BUJUMBURA March 12th (ABP) – The governor of the Bank of the Republic of Burundi (BRB), Mr. Edouard Normand Bigendako chaired, Thursday March 7, 2024, a meeting for the country’s economic development partners to announce the monetary policy statement for the first quarter of 2024 within the BRB.
Mr. Bigendako recalled that the monetary policy committee met on February 6, 2024, to analyze recent macroeconomic development and the international, regional and national environment. The members of that county wanted to evaluate the results of recent decisions taken during the previous quarter with a view to deciding on new measures planned in the short term in terms of monetary and exchange rate policy. He indicated that according to the regional economic outlook of the International Monetary Fund (IMF) of October 2023, the economic growth of the countries of the East African Community is expected to excel in 2023. Estimates of Burundi’s economic growth indicate that the economy continues to recover while still facing shocks that are slowing the pace of growth, it is specified.
Burundi’s macroeconomic framework forecasts show that economic activity could accelerate in 2024 to 4.2% compared to 2.8% in 2023, following the improvement of activity in the primary and secondary and tertiary sectors, he added.
To that end, the current account deficit widened further in the 4th quarter of 2023 compared to the same quarter of last year, in connection with the increase in imports which still remain higher than exports.
Mr. Bigendako also specified that overall inflation continued the trend, going from 27.2% in the 3rd quarter of 2023 and 22.3% in the 4th quarter of 2023. That drop affected food inflation with a rate of 26, 6% compared to 36.8% in the previous quarter.
Inflation stands at 15.3% compared to 20.6%, mainly following the improvement in agricultural production and the restrictive monetary policy carried out by the central bank.
He mentioned that inflation forecasts also indicate that overall inflation continues its trend to settle at 15.2% in the 1st quarter of 2024. That drop will affect all components of the consumer price index. . It is due on the one hand to moderate demand following the action of restrictive monetary policy and on the other hand, to the fall in prices of basic and energy products on the international market.
In addition, the expected good agricultural production will have an impact on the fall in prices and food products.
However, those forecasts are subject to significant risks, notably geopolitical conflicts which could increase tensions on international prices of raw materials and energy as well as new disruptions in supply chains and climatic hazards, he announced.
On the basis of those analyses, he also indicated that the monetary policy committee considers that the current orientation of monetary policy will contribute to gradually bringing inflation back around its objective of 8% in the medium term and to supporting the macroeconomic stability. It is with that in mind that the central bank is committed to adopting a prudent and adaptive approach that ensures the stability of prices and the financial sector. From the above, the BRB Governor announced that the BRB will take measures for the coming period. That concerns the increase in the key rate by 200 basis points which will go from 10 to 12% and the reserve constitution period which is obligatory and set at 15 days and the process of liberalization of the foreign exchange market to increase availability currencies on the market.
The BRB is also committed to maintaining transparent communication with all economic players to ensure the success of the ongoing reforms. Please note that the terms of implementation of those new measures will be communicated at an appropriate time.