Covid-19: a debt of nearly 400 billion FCFA contracted

• To manage the health emergency and economic recovery

• 300 billion FCFA of domestic debt

• 55 billion FCFA of external debt

Po deal with the health emergency (Covid-19) and ensure economic recovery, the Burkinabè State and its partners have mobilized 833 billion FCFA between 2020 and 2021. The contribution of the State on its own resources and of the national private sector is valued at 170.89 billion FCFA, or 20.51% of the total amount. Out of 833 billion FCFA, nearly 400 billion FCFA of debt contracted by the government. This information comes from the Center for Information, Training and Studies on the Budget (CIFOEB).

In a final report published in October 2022, entitled “Governance of official development assistance (ODA) and public debt in Burkina Faso in the context of Covid-19”, CIFOEB takes stock of this contracted debt and its management. It appears that between 2020 and 2021, this debt amounts to 355.92 billion FCFA, or 42.73% of the total resources mobilized. The internal debt is composed of 300.93 billion FCFA, against 55 billion FCFA of external debt.

The internal debt represents 84.55%, against 15.45% of external debt

The report informs that the domestic debt was mainly mobilized through issues of “Covid social bonds” on the regional financial market, the rapid credit facility and SDR allocations from the IMF on-lent through the BCEAO, and a loan outstanding with BOAD. On the “good social Covid” case, the report mentions that the BCEAO enabled Burkina Faso to mobilize a cumulative amount of 130 billion FCFA representing 15.61% of total COVID resources. The “Covid social bond” represents 43.20% of domestic debt, followed by SDRs at 30.45%, then rapid credit facilities at 23.03% and finally, the BOAD loan at 3.32%.

Covid-19, weakly financed by external debt

However, the document states that the IMF alone contributed 53.48% to the country’s COVID domestic debt. Despite the predominance of domestic debt, deemed generally more restrictive, it should be noted that in the context of COVID-19, debt conditions have been relaxed, through the various instruments that have been activated so as to adapt the terms indebtedness to the economic situation caused by the pandemic. Another key piece of information is that the response to COVID-19 was poorly financed by external debt fully mobilized from multilateral partners. Indeed, it represented only 15.45% of the total COVID debt. According to the investigators, this low proportion could be explained, on the one hand, by a desire to favor donations, in view of the impact of COVID-19 on the socio-economic situation of the country, following the COVID- 19, and on the other hand, by the need to simultaneously address the needs of other countries affected by the pandemic.

Focus on SDR management

91.63 billion FCFA of SDRs in the form of loans granted by the International Monetary Fund (IMF), repayable over 20 years at an interest rate of 0.05%. Special Drawing Rights (SDRs) are international reserve assets, created in 1969 by the IMF, to supplement the official foreign exchange reserves of its member countries. The report informs that in Burkina Faso, this allocation was mainly used in the form of budget support to deal with the socio-economic effects of COVID-19 and help reduce the budget deficit. However, it should be noted that this distribution of allocations does not take into account the needs of the countries, but based on their quota. This contracted debt was used to finance social and economic measures (see box). o

Synthesis of Ambéternifa Crépin SOMDA


Economic measures

– Economic stimulus funds to affected businesses ;

– Acquisition of agricultural inputs and animal feed, agricultural materials and equipment ;

–Repayment of the debt of the hospitality, tourism and arts sectors, as well as the press ;

-Financing income-generating activities for women ;

– Funding for infectious disease research and drug production ;

– Support for cultural actors.

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