance with the provision that the Ministry of Finance has the exclusive right to negotiate and sign external loans.

National Accounts
Serious deficiencies in real sector data handicap analysis and economic management. National accounts are compiled infrequently. Source data on agriculture, the most important activity, is inadequate. The Statistical Office (ISTEEBU) responsible for producing economic statistics and preparing national accounts has weak capacity. Since 1998 Burundi has reported annual national accounts estimates to the Fund with about a three-month lag, which are derived from a macroeconomic projection model maintained by the Ministry of Planning and Reconstruction. Recently, ISTEEBU has developed, with AFRISTAT’s help, a set of provisional national accounts for 2005, the new base year. This is a major effort because the last national accounts data were from 1998.

For Discussion: How reliable are their national accounts estimates and other statistics?

1 comment:

TomTom said...

National accounts as estimated by the Ministry of Planning (with a big help from WB and IMF consultants) shouldn't be trusted, as their model is outdated and the data dodgy. New NA for 2005 and 2006 are much better, however they are not acknowledged at the moment by either the government or international financial institutions. Real GDP should be 35% higher, which would modify PRGF comments on the government wage bill or the level of tax income...