IMF Warns of Mounting Economic Pressures in Burundi, Urges Bold Reforms to Avoid Prolonged Instability

An International Monetary Fund (IMF) team concluded its 2025 Article IV consultation to Burundi on 28 March, issuing a sobering assessment of the country’s macroeconomic and structural outlook. Despite modest GDP growth of 3.5% in 2024, the IMF cautioned that Burundi is slipping into a high-inflation, low-growth trap unless it undertakes urgent and coordinated fiscal, monetary, and structural reforms.

The economy remains constrained by critical vulnerabilities, including a steep inflation rate averaging 39% in early 2025, worsening foreign currency shortages, and recurring fuel scarcities. These pressures are exacerbated by continued monetary financing of deficits, which the IMF described as the main inflationary driver. Staff called on the central bank (BRB) to tighten its policy stance, raise interest rates above the current 12%, and restore monetary discipline. Without a halt to unchecked money supply growth and a return to market-based exchange rate mechanisms, the Fund warned, macroeconomic imbalances will deepen.

The Fund also urged the government to broaden and reform its tax base, especially by limiting exemptions, reviewing VAT impacts on the poor, and shifting towards a more progressive system. While domestic debt levels appear sustainable for now, Burundi's high risk of debt distress requires careful management, grant financing prioritisation, and structural policies that unlock export revenues. Key sectors like agriculture and mining were singled out as having underexploited potential, particularly in light of smuggling and weak value addition.

Importantly, the IMF welcomed ongoing reforms in digital tax systems, public financial management, and modernised payment infrastructure, which could widen the formal economy and improve transparency. However, delays in governance reforms, weak investment flows, and the fragmented foreign exchange market continue to dampen investor confidence and economic momentum. To escape prolonged stagnation, the Fund concluded, Burundi must accelerate policy action to create a more competitive, rules-based, and resilient economy.

Burundi’s current economic difficulties also signal areas ripe for private investment and donor-backed intervention. The urgency to reform the tax regime, modernise the financial sector, and expand the formal economy creates openings for fintech firms, digital tax solution providers, and private partners in mobile payment systems. There is room to support government capacity-building in digitised fiscal governance and to offer advisory services on debt management and monetary policy reform.

Meanwhile, the agriculture and mining sectors offer strong medium-term prospects. The IMF’s call to restructure coffee value chains and boost value-added processing invites private investment in modern agri-processing facilities, cold chain infrastructure, and farmer cooperatives. Mining reform, including contract renegotiations and upfront revenue models, can attract responsible investors especially those committed to transparency standards like EITI. With the right safeguards and investment climate, these sectors could be the engines of export recovery and job creation.

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