The Dynamics of Fiscal Deficits in Burundi: An Exploratory Review
The Dynamics of Fiscal Deficits in Burundi: An Exploratory Review

Summary/Abstract: The major objective of this study is to undertake an exploratory review of fiscal deficits in Burundi during the period 1980 – 2017. Burundi emerged from conflict with large state and peace building challenges, and extreme institutional and socio-economic deficits. Many years of conflict affected Burundi's productive capacity, policy and institutional capacity, and the ability to make meaningful public investments. While the country has undertaken various fiscal policy reforms, revenue growth has been lower than anticipated, and little progress has been achieved in improving public expenditure efficiency. Consequently, fiscal deficits remain large as a percentage of GDP. The study approach considers a systematic review of literature, reforms, and trends. Findings indicate that the major factors contributing to the persistently large fiscal deficits in Burundi include the following: low and volatile economic growth, small economic base with low incomes, large informal economy, and dominance of the primary sectors. In addition, conflict and fragility, large expenditure on military and peace operations, as well as dependency on aid have been identified as major determinants of fiscal deficits in Burundi. The authorities in Burundi should put in place strategies for operating a fiscal policy that is consisted with sustainable fiscal balances and maintenance of sustainable levels of public debt in line with the East African Monetary Union convergence criteria. To the best of the authors’ knowledge, this is the first paper to provide a systematic review of the fiscal policy trends and reforms in Burundi.

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