- Burundi’s Economy Improves as IMF Urges Fiscal Discipline, Monetary Tightening and FX Reform
The International Monetary Fund has said Burundi’s economy is showing signs of stabilisation after stronger growth, lower inflation and improved export receipts in 2025, but warned that the recovery remains fragile because of large external imbalances and persistent foreign exchange market distortions.
In an end-of-mission statement following the 2026 Article IV consultation, an IMF team led by Alexandre Chailloux said the Burundian authorities had taken “important policy steps” to stabilise the economy and reduce imbalances, in line with the macroeconomic strategy adopted last year.
The Fund said growth accelerated in 2025 while inflation declined sharply, supported by improved fiscal discipline and a large positive terms-of-trade shock from higher prices and stronger export volumes for gold and coffee, Burundi’s main export commodities.
Real GDP growth is estimated at 4.2% in 2025, driven by strong exports. Gold export volumes rose from about 400 kilogrammes in 2024 to 1.2 tonnes in 2025, helping increase export revenue and foreign exchange inflows.
The improvement helped moderate pressure in the foreign exchange market and narrow the parallel exchange-rate premium. However, the IMF said the premium remained high at about 100% at the end of April 2026, underscoring the scale of remaining distortions in the economy.
The Fund said Burundi’s overall fiscal deficit is projected to narrow significantly to 3.4% of GDP in 2025/26, from 5.5% in 2024/25, reflecting ongoing fiscal consolidation efforts. But it noted that revenue performance up to March 2026 was below target, particularly because of weaker non-tax revenues linked to lower-than-expected rental revenues and sales of goods and services.
Public debt is estimated at 42% of GDP at end-2025 and assessed as sustainable, but the IMF said Burundi remains at high risk of debt distress. It urged continued fiscal consolidation, cautious borrowing and reliance on concessional financing to protect debt sustainability.
Inflation has also eased significantly. Year-on-year inflation declined from about 45.5% in April 2025 to 10.8% in March 2026, largely due to improved fiscal discipline, limited recourse to central bank financing of the deficit and better coordination between fiscal and monetary policy.
The IMF said inflation is now approaching the central bank’s 8% target, but projected that it could rise slightly in the second half of 2026, averaging 14.5% for the year before converging toward the 10% to 12% range over the medium term.
The outlook remains positive if reforms continue and external conditions normalise. The Fund projects real GDP growth of about 3.9% in 2026, gradually strengthening to between 4% and 4.5% over the medium term, supported by improved macroeconomic stability, easing foreign exchange constraints and reforms in key export and productive sectors.
The current account deficit is projected to narrow to 6% of GDP in 2026, helped by higher gold exports, while foreign exchange reserves are expected to increase gradually to about US$500 million, equivalent to 2.8 months of imports, over the medium term.
But the IMF warned that the outlook is marked by major uncertainty, including risks from the war in the Middle East, revenue shortfalls, political economy pressures, capacity constraints and possible delays in governance reforms.
The Fund said macroeconomic stabilisation remains attainable, provided the authorities maintain fiscal discipline, tighten monetary policy and advance exchange-rate reform through a credible, orderly and well-sequenced approach.
On fiscal policy, the IMF commended the authorities for the ambitious adjustment under way and the adoption of a medium-term budget framework. It also welcomed the fact that government had not drawn on central bank advances to finance the deficit so far this fiscal year, helping reduce inflationary pressures.
The Fund urged stronger domestic revenue mobilisation to create space for priority social and development spending while continuing to reduce public debt. It recommended reforms in tax administration and policy, including the phased deployment of EKori, the Burundi Revenue Authority’s integrated revenue management system, and continued roll-out of VAT machines to broaden the tax base.
It also called for better targeting of tax exemptions, which it said had cost government between 1.5% and 3% of GDP annually in recent years. The IMF said reducing VAT registration thresholds, reviewing unnecessary VAT exemptions and reducing the number of items taxed at lower VAT rates could yield additional revenue and formalise economic activity.
On expenditure, the Fund cautioned against across-the-board cuts that could undermine essential public services and growth. Instead, it recommended durable and targeted measures that protect health, education, social spending and high-quality public investment.
Foreign exchange reform is emerging as one of the most important policy tests.
The IMF said phasing out Burundi’s dual exchange-rate system would help reduce distortions, support competitiveness, strengthen foreign exchange inflows and improve the transmission of external support to the economy. It urged the authorities to adopt a clearly sequenced roadmap for reform, backed by sound fiscal and monetary policies.
The Fund also called for tighter monetary policy to consolidate disinflation gains and support foreign exchange reforms. It said real policy rates in positive territory, stronger liquidity management and active communication would help anchor inflation expectations and reinforce policy credibility.
The financial sector remains broadly stable, but vulnerabilities persist. Banks continue to face negative real interest rates, limited private-sector lending opportunities and high exposure to government debt. The IMF urged stronger supervision, enhanced stress testing, improved monitoring of banks’ foreign exchange risks and a full Asset Quality Review to safeguard stability.
The Fund also highlighted governance and structural reforms as essential to making Burundi’s stabilisation more durable. It said an IMF Governance Diagnostic Assessment currently being finalised would help identify reforms to strengthen transparency, accountability, institutional effectiveness and the business climate.
In the coffee sector, the IMF said improvements in export quality, traceability and pricing transparency had boosted exports, but stronger price incentives for small farmers and better pass-through of international prices could further increase production and income.
In the electricity sector, it called for improvements in distribution and transmission to expand access to affordable renewable power. It said public-private partnerships, donor support and measures to improve the financial soundness of the public utility REGIDESO should be central to the investment strategy.
For the gold sector, the Fund said formalisation, transparency through participation in the Extractive Industries Transparency Initiative, a stable fiscal regime and stronger oversight would help ensure that mineral resources contribute more fully to fiscal revenues, foreign exchange inflows and sustainable development.
