ReportNo. 6754-BU Burundi StructuralAdjustment and Development Issues BackgroundPapers Public Disclosure Authorized January20,1988 DivisionAF3CO South-Centraland Indian Ocean Department AfricaRegion FOR OFFICIALUSE ONLY Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Documentof the WorldBank Thisdocument has a restricteddistribution and may be usedby recipients onlyin the performanceof theirofficial duties. Its contents may not otherwise be disclosedwithou; World Bank authorization. Currency Equivalents and Units Currency unit = B.rundi Franc (FBu) Exchange rate = US$ 1.00 = FBu 114.17 (Annual average 1986) = FBu 123.12 (Average Jan.-Nov. 1987) = SDR 1.00 = FBu 134.08 (Annual average 1986) FBu 159.50 (Average Jan.-Nov.1987) Standards = Metric system Fiscal Year - January 1 to December 31 Glossary of Abbreviations and Acronyms ADF African Develcpment Fund BCC Burundi Coffee Company BEI Development Budget BNDE National Bank for Economic Development BO Ordinary budget BRB Bank of the Republic of BurunJi (central bank) CADEBU Burundi Savings Bank CCI Chamber of Commerce and Industry COGERCO Company for the Management of the Cotton sector COOPEC Rural Cooperative of Credit COTEBU Textile Company of Bujumbura CPI Center for Industrial Promotion EDF European Development Fund FP Family Planning FWA Fully Washed Arabica (coffee) IEC Information/EducationCampaign ICA International Coffee Association IDA International Development Association IMF International Monetary Fund ISABU Agronomic Sciences Institute KAP Knowledge, Attitudes and Practices MCH Maternal and Child Care MOH Ministry of Health OCIBU Industrial Culture Office of Burundi ONAPHA National Pharmaceutical Office OTB Burundi Tea Office PE Public Enterprise PEP/PIP Public Expenditures Program/ Public Investment Program PHN Population, Health and Nutrition PTA Preferential Trade Agreement RDC Regional Development Companies SAL Structural Adjustment Lending SAP Structural Adjustment Program SCEP Service in Charge of Public Enterprises SME Small and Medium Enterprise SMIG Minimum Daily Wage SNES Service National d'Etudes Statistiques SOSUMO Sugar Production Enterprise in Mosso TRC Tanzania RaLlway Company UNFPA United Nations Fund for Population Activities WHO World Health Organization FOR 0C USEONLY PREFACF This report is largelybased on the findingsof an economic missionwhich visitedBurundi during November/December1986. The mission comprisedMmes. Maria E. Preire (MissionChief), Dale Hill (agriculture), Judith Press (SMEs,consultant), Miriam Schneidman(popu>ation, health, nutrition),and Messrs.Didace Butare (industry,Residen; Mission), Jean M. Cour (urbanand regionaldevelopment), Martyn Kebbell (exportpromotion, consultant),Janvier Kpourou-Litse (employment, external debt, statistical appendix),Benoit Millot (education),and Jan Weijenberg(agriculture). Additionalcontributions were receivedfrom Messrs. Robert Broadfield(energy sector issues and updating),Marc Blanc and J.J. Raoul (transportsector), and ChristianSchmidt (financial sector). The sections concerningthe structuraladjustment program reflect the work of various Bank missionswhich visited Burundibetween May 1985 and December 1986 for the preparationand supervisionof the First SAL as well as of IMF missions which have collaboratedclosely in discussionson