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Burundi Economical Facts

 

Economical overview

Burundi's economy is dominated by agriculture, especially the export of coffee. This means that the income is severely affected by the weather and the demand in the outside world. The poor country is in fact dependent on support from the outside world to bring the economy together. When President Nkurunzizia's contested reelection in 2015 led to political chaos, many donors withdrew their aid and Burundi ended up in a severe economic downturn.

The Burundian economy is fragile for several reasons. Unilateral dependence on coffee production causes food prices and inflation to fall during years with favorable weather and good harvests. Bad weather gives the opposite effect. The development is also hampered by overpopulation, high Population growth, poor infrastructure and the country's closed position.

  • Countryaah.com: Major imports by Burundi, covering a full list of top products imported by the country and trade value for each product category.

During the 1990s, the civil war and its relocations, as well as the economic blockade of neighboring countries between 1996 and 1999, had catastrophic consequences. During most of the 1990s, GDP fell by several percent per year. Only through extensive smuggling did Burundi survive the blockade.

From the middle of the first decade of the 2000s, an improvement took place. Transport became safer and cheaper after the fighting subsided. The construction sector flourished, at least in the capital Bujumbura. GDP increased from 2006 by an average of around 4 percent per year.

Acute economic crisis

Economical Facts of Burundi

A new breaking point came in 2015 when the unrest in the summer elections led to political chaos. Important donors such as the IMF, the EU and several Western countries fully or partially withheld their financial support to the government due to growing corruption and reports of serious human rights violations. The aid-dependent Burundian economy plunged rapidly; GDP shrank by almost 4 percent in 2015 and remained low, often close to zero, during the second half of the 2010s.

Internal power struggles in Parliament and in government led to uncertainty and declining foreign investment. The country's small emerging tourism industry, which began to develop during the latter part of the 2000s, is now basically completely eliminated.

  • Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including BDI which represents the country of Burundi.

The Nkurunzizia government tried to get revenue from elsewhere. Taxes were increased from 2017 on both basic and import goods. When the country could no longer afford to pay for all imports, inflation began to rise and food shortages arose among poor residents. In 2018, new austerity packages were issued and there is information that the government demanded donations to the Treasury from public servants and other citizens.

The government also sought financial support elsewhere. In 2017, China promised direct budget support, and agreements in the mining and energy sector were signed with Russia. An agreement was made with Turkey on increased trade. However, none of this compensated for the loss of assistance from the old donors.

At the end of the 2010, there was a serious shortage of food and fuel in the country. Foreign currency reserves were very small. The smuggling graced. A slaying of the poor came when the government in October 2018 drove almost all international aid organizations out of the country.

The Government has been repeatedly criticized by the Auditor General for overly optimistic forecasts of foreign aid and increased government revenue. Another problem is the widespread corruption, which the government has not shown greater interest in doing something about. In addition, wages have eroded so much of inflation that corruption has quickly become a condition of survival among civil servants and soldiers. A majority of the residents are forced to try to survive on a few kronor a day.

Help from the World Bank

Before the crisis erupted in 2015, Burundi received a lot of aid from donor countries in the western world such as the USA, France, Belgium and the Netherlands. Other major donors have been the EU, the World Bank, the IMF and a number of UN agencies. A large part of the state budget has been covered by foreign aid.

In 2009, Burundi qualified for the World Bank and IMF debt-relief program for heavily indebted poor countries (HIPC). The two institutions paid off a debt of $ 833 million. Previously, the external debt had at most accounted for more than 220 percent of GDP in 2003, but was now reduced rapidly and was down to a record low of 14 percent in 2014. Foreign debt has since remained at a relatively moderate level.

The World Bank has chosen to keep its most important projects in Burundi on the grounds that the population needs the support. The projects mainly help small farmers with agricultural equipment, fertilizers or irrigation.

Burundi has a constant deficit in foreign trade, ie imports exceed exports. The value of the few export goods does not cover the cost of importing food, fuel and capital goods. In addition, the construction industry has had major import needs during the reconstruction after the civil war. Fuel imports are subject to high taxes, which has led to extensive smuggling.

The only major export goods are coffee and tea, which together account for about half the export value. This makes the trade balance strongly dependent on the international price situation for these two goods. The state is trying to increase exports of other goods by attracting manufacturers with duty-free import of raw materials and tax exemptions. Gold and precious stones are also exported.

FACTS - FINANCE

GDP per person

US $ 275 (2018)

Total GDP

US $ 3,078 million (2018)

GDP growth

1.6 percent (2018)

Agriculture's share of GDP

30.6 percent (2016)

Manufacturing industry's share of GDP

9.4 percent (2016)

The service sector's share of GDP

49.1 percent (2016)

Inflation

7.3 percent (2019)

Government debt's share of GDP

58.4 percent (2018)

External debt

US $ 613 million (2017)

Currency

Burundian Franc

Merchandise exports

US $ 173 million (2017)

Imports

US $ 626 million (2017)

Current account

- US $ 360 million (2017)

Commodity trade's share of GDP

32 percent (2018)

Main export goods

Coffee, Tea, Sugarcane, Gold, Gemstones (2017)

Largest trading partner

India, China, Kenya, United Arab Emirates, Congo-Kinshasa, Switzerland (2017)

2005

August

Nkurunziza becomes new president

The newly elected parliament appoints CNDD-FDD leader Pierre Nkurunziza as president.

July

CNDD-FDD wins the parliamentary election

The hut-dominated party CNDD-FDD surprisingly wins big in the parliamentary elections. The party was formerly a Hutu extremist militia, but now, like all parties, must stand with both Hutu and Tutsi candidates.

March

New constitution

A new constitution comes into force after being approved in a referendum the month before. The constitution guarantees that the Tutsi minority will have influence over politics, the defense and the police power.

 

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