The Monetary Policy Committee of BRB convened on November 21, 2023, to discuss prevailing Economic trends at international, regional, and national levels. According to the International Monetary Fund's World Economic Outlook from October 2023, there is an anticipated slowdown in global economic growth from 3.5% in 2022 to 3.0% in 2023, reducing further to 2.9% in 2024. The deceleration is attributed to ongoing effects of the COVID-19 pandemic and the conflict in Ukraine.
In Sub-Saharan Africa, growth estimates dip from 4.0% in 2022 to 3.3% in 2023, largely affected by high Inflation in some countries, rising global interest rates, currency rate pressures, and funding shortages.
Burundi, however, forecasts a positive economic acceleration in 2023 compared to the past year, jumping from an annual growth rate of 3.0% from 1.8% in 2022, thanks to the improvements in primary (1.5% from -1.5%) and secondary (4.8% from 2.7%) sectors.
Despite the positive outlook, recent macroeconomic developments indicate persistent inflationary pressures, which might undercut initial forecasts and result in lesser economic performance than expected. Inflation rates hit 27.2% in the third quarter of 2023, up from 19.8% in the same period of the previous year. However, there's been a downward trend compared to the preceding quarter (27.2% from 29.5%), primarily due to reduced food inflation (36.8% from 43.9%).
Additionally, core inflation continues its downward trajectory, falling from 19.3% in the second quarter of 2023 to 18.8% in the third quarter on an annual average, partly due to the implementation of restrictive monetary policies.
Monetarily, the base money supply rose by 3.7%, related to a 12.7% increase in net domestic assets. Money supply experienced a 4.4% increase quarter-on-quarter.
Fiscally, total revenue increased by 14.0% in the third quarter of 2023 over the same quarter in 2022, boosted mainly due to the Burundi Revenue Authority's implementation of an online tax declaration and payment system.
Despite these developments, the national economic outlook remains cautiously optimistic but not without uncertainties, such as the global downturn due to geopolitical tensions that could further disrupt supply chains, and a decline in international demand partly due to tighter monetary conditions applied globally to counter inflationary pressures.
To navigate these choppy economic waters, BRB maintains the imperative need for an effective monetary policy to stabilize inflation. The Central Bank commits to a careful and adaptable approach, prioritizing price stability while also considering the need to stimulate economic activity.
To achieve these objectives, the BRB declares the following measures for the upcoming quarter:
- Continuation of a restrictive monetary policy, while still providing refinancing for agriculture and livestock sectors.
- Introduction of a benchmark interest rate as a new monetary policy tool, set at 10% for the fourth quarter of 2023.
Regarding foreign exchange policy, BRB plans to continue the liberalization of the exchange market, transferring foreign currency accounts of NGOs and private entities to commercial banks as of January 1, 2024.
Table: Summary of Economic and Monetary Trends - Burundi (2023)
| Economic Indicator | Statistic | Change |
|---|---|---|
| Global Economic Growth (2023) | 3.0% | Slowdown from 3.5% (2022) |
| Growth Forecast (2024) | 2.9% | Decrease from 2023 |
| Sub-Saharan Africa Growth (2023) | 3.3% | Down from 4.0% (2022) |
| Burundi Economic Growth (2023) | 3.0% | Up from 1.8% (2022) |
| Primary Sector Growth (2023) | 1.5% | Improvement from -1.5% (2022) |
| Secondary Sector Growth (2023) | 4.8% | Up from 2.7% (2022) |
| Inflation Rate (Q3 2023) | 27.2% | Increased from 19.8% (Q3 2022) |
| Previous Quarter Inflation | 27.2% | Down from 29.5% |
| Food Inflation (Q3 2023) | 36.8% | Decreased from 43.9% |
| Core Inflation (Q3 2023) | 18.8% | Falling from 19.3% (Q2 2023) |
| Base Money Supply Growth | 3.7% | - |
| Net Domestic Assets Increase | 12.7% | - |
| Money Supply Increase | 4.4% | Quarter-on-quarter |
| Total Revenue Increase (Q3 2023) |