the adjustmentprogram and the joint work carriedout to preparetwo Policy FrameworkPapers (1986 and 1987) for Burundi. Ms. Lynne Sherburne-Bent(consultant) was responsiblefor finalizingthe report followingits discussionwith the authorities. The reportwas discussedwith the Governmentin October/November 1987. Many of the recommendationsmade in the reporthave alreadybeen adoptedby the Government;others are expectedto be addressedin the contextof the dialoguebetween the Governmentof Burundiand the Bank. Wheneverpossible, a note has been insertedto that effect. The statisticsused in the reportare based on data providedby the BurundianGovernment. These generallycover the period up to December 1986. Many of the officialdata for the 1984-86period used in compiling the StatisticalAppendix are preliminaryand subjectto revisionby the authorities. Thisdocument has a restricteddistribution and maybe used by recipientsonly in the performance of their officialduties. Its contents may not otherwisebe disctosedwithout World Bank authorization. COLWTRYDATA-4LRlUI AREA(Thouand sq. km.) POPULATION DENIM (1986) 27.6 4.9 miion (1986) 1S9per square km. Rate of Growth: 2.81 210 per equare km. of arablo led. (from 1o8 to 198) POPUTIOTNCAACTERISTICS (1982-1988) HALTF (1979) Crude birth rate (per 1000) 47 Population per physician 48020 Crude doath rate (per 1000) 19 Population per hoepitol bed 7i4 (1970) Pereent urban 8 INCOIEDISTRINTION Boi CONUPiON PERCAPITA I of not;onal income, hiaheat quintile -- (Kilograma of otl equIve nt) 16 lowest quintile ACCESSTO SAFEWATER (1980) ACCESSTO ELTRICITY I of population - total 24 e of population - total = urban 9) - rural = rural 20 FOODA JWTRITION(1t92-1985) EDUCATION(198 eolorle Intake eo i of requirement. 102.1 Adult literacy rate I 80 per capita protein Intako (ga/day) 78.1 Primary aeol enrollment 1 64 GIP PIP CAPITAIN 1988a/: UtA240 SS;DOMESTIC PRODUCT IN 1988 ANNUALRATE OF OROWTH(11, CONSTANT1970 PRICES) UStS.N. 5 198048 1908 01P at market prices 1308.3 100.0 3.0 4.8 Grossdoestic investmnt 188.8 12.9 4.5 19.1 Gross national savings 67.8 8.2 2.2 "88. Current accunt balarce -72.8 8.6 -4.7 0.8 Exports @+nfa) 1S7.4 12.1 14.5 -2.9 aimorts (genen) 244.2 18.7 4.1 2.2 QDPat factor cost 1187.7 100.0 8.1 8.8 Primary "stor 719.8 80.6 2.4 8.2 Secondarysector 182.8 13.7 S 0 3.4 Tertiary setor 308.4 25.7 8.7 8.8 OOVBR4T FINANCE(Central Government) (Fbu bin.) 1 of COP 1908 198 10S1 Current revenue b/ 24.09 16.2 1t.8 Current expenditure c/ 18.07 12.1 12.2 Current surplus 6.02 4.1 1.0 Developmentexpenditure c/ 18.0S 11.4 12.1 D/ The per capita GP oetimate calculated by the momeconveroion technique mothe world BankAtlas. All other eonversionsto dollars in this table are at the average exchangerate prevailIna during th. period covered. b/ It does not include officiol capital grants. a/ On a cash baoio. / not available. / not uapplicable. COUtRYDATA -ANDI (14illion* Fbu Outstanding End Period) MONEY,CRED1T 4A0 PRICES 1980 1981 1982 1983 1984 1988 1988 MonesySupply */ 12601 15898 tS878 16756 19984 23822 2474 Claieo on Government(net) 4615 7808 9841 12389 14090 1S796 14712 Clot.. on the ESconoy 0276 11000 10989 11013 11430 1267 18645 Credit to Public Enterpri.o 1887 874 468 4884 4180 5120 7219 (percentage or Indx Numbers) Moneyae atIGof 15.9 1.0 10.9 16.6 16.9 18.4 16.6 