Burkina Faso: Greater Capacity

• Author: Jean-Baptiste Compaoré
• Position: Minister of Finance of Burkina Faso

Burkina Faso began a stabilization and structural adjustment program in 1991, with IMF and World Bank support. Since 1994, real GDP growth has averaged more than 5 percent a year, among the highest rates in sub-Saharan Africa. Economic recovery in the 1990s was the result of major economic and institutional reforms, including trade liberalization, especially for agricultural products; reform of the public enterprises sector, including banking; and fiscal reform that introduced a value-added tax and improved economic management. Debt relief, through the Heavily Indebted Poor Countries initiative, has helped ease an earlier debt overhang