IMF approves US $13 million for immediate emergency aid

The IMF approved on Wednesday an "immediately available" credit of US $13 million in emergency post-conflict aid to support the Burundi government's reconstruction and economic recovery programme.

"Burundi has made significant progress in laying the basis for normalcy since the conclusion of the Arusha Peace and Reconciliation Agreement in August 2000," said Eduardo Aninat, Deputy Managing Director and Acting Chairman of the IMF's Executive Board.

"Notwithstanding sporadic hostilities, the recent opening of direct negotiations between the government and rebel forces, as well as other peace initiatives in the subregion, provide a basis for cautious optimism that a broad-based settlement could be reached," he added.

However, he said that the Burundi authorities still faced major challenges to reduce domestic and external imbalances, improve financial management, and reduce poverty.

The IMF welcomed Burundi's adoption of measures designed to restore financial stability, these including tighter fiscal management, a more active monetary policy, a liberalisation of the foreign exchange auction market, and lower processing charges in the coffee sector.

"Further liberalisation of the foreign exchange market, together with regular auctions of foreign exchange, and a more active use of monetary policy instruments should help narrow the differential between the official and parallel market exchange rates," he said.

"Over time, it will be important for the Bank of the Republic of Burundi to improve its capacity to monitor and control bank liquidity, and develop more flexible monetary policy instruments," he added.

The IMF noted that subject to the establishment of a good record of performance, it stood ready to consider further help to Burundi under the post-conflict emergency assistance policy.

Rapid progress in the implementation of the programme would speed up the delivery of external aid and lay the groundwork for a medium-term programme that could be supported by the IMF under the Poverty Reduction and Growth Facility and the Initiative for Heavily Indebted Poor Countries.

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