CPI Average 19600100 100.0 118.8 119.8 129.8 140.8 184.0 156.8 Annual Percentage Chlngos in: ConeuoerPrice Index 12.8 13.8 8.7 8.8 14.4 3.7 1.8 Clalm an overnmnt(net) 28.2 58.8 30.8 29.9 18.7 12.1 -e.9 Claim on the Econogo 28.0 82.9 -0.4 7.8 -8.2 10.9 7.6 BankCr*dit to Public Entorprile -- -87.7 -20.2 880.8 -4.7 28.6 40.8 SALACEOF PAYMTS 1v80 191 1982 1988 1984 1988 1986 MEBCADISEEPOBMT (AVEBAQE 1980-1988) (Ms MILLIONS) US9 Mln. Percent FEporte (g*fen) 81.0 87.7 102.6 96.7 101.8 128.0 187.1 I,port (genfe) 205.6 196.6 25.1 288.7 247.9 228.0 248.7 Coffee 80.S 87.4 Ter 8.8 4.1 RecourceGap (deflclt.) -124.6 -110.9 -185.5 -189.0 -140.6 -99.2 -86.6 Cotton 1.2 1.4 Other 6.6 7.1 Factor Service (net) -7.1 -20.1 -26.2 -26.4 -26.9 -82.7 -81.4 Totael 92.2 100.0 Current Trenefere (net) 47.1 88.7 5.6 51.6 44.4 48.8 66.3 Balance on Current Account -84.6 -07.8 -126.1 -13.8 -129.1 -88.6 -72.8 EXTERALDEB AS OFOM. 81. 190 S Miin. OfficialCapital Orrnte 88.2 80.5 40.1 89.9 89.8 89.0 39.0 Public Debt,IncI. Ous nteed 626.41 Direct Priv. Foreign Investmen 1.1 0.6 1.5 0.4 0.9 1.6 1.8 Non GuaranteedPrivate; *t -- NeOtMLT Loans 80.6 22.8 40.7 110.7 81.1 86.1 80.2 Total Outetnding *andOiSebured 526.41 Short Term Capital (neOt) 12.8 12.4 14.5 20.4 2.0 2.8 -1.2 Al location of SORe 0.0 0.0 0.0 0.0 0.0 0.0 0.0 DEBTSERICE RATIOFOR 196 b/ Percent Error, A Oomisiono -1.0 -87.4 -6.1 -28.2 8.6 -2.7 -8.9 ------ Increase In Roaervee(-) -6.O -81.0 -88.4 14.0 -1.8 11.4 88.7 Public Debt, Inl. Ouaranted 28.2 Non GuaranteedPrivate Debt - Petroleum Imports 24.7 82.2 80.1 20.7 82.8 82.8 26.0 Total Outetanding and Disbursed 28.2 IDA LENDSNOAS OFDM. 81,1966 US$MIln. RATEOF EXCHAWN Annual Averag --------------- 1980 198t 1982 198S 1984 1985 1986 Outstanding and Diebureed 164.0 Undtiburwd 106.1 U5se1.00 - suf 90.0 90.0 90.0 98.0 119.7 120.7 114.0 Outotanding Incl. Unditbured 290.1 o/ Include, money and quasicmney. b/ Debt eorv ice as a pereuntage of export. of goodeand nn-foctor servico. BURUNDI STRUCTURALADJUSTMENT AND DEVELOPMENT ISSUES BACKGROUNDREPORT Table of Contents Patze No.. INTRODUCTION... *.......... ..... .......... ...... **....... 1 Progress since last CEM .1. .................... ................ 1 Organization of present report ............................... 2 I. RECENT POLICY REFORMS ANvu ,CORoMICPEKRFORMNCE ............ 3 A. An Overview of Recent Policy Reforms ................... 3 Background ................................ 3 Adjustment Policies .... 55............................ B. Recent Economic Performance ...... ..................... 8 SectorGrowth and Policies ........................... 8 Investment and Savings 449444444444 #4444..... 11 The External Sector 99944444444444c. 44944**4444**** 12 ExternalPublic Debt ... ,.............. 15 Public Finance ........ ............... ............ 16 Monetary Policies ...449 *4444449 .. .*. 21 Price and Price Determination ....... ,............... 23 Wagesand Employment .. ....................*......... 25 II. THE LONG-RUN CHALLENGE . ..................... 99944444 27 A. AGRICULTURE .............. 44444 . ..........27 FoodSecurity 4 94.444..494.4....4... 44949944444494944444.28 Government Programs ........................... ........ 29 Imports andFood Aid 94444444444*9444444444444444444444 30 Shortages/disruptions ................................