Burundi - Structural adjustment and development issues (Vol. 1 of 2) : Executive summary

I- 2 Report No. 6754-BU Burundi Structural Adjustment and Development Issues Executive Summary January 20,1988 Division AF3CO South-Central and Indian Ocean Department Africa Region FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency Equivalents and Units Currency unit = Burundi 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 Development Fund BCC Burundi Coffee Company BEI Development Budget BNDE National Bank for Economic Development BO Ordinary budget BRB Bank of the Republic of Burundi (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/Education Campaign 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 Railway Company UNFPA United Nations Fund for Population Activities WHO World Health Organization  FOR OFFICIAL USE ONLY PREFACE This Summary report includes the main findings and recommendations of a compreheasive report (available upon request) which was prepared by an economic mission that visited Burundi during November/December 1986, and was updated following discussion with the Government in November 1987.1 The mission comprised Mmes. Maria E. Preire (mission chief), Dale Hill (agriculture), Judith Press (SMEs, consultant), Miriam Schneidman (population, health, nutrition), and Messrs. Didace Butare (industry, Resident Mission), Jean M. Cour (urban and regional development), Martyn Kebbell (export promotion, consultant), Janvier Kpourou-Litse (employment, external debt, statistical appendix), Benoit Millot (education), and Jan Weijenberg (agriculture). Additional contributions were rveived from Messrs. Robert Broadfield (energy sector issues and updating), Marc Blanc and J.J. Raoul (transport sector), and Christian Schmidt (financial aector). The sections concerning the structural adjustment program reflect the work of various Bank missions which visited Burundi between May 1985 and December 1986 for the preparation and supervision of the First SAL as well as of IMF missions which have collaborated closely in discussions on the adjustment program and the joint work carried out to prepare twoIPolicy Framework Papers (1986 and 1987) for Burundi. Ms. Lynne Sherburne-Benz (consultant) assisted in preparing the final draft. i The background report was sent to the Burundian authorities in July 1987 and, following the change in Government, discussed with the new Government in November 1987. This comprehensive report was intended to serve as the basis for detailed discussion of a wide range of macroeconomic and sectoral issues relevant to the implementation of SAL I (effective since September 1986) and to the preparation of SAL II. Many of the recommendations made in the report have already been adopted by the Government; others aze expected to be addressed in the context of the dialogue between the Government of Burundi and the Bank. Wherever appropriate, a note has been inserted to that effect. The statistics used in the report are based on data provided by the Burundian Government. Th4se generally cover the period up to December 1986. Many of the official dAta for the 1984-86 period used in compiling the Statistical Appendix are preliminary and subject to revision by the authorities. 1/The objectives of the main mission were to update recent economic developments and to identify major issues in key sectors as an input to the analysis of the Fifth Development Plan and to our economic and sector dialogue with the country. The Table of Contents of the background report is attached. