BURKINA FASO Key conditions and Recent developments challenges Following a sharp recovery in the second half of 2020, GDP growth remained Table 1 2021 Over the past decade, the primary (mainly strong in 2021, estimated at 7.0 percent. Population, million 21.5 agriculture) sector has declined in impor- This reflected a strong rebound in ser- GDP, current US$ billion 18.0 tance, now contributing less than 20 per- vices and robust gold production and was GDP per capita, current US$ 839.4 cent to the economy, with a booming gold supported by private investment, main- a 33.7 International poverty rate ($1.9) industry generating almost 20 percent of ly into mines, air transport, and bever- a 61.8 GDP and 85 percent of exports. Services ages. The fiscal deficit remained above 5 Lower middle-income poverty rate ($3.2) a 80.0 account for nearly half of GDP, with the percent as the government implemented Upper middle-income poverty rate ($5.5) Gini index a 47.3 public and retail sectors creating most jobs the Economic Recovery Plan in response School enrollment, primary (% gross) b 92.6 and output. With an increasingly violent to COVID-19 while enacting additional b 61.6 security context outside the capital, about security spending. Despite robust gold Life expectancy at birth, years a quarter of schools have closed in the two production, the trade deficit deteriorated, Total GHG Emissions (mtCO2e) 62.7 most affected regions, and the number of with imports rising faster than exports. Source: WDI, Macro Poverty Outlook, and official data. internally displaced persons reached 1.8 With lower donor grants, the current ac- a/ Most recent value (2018), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy million as of March 2022. count deficit is estimated to have (2019). Economic prospects are uncertain after the widened to 3.0 percent of GDP. recent unconstitutional regime change, Fueled by an accommodative monetary combined with growing insecurity, the im- stance and rising food prices (+14.7 per- The economy grew by an estimated 7.0 pact of climatic change, and the lingering cent) on account of a sharp contraction in percent in 2021 (4.2 percent in per-capita effects of COVID-19. On January 24, 2022, agricultural output, inflation (CPI) reached a military junta seized power in response 3.9 percent in 2021, a 10-year high. Food in- terms), with investment-led growth in to the worsening security situation, which flation is a particular concern for the poor, services, gold mining, and manufactur- reduced international community financial as food accounts for 48 percent of their to- ing. Due to supply bottlenecks in the support and could prompt economic sanc- tal consumption. The Central Bank of West agricultural sector, food insecurity re- tions by ECOWAS, the regional bloc from African States (BCEAO) manages the mon- which the country got suspended. The pri- etary and exchange rate policies, which mains high, and inflation approached a marily rain-fed agriculture and livestock maintains a fixed peg between the CFA 10-year peak. The transition government, sectors remain highly vulnerable to climat- Franc and the Euro. Its reserves reached in place since the January 2022 coup ic shocks and natural disasters, particular- 5.8 months of imports of goods and ser- d’état, faces significant challenges in ad- ly droughts, floods, and locust invasion. vices in 2021 due to increased exports, the dressing the multifaceted security, hu- A resurgence of COVID-19, with less than August 2021 SDR allocation, and portfolio 20 percent of the population vaccinated, inflows linked to Eurobond issuances in manitarian, and food crises. could also subdue domestic demand and the region (by Benin, Côte d’Ivoire, Sene- hurt the services sector. gal, and BOAD). FIGURE 1 Burkina Faso / Real GDP and sectoral FIGURE 2 Burkina Faso / Actual and projected poverty decomposition of real GDP rates and real GDP per capita Billion CFAF Poverty rate (%) Real GDP per capita (constant LCU) 2,250 100 600,000 2,000 90 500,000 1,750 80 1,500 70 400,000 1,250 60 1,000 50 300,000 750 40 200,000 30 500 20 250 100,000 10 - Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 0 0 2016 2017 2018 2019 2020 2021 2014 2016 2018 2020 2022 2024 International poverty rate Lower middle-income pov. rate Primary Sector Secondary Sector Tertiary Sector Upper middle-income pov. rate Real GDP pc Source: : World Bank staff estimates based on the national statistical institute Source: World Bank. Notes: see Table 2. (INSD) data. MPO 9 Apr 22 The international extreme poverty rate at 4.8 percent in 2022, assuming that there