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Rwanda Burundi COUNTRY REPORT Rwanda Burundi August 2001 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through our digital portfolio, where our latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2001 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 1465-6418 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. 1 Contents 3 Summary Rwanda 5 Political structure 6 Economic structure 6 Annual indicators 7 Quarterly indicators 8 Outlook for 2001-02 9 Economic policy outlook 10 Economic forecast 11 The political scene 16 Economic policy and the economy 18 Agriculture 19 Mining 20 Foreign trade and payments Burundi 22 Political structure 23 Economic structure 23 Annual indicators 24 Quarterly indicators 25 Outlook for 2001-02 26 Economic policy outlook 27 Economic forecast 28 The political scene 33 Economic policy and the economy 34 Agriculture 35 Foreign trade and payments List of tables 10 Rwanda: forecast summary 27 Burundi: forecast summary List of figures 7 Rwanda: exchange rate 7 Rwanda: foreign reserves 12 Rwanda: areas of recent fighting 19 Rwanda: international tantalum prices 24 Burundi: exchange rate 24 Burundi: foreign reserves 32 Burundi: areas of recent conflict 34 Burundi: claims on central government 34 Burundi: exchange rate EIU Country Report August 2001 © The Economist Intelligence Unit Limited 2001 3 Summary August 2001 Rwanda Outlook for 2001-02 Incursions into Rwanda from Congo by the interahamwe and ex-FAR rebels are set to continue. However, they appear to pose little real threat to the Rwandan Patriotic Front (RPF) government as it has easily contained these attacks militarily and the loyalty of the rural Hutu populations has not seriously wavered. The rebels’ lack of success with attacks on the north-west may cause them to retreat to Burundi and launch attacks on southern Rwanda from there. The government has reaffirmed that it intends to maintain the ban on political activity. However, further agitation against this is set to increase, and the government may have to do more to neutralise such pressures. Greater co- operation with international peace efforts by the new Congolese government has served to increase pressure on and scrutiny about Rwanda’s own involvement there. This has also exposed the growing political weakness of Rwanda’s proxy force, the RCD. The government’s main economic policy objectives are to promote rapid, poverty-reducing growth as well as increased delivery of social services. Revenue generation remains a key objective, although spending will rise due to a higher than expected donor disbursement. Real GDP growth is expected to reach 5% in both 2001 and 2002. The political scene The interahamwe Hutu rebels have launched the first attacks on north-west Rwanda in two and a half years, an action believed to be motivated by growing pressure in eastern Democratic Republic of Congo, including a decision by its government that they should leave the country. A former president, Pasteur Bizimungu, has attempted to defy the ban on party politics and establish a new party, a move swiftly quashed by the government. Allegation of a growing incidence of human rights abuses has led to former government members and supporters fleeing the country. Efforts are underway to repair relations between Rwanda and Uganda following meetings between the two presidents in July. Cross border “defections” between the two countries have continued over the past quarter. Overtures are underway between Rwanda and Zimbabwe aimed at reaching agreement in Congo. Economic policy and the The poverty reduction strategy paper is being finalised, an event which will economy meet a condition for receiving debt relief under the heavily indebted poor countries (HIPC) initiative. The privatisation programme is experiencing considerable delays including for the main state utilities and coffee and tea factories. The government is nonetheless pushing ahead and the delays are primarily technical ones. The Ministry of Finance is acting to clear domestic arrears. The “B” season harvest has been positive with production rising from last year. Foreign trade and Rwanda has ratified the African Union treaty which has come into being, payments replacing the former Organisation for African Unity. EIU Country Report August 2001 © The Economist Intelligence Unit Limited 2001 4 Burundi Outlook for 2001-02 Following a summit on the peace process in Arusha, Tanzania, in July, there is a good chance that a transitional government, headed by President Pierre Buyoya, may be installed by November 2001. The transition and the peace agreement face stiff resistance from the armed forces and some opposition parties but is supported by the two largest Hutu and Tutsi parties as well as regional states. However, the anti-agreement opposition parties will be well placed to exploit growing anxiety among Tutsis regarding the transition, which will include a Hutu president in 18 months’ time and elections in three years. Military reform will remain a contentious issue as Hutus insist that this is necessary while the largely Tutsi armed forces adamantly oppose it. The conflict is set to escalate. The main rebel group, the Forces pour la défence de la démocratie (FDD), is withdrawing from the Democratic Republic of Congo, under pressure from the government there, and returning its forces to Burundi. The government will draw satisfaction from the support it has received for the transition from regional states and the international community. Real GDP growth has been revised downward to 2.8% this year on account of delays in restarting large scale foreign aid, but may pick up in 2002 as such assistance is consolidated. The political scene The mediator, Nelson Mandela, has secured agreement to the implementation of the Arusha peace accord following acceptance of a compromise that President Buyoya remain president during the first 18 months of the transition. A Hutu president, from the Front pour la démocratie au Burundi (Frodebu), is to take over during the second half of the transition. This compromise has been accepted by regional heads of state and many, but not all, of the opposition parties. A coup attempt by “anti-agreement” members of the armed forces took place July 22nd, the second this year, but was quickly quashed. The rebels have continued to reject any cease-fire amid a continued escalation of fighting inside the country. An influential report has alleged that the rebels’ non-participation in the peace process is largely due to the incompetence of the Tanzanian mediation team. Economic policy and the The government has announced a new war tax on some consumer goods to economy support public expenditure. A 10% wage rise for civil servants has been announced. The government has continued borrowing from the central bank to fund public expenditure, replacing an earlier policy of borrowing from the domestic commercial banks. The currency, the Burundian franc, has continued to weaken. The “B” season harvest has risen this year. Foreign trade and Donors have still not disbursed the bulk of funds pledged at a conference in payments Paris last year, because of continued doubts over the conflict. The EU has urged swifter implementation of these pledges. Burundi has ratified the African Union treaty which has replaced the Organisation for African Unity. Editors: Douglas Mason (editor); Angus Downie (consulting editor) Editorial closing date: July 26th 2001 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule
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