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CWtNTRY OATA-BURUNDI AREA (housand eq. km.) POPULATION D8iSITY (1985) 27.8 4.9 million (1986) 169 per square km. Rate of growth: 2.8a 210 per square km. of arabIa land. (from 1982 to 1985) POPUtLATION oCARACTERISTICS (1982-1985) HEALTH (1979) Crude birth rate (per 1000) 47 Population per phy-lcian 4J020 Crude death rate (per 1000) 19 Population per hospital bed 744 (1970) Pertent urban 6 INCOME DISTRIWTION ENERGY CONSU1PTION PER CAPITA X of national income, highest quintile -- (Kilograms of oil equivalent) 15 lowest quintile - ACCESS TO SAFE WATER (1980) ACCESS TO ELCTRICITY U of population - total 24 j % of population - total - urban 90 - rural - rural 20 FOOD A NUJRITION (1982-1985) EDUCATION (1985) calorie intake as # of requiremento 102.1 Adult ulteracy rate S 30 per capita protein intake (am/day) 78.1 Primary school enrollment S 64 ONP PtR CAPITA IN 19Se a/: USd240 GROSS DOMESTIC PRODUCT IN 1986 A L RATE OF QWAlN (S. CONSTANr 1970 PRICES) US$ ML. S 1980-65 1986 MDP at market prices 1305.3 100.0 3.0 4.6 Gross domestic inveotment 168.3 12.9 4.5 19.1 Gross national savings 67.3 5.2 2.2 66.5 Current account balance -72.8 5.8 -4.7 0.8 Exports (genfa) 157.4 12.1 14.5 -2.9 Imports (c+nfa) 244.2 18.7 4.1 2.2 CDP at factor cost 1187.7 100.0 3.1 3.3 Primary sector 719.8 60.6 2.4 3.2 Secondary sector 162.5 13.7 5.0 8.4 Tertiary Sector 305.4 25.7 3.7 3.5 COYVE80dT FINANCE (Central Government) (Fbu bin.) S of ODP 1986 1986 1981 Current revenue b/ 24,09 16.2 13.3 Current expendrture c/ 18.07 12.1 12.2 Current surplus 6.02 4.1 1.0 Developmnt expenditure c/ 16.98 11.4 12.1 a/ The per capita ONP estimato calculated by the same conversion technique ao the world Bank Atlas. All other conversions to dollare in this table are at the average exchange rate prevailing during the period covered. b/ It does not include official capital grants. c/ On a cash basis. --/ not available. / not spplicable.  COUNTRY DATA - UtRlNI (Millions Fbu Outetanding End Period) MOEY, aWrT AND PRICES 1980 1981 1982 1988 1984 1988 1986 money Supply a/ 12681 15698 18878 16786 19954 23822 24774 Claims on Governeent (not) 4615 7806 9541 12389 14090 15798 14712 Claims on the Ecano"y 6276 11000 10989 11818 11430 12678 18645 Crodit to Publile Enterpries 1887 574 488 4854 4150 5128 7219 (percentage or Index %umbero) Money as I of CDP 15.8 18.0 16.9 16.6 16.9 18.4 16.6 CPI Averoge 1980.100 100.0 118.8 119.8 129.8 148.5 154.0 156.8 Annual Percentage Chansen in: I Consumer Prieo Index 12. 18.8 S.7 8.8 14.4 3.7 1.8 Claims on Government (net) 2S. 38.8 80.5 29.0 18.7 12.1 -6.9 Clairl on the Eonm . 2.9 -0.4 7.8 -8.2 10.9 7.6 Sank Credit to Public Enterprie -- -S7.7 -20.2 880.8 -4.7 23.8 40.8 BALANCE OF PAYMENTS 1980 1981 1982 1988 1964 1985 1986 MWH NDISE EXPORtS (AVBUOE 1980-1986) (1B8 MLLI"NS) US11 Min. Percent Ejports (g*nfe) 81.0 87.7 102.6 96.7 101.8 128.8 187.1 Imports (genfe) 205.6 198.6 286.1 288.7 247.9 228.0 248.7 Coffe 80.6 87.4 Teo 8.9 4.1 Reaource Gap (deficit-) -124.6 -110.9 -153.5 -159.0 -146.6 -99.2 -86.6 Cotton 1.2 1.4 Other 6.6 7.1 Factor Services (net) -7.1 -20.1 -26.2 -26.4 -26.9 -2.7 -82.4 Total 92.2 100.0 Current Transfore (net) 47.1 68.7 58.6 81.6 44.4 46.8 66.S Balance on Current Account -84.6 -67.8 -126.1 -188.8 -129.1 -65.6 -72.8 EXTGdAL DET AS OF DE. 31, 1986 USS Min. Official Capital Crent. 85.2 SB85 40.1 89.9 89.8 89.8 39.8 Public Debt, Inel. Ouarnteed S26.41 Direct Priv. Foreign Investment 1.1 0.6 1.8 0.4 0.9 1.6 1.5 Non Guaranteed f *vate Debt -- Not KLT Loans 80.6 22.8 40.7 110.7 81.1 56.1 80.2 Total Outetanding ;nd Disbureed 526.41 Short Term Capital (noet) 12.8 12.4 14.5 20.4 2.0 2.8 -1.2 Al location of SDRe 0.0 0.0 0.0 0.0 0.0 0.0 0.0 DE3T RSVWICE RATIO FOR 1986 b/ Percent Error. A Omimuione -1.0 -87.4 -6.1 -23.2 8.6 -2.7 -8.9 - - ------------- Increase in Reservee(-) -8.0 -81.0 -85.4 i4.0 -1.8 11.4 88.7 Public Debt, Inl. Guaranteed 28.2 Non Guarantoed Private Debt -- Petroleum Imports 24.7 82.2 90.1 28.. 82.8 82.8 26.8 Total Outetanding and Dlebursed 28.2 IDA LECINO AS OF ODE. 81,1986 USS Min. RATE OF EWCHANOE Annual Averagoo ----------------- -------- ---- ---- -----