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Burundi’s Compliance and Risk Management in Finance Under Scrutiny Amid Economic Crisis

As Burundi continues to navigate its economic challenges, the country is under pressure to strengthen its compliance and risk management practices in finance. The government has been working to reduce its reliance on domestic borrowing and improve its debt sustainability, but experts warn that more needs to be done.

Economic Challenges and Debt Sustainability

According to the latest joint International Monetary Fund (IMF) and World Bank assessment, Burundi’s public debt stands at US$1.9 billion, accounting for 54.6 percent of its Gross Domestic Product. The report also warned that the country is at high risk of external and public debt distress.

Government Response

In an effort to address these concerns, the government has reached a staff-level agreement with the IMF on economic policies and reforms, which will be supported by a new 40-month Extended Credit Facility. The reform program aims to:

  • Support the economic recovery from shocks
  • Restore external sustainability
  • Strengthen debt sustainability while creating fiscal space for accelerated and inclusive growth

Debt Management Strategy

To achieve this, Burundi is expected to develop a new debt management strategy and improve its debt management capacity and practices. The Ministry of Finance, Budget, and Economic Planning has requested assistance from the World Bank to bring its debt management framework and practice up to par with international standards and strengthen its capacity in debt management.

Technical Assistance

As part of this effort, the World Bank is providing technical assistance to Burundi through the Debt Management Facility. The program includes:

  • Support for improving debt transparency and reporting standards
  • Enhancing the capacity of the Public Debt Department to develop a Medium-Term Debt Strategy and Annual Borrowing Plan

Upcoming Missions

A recent virtual mission on debt reporting and monitoring was held, followed by a joint World Bank/IMF Technical Assistance mission on medium-term debt strategy. A further Debt Management Assessment Performance mission is scheduled for June 2023 to determine the strengths and weaknesses of Burundi’s debt management practices.

Expert Insights

Experts warn that improving debt management in Burundi will require continued support and technical assistance from development partners to build capacity and strengthen institutions. The government has set intermediate results for the medium term, including:

  • Submitting a Medium-Term Debt Strategy and Annual Borrowing Plan to Parliament in June 2024
  • Improvements in debt transparency and governance

Conclusion

As Burundi navigates its economic challenges, the country’s compliance and risk management practices will be closely watched by international financial institutions and experts. The government has made significant efforts to address its debt sustainability concerns, but more work needs to be done to ensure that the country’s economy is on a stable footing.