Poor-country status could bring IMF debt relief

Burundi's satisfactory economic performance in 2004 could make the country eligible for the International Monetary Fund's (IMF's) Highly Indebted Poor Countries (HIPC) initiative, if it continues with its privatisation and liberalisation policies, an IMF official said on Wednesday. The official, Paul Mathieu, who headed an IMF delegation for a 10-day mission to the country, told a news conference in the capital, Bujumbura, that his delegation would in June present a second review of Burundi's economic reforms to the World Bank and IMF board of directors. "We also hope to present Burundi's request to benefit from the debt relief which will come from the HIPC initiative," he added. If considered for the HIPC initiative, Mathieu said Burundi's external debt could be cut significantly. This would allow US $30 million, or even up to $40 million, to be saved in the budget, "to be redirected to social sectors". His delegation advised Burundi to pursue liberalisation and privatisation, particularly in the coffee and sugar sectors. Burundian citizens, particularly civil servants, hope that if Burundi were accepted to the HIPC initiative, it would allow the government to meet their demands for salary increases. Civil servants have been demanding salary increases for years, but the government has not been able to meet their demands since the beginning of the civil war in 1993. On 7 March, nurses in public hospitals began a strike - demanding better pay and working conditions - that continues to paralyse provision of health services nationwide. Yet another strike, by employees of the Ministry of Civil Services, entered a second month in March, with the employees demanding more pay. In 2004, teachers stayed away from work for almost three months, and have threatened to resume their strike if the government fails to respect its pledges. However, the government has maintained that it does not have the money to increase salaries. At a meeting with leaders of trade unions on Friday, Burundian President Domitien Ndayizeye told workers that salaries could possibly increase in July if Burundi benefited from the HIPC initiative. However, Mathieu said on Wednesday that the workers should "be patient for some time". He said there had been an agreement on a reasonable budget for 2005, but that limitations still existed, and salary increases would have a significant impact on the nation's budget, and on inflation. "What will be the gain if there is a salary increase, but the loss of purchasing power?" he said, noting that the inflation rates, estimated at 11.8 percent, were still high. He added that measures had been taken to reinforce the central bank's ability to conduct monetary policy. The IMF delegation was in Burundi for the second review of the government's economic reforms. The delegation found that the country's performance was good at the end of December 2004. At the macroeconomic level there had been growth of about 4.5 percent in 2005, even if it was less than expected because of drought in the north of the country and a sharp rise in international oil prices.