GITEGA, December 29th (ABP) – The Upper House of Parliament passed, on Thursday, December 28, 2023, during a plenary session, the bill amending Law No. 1/03 of May 7, 2016 governing the management of public debt.
The Minister of Finance, Budget and Economic Planning, Mr. Audace Niyonzima, was the guest of the day to present the said bill to senators.
In his explanatory memorandum, Minister Niyonzima noted that the government of Burundi is engaged in a vast project of economic, financial and budgetary reforms with a view to establishing good governance of public finances and strengthening relations with its development partners.
According to the Minister in charge of Finance, the bill provides added value compared to the existing legal framework to guarantee rigorous monitoring of all institutions likely to contract public debt with the aim of countering possible budget risks linked to contingent liabilities.
It is for that reason that the strengthening of the existing legal framework for controlling the budgetary risk associated with the debt of companies with public participation and local authorities constitutes one of the major reforms envisaged by this bill for effective management of public debt, he stressed.
Mr. Niyonzima explained to senators that the existing legal framework for public debt management did not clarify the financial supervision of local authorities and companies with public participation while the prerogatives of financially committing the State fall to the minister in responsible for Finance. This framework, according to him, did not clearly provide the manner in which the guarantees and on-lent debts are granted.
This is why, he said, this revised bill emphasizes that the debt of companies with public participation and local authorities must be approved in advance by the Minister in charge of Finance in order to prevent possible budgetary risks and that the above-mentioned institutions are required to report the level of their debt to the Ministry in charge of Finance and on a regular basis. He further added that in this bill, the procedures for granting guarantees and on-lending debt have been clarified.
The senators wanted to know if with the revision of that law, Burundi will no longer be classified in the category of donor countries and that it will have the possibility of directly negotiating financing on international financial markets.
The Minister in charge of Public Finance explained that the classification of a country in the category of grant countries depends on its capacity to manage sufficient income to meet the repayment of the debt. Furthermore, the law does not change the classification of Burundi, but it comes to help the country to borrow prudently and to have an overall view of its public debt portfolio, he said, specifying that those rankings are derived from the analysis of debt sustainability.
Minister Niyonzima said the country is moving from a high risk country to a low risk country of debt distress as the economic situation improves and this allows it to trade on any one-stop shop.
After discussions and debates, the senators unanimously passed that bill.