• According to the World Bank
• Inflation rate down to 4.9%
• Condition: reduced insecurity
A On March 30, 2023, the World Bank representation in Burkina Faso reviewed the country’s medium-term economic outlook for 2023.
The Bretton Wood institution reveals that in the medium term, and in a context marked by uncertainty, the real growth of the country of upright men should continue on its pre-COVID-19 pandemic trajectory. The review projects this growth in 2023 at 4.3%, or (1.7% per capita) and should be driven by the agriculture and services sectors, and the recovery of gold mining. On the other hand, Burkina Faso, which had reached the peak of inflation in the WAEMU space with a rate of 13.5% in October 2022, should fall significantly with a reasonable rate.
It shows that average annual inflation is expected to decline to 4.9% in 2023, reflecting lower global oil and food prices and assuming the security situation does not deteriorate further. Other information from Bretton Wood is that the budget deficit is expected to remain high at 6.9% of GDP, exceeding the target (4.7%) of the adopted budget.
The reasons for the increase are said to be due to increased security spending and the inclusion of securitized debt related to fuel subsidies in the spending figures. As a result, says the institution headed by Maïmouna Mbow Fam, convergence towards the WAEMU 3% of GDP target is not expected before 2027.
Another consequence is that financing the deficit will prove difficult to achieve, as the tightening of financing conditions at the global level has already increased the cost of financing in the WAEMU regional bond market and access to concessional financing remains limited. . These consequences could be mitigated with the return to civilian rule, expected in mid-2024, leading to a resumption of concessional financing, which would contribute to debt sustainability.
5.1% growth by 2025
The World Bank believes that assuming improved security and the implementation of the Transition program, growth should improve over the medium term to reach 5.1% by 2025. Poverty rates are projected to remain unchanged in 2023, with inflation offsetting income growth for poor households, before beginning a downward trend of around one percentage point per year. This slight decrease will only compensate for the increase in the population, so that the number of poor should remain at around 7.5 million, indicates the representation of the WB in Burkina Faso.
Ambéternifa Crépin SOMDA
Box 1
Persistent insecurity, big handicap at economic take-off
Lhe review insists that persistent insecurity is the main risk to the outlook. In addition, slower global growth, higher inflation and international monetary tightening could lead to higher financing costs. The price of gold remains at historically high levels, but could decline in real terms, posing a risk to the current account and domestic revenue mobilization.
Box 2
Security spending on the rise
Lhe World Bank notes that due to defense and security spending, which is rising sharply (4.6% of GDP in 2022, compared to 3.4% in 2021), the structurally high public wage bill, and higher tax transfers, the budget deficit increased to 10.6% of GDP in 2022, from 7.5% of GDP in 2021. At the same time, public debt reached 54.3% of GDP, domestic debt at high interest rates constituting the major part of the outstanding public debt.
