Tuesday, November 06, 2012

Burundi receives praise but sees little improvement

 Burundi is a land locked country in central Africa that has drawn praise for economic reforms. Those reforms have yet to see much improvement for those at the bottom of the economic ladder. Taxes are still to high for many and the local currency still can't buy much.

From Reuters alert Net, writer Duncan Miriri tells us more.
The tiny country targets economic growth of around 4 percent this year, supported by booming exports of tea and coffee, but high oil prices, drought and lower aid assistance have eroded the Burundi franc's value against the dollar by nearly half in the past three years, driving up consumer prices and causing widespread hardship for its citizens.
Inflation soared to 25 percent in April this year, forcing the government to remove taxes on essential imported commodities such as beans, rice and potatoes, after surging prices prompted many in the capital to stay away from work in protest. Inflation remains high at just above 14 percent.
The tea and coffee producer's Achilles heel is its heavy reliance on external aid to fund a budget that pays for free education and healthcare for pregnant women and children under the age of five.
Export earnings, mainly from coffee and tea, grew 17 percent to $86 million in the first nine months of this year, but they were outpaced by imports which jumped by close to a quarter to $533 million, creating a precarious balance of payments situation.
Foreign donors prop up state spending, expected to provide over 50 percent of the 2012 budget for the country, landlocked between Tanzania, Rwanda and the Democratic Republic of Congo.
While streets in the capital are busy, in shops like Alimasi's there is little sign of the consumerism seen in many fast-growing African economies.
Only 5 percent of the entire population of 8 million has a bank account. Many live from hand to mouth.
The World Bank has ranked Burundi, a member of the five-nation East African Community (EAC) common market, among the most improved economies worldwide for regulatory reforms, highlighting its new tax collection agency set up to help the government self-finance its budget.
Such reforms are leading to a much-needed pick-up in aid, which the government has pledged to plough into roads and energy-generation projects, to create jobs and kick-start the mining sector that could boost exports.

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