The International Monetary Fund (IMF) on Tuesday approved the release of $115.3 million to Burkina Faso to respond to the novel coronavirus economic consequences, in addition to the IMF debt service relief to the West African country under the Catastrophe Containment and Relief Trust.
The ’emergency assistance’ for Burkina Faso under the Rapid Credit Facility would be used to address the urgent balance-of-payments needs by the Burkina Faso government, the IMF said.
According to the IMF, the immediate challenge for Burkina Faso is “to contain the spread of COVID-19, strengthen medical care, implement the social distancing and other containment measures, and mitigate the socio-economic impact of the pandemic, especially on the most vulnerable.”
Mr. Mitsuhiro Furusawa, Deputy Managing Director at the IMF and Acting Board Chair, said Burkina Faso has been adversely impacted by the COVID-19 pandemic.
“The near-term economic outlook has deteriorated quickly, compounding existing challenges posed by the security crisis in the Sahel region and the associated high number of internal displacements and humanitarian assistance needs,” Furusawa said.
“The authorities’ measures to contain and mitigate the socio-economic fallout of the pandemic have given rise to substantial and urgent fiscal and balance of payments needs. With uncertainties surrounding the duration and scope of the pandemic, the fallout could intensify further. The IMF emergency support under the Rapid Credit Facility will provide much-needed resources to support the authorities’ response to the crisis and help catalyze further donor support,” he added.
According to Furusawa, a widening of the fiscal deficit in 2020 is warranted to create room for health care spending, social safety nets and for the mitigation of the economic impact of the shocks.
“Prioritized, well-targeted and cost-effective spending would be critical. Fiscal measures introduced as a response to the shocks should also be temporary to ensure medium-term debt sustainability. Once the impact of the COVID-19 pandemic has abated, fiscal policy should be rebalanced toward a more growth-friendly composition, including scaling down current transfers to increase space for domestically financed development spending.
“Additional external support, preferably in the form of grants, is urgently required to meet Burkina Faso’s elevated financing needs, ease the financial burden of the pandemic and preserve recent macroeconomic stability and development gains,” he added.