Fund warns of macroeconomic instability, calls for unified exchange rate and tighter monetary policy
BUJUMBURA, Burundi The International Monetary Fund (IMF) has called on Burundi to urgently implement fiscal, monetary, and structural reforms to contain surging inflation and stabilise its fragile economy.
In a statement released after a March 17–28 visit to Bujumbura, the IMF said the country’s annual economic consultation revealed a troubling rise in inflation and persistent structural weaknesses, despite modest growth in 2024.
“Controlling inflation should be the authorities’ utmost priority, given its impact on the poor and the widespread economic distortions it causes,” The IMF mission said.
Burundi’s GDP grew by 3.5% in 2024, slightly up from 3.3% in 2023. However, inflation surged to an average of 39% in the first two months of 2025, driven by rapid growth in the money supply and continued monetary financing of the budget deficit.
Mounting Economic Pressures
The IMF warned that inflation could remain elevated through 2027 unless the government takes urgent action. Key recommendations include tightening monetary policy, raising the policy rate (currently 12%), and unifying the dual exchange rate system.
“A unified and market-clearing exchange rate remains critical to economic stabilisation and escaping the current low-growth, high-inflation trap,” the statement read from IMF.
Limited foreign reserves, fuel shortages, and declining imports are expected to weigh heavily on Burundi’s economic outlook in 2025. The IMF noted that reduced production imports are constraining both industrial and service sectors.
Debt and Fiscal Reform
Burundi’s public debt stood at 52% of GDP at the end of 2024. While still deemed sustainable, the IMF said it remains at “high risk of debt distress,” especially without reforms to boost export earnings and improve fiscal discipline.
The Fund praised recent efforts to digitalise tax collection and improve expenditure management but stressed the need for broader revenue reforms.
“Strengthening domestic revenue mobilisation is essential,” the IMF said, calling for a progressive tax framework and tighter oversight of tax exemptions.
Financial Sector and Structural Challenges
The financial system remains resilient but under pressure. Non-performing loans rose to 3.8% in 2024, up from 2.7% the previous year. Credit growth also remained high at over 27%.
The IMF recommended a full asset quality review and urged the central bank to monitor banks’ exposure to government debt.
On structural reforms, the IMF encouraged the government to modernise the coffee and mining sectors, improve infrastructure, and strengthen governance.
‘Progress in these areas would support a more open and competitive economy,” the statement said emphasising the need for regulatory stability and investment in productivity.
Burundi is also being urged to join the Extractive Industries Transparency Initiative (EITI) to boost transparency in its mining sector.
The IMF concluded that a return to the reform momentum of 2022–2023, backed by coordinated fiscal and monetary policy, will be critical to restoring stability and unlocking long-term growth.