reforms are crucial to maintaining reserves (US$1.9/day per capita, 2011 PPP) in- continue to be no significant sanctions at an optimal level. creased by about half a percentage point from the international community in re- The extreme poverty rate is projected to to 32.6 percent in 2020, resulting in an ad- sponse to the January coup d’état and tran- continue to fall by about one percentage ditional 290,000 extreme poor. In 2021, sition arrangements. Growth is expected to point a year over the medium term. The poverty projections based on per-capita be driven by private consumption and a number of poor is also projected to de- GDP growth estimated a decline to 30.8 rebound in agriculture, while the current crease. Still, with high population growth, percent. Food insecurity (as measured by account deficit may widen further due to this means only 50,000 to 100,000 would the FIES) has followed the same pattern, high oil prices and a decline in donor escape poverty each year, and over 6 mil- rising from 44 percent in 2018 to 53 percent grants after the coup. lion Burkinabe will remain poor for the in June 2020 and then falling to 37 percent The fiscal deficit is projected to worsen in foreseeable future. Food insecurity is ex- by June 2021 (phone surveys). However, 2022 due to increased security spending pected to deteriorate due to poor harvests the decline in poverty may be overestimat- and lower grants before gradually con- in 2021 and rising food prices, with the sit- ed as mining and services growth is un- verging toward the WAEMU fiscal target uation particularly severe in the north. likely to quickly translate into increased of 3 percent of GDP by 2025. Over the There are significant downside risks to the incomes for poor and rural households, medium term, further tax reforms and economic outlook with multiple domestic and the same surveys find that almost half wage bill controls could significantly lower risks, including further political instability, of households had lower incomes in 2021, the fiscal deficit. Burkina Faso remains at climate shocks, local COVID outbreaks, compared to 2020, with only 28 percent re- moderate risk of external and overall pub- and widespread social discontent from ported an increase. lic debt distress, with some space to absorb high food inflation and insecurity. The eco- shocks on external debt. nomic consequences of the Russia-Ukraine WAEMU regional foreign exchange re- war would primarily be through higher serves are expected to fall to around 5.3 global food (grains and fertilizer) and en- Outlook months of imports by 2024, reflecting ergy prices. The projections already reflect faster growth in imports and a reduction in recent sharp price increases of oil, gas, Over the medium term, the economy is ex- net capital inflows (as a percent of GDP), metals, minerals, and agricultural com- pected to continue slightly below its pre- as the environment for Eurobond is- modities since January 2022, including pandemic growth path amidst heightened suances remains uncertain. Growth- gold, which benefits Burkina Faso. uncertainty. Real GDP growth is projected friendly fiscal consolidation and structural TABLE 2 Burkina Faso / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 5.7 1.9 7.0 4.8 5.4 5.3 Private Consumption 3.5 8.6 3.4 9.9 3.4 5.4 Government Consumption 13.4 8.0 6.6 13.7 12.5 3.2 Gross Fixed Capital Investment 3.0 -4.0 29.1 -9.2 6.2 8.0 Exports, Goods and Services -0.3 -3.6 6.5 9.7 4.5 3.4 Imports, Goods and Services -2.8 10.0 15.5 10.7 5.1 4.8 Real GDP growth, at constant factor prices 5.9 2.6 7.0 4.8 5.4 5.3 Agriculture 2.1 6.3 -4.1 6.3 4.6 6.2 Industry 2.7 15.6 11.0 4.8 5.9 6.9 Services 9.8 -6.0 10.6 4.1 5.5 3.9 Inflation (Consumer Price Index) -3.2 1.9 3.9 5.0 3.5 3.0 Current Account Balance (% of GDP) -3.3 -0.2 -3.0 -4.8 -4.7 -4.9 Net Foreign Direct Investment (% of GDP) 0.9 0.6 0.5 0.5 0.6 0.6 Fiscal Balance (% of GDP) -3.3 -5.5 -5.5 -6.6 -5.1 -3.8 Debt (% of GDP) 42.0 46.3 55.0 59.3 58.4 56.4 Primary Balance (% of GDP) -2.1 -4.2 -4.0 -4.4 -2.9 -1.8 a,b International poverty rate ($1.9 in 2011 PPP) 32.1 32.6 30.8 30.1 28.8 27.7 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 60.6 60.9 59.7 59.0 57.8 56.7 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 79.2 79.5 78.4 77.9 77.4 76.8 GHG emissions growth (mtCO2e) 4.3 4.7 4.4 5.1 5.0 4.9 Energy related GHG emissions (% of total) 10.5 10.9 10.7 11.2 11.7 12.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2018-EHCVM.Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2018) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 10 Apr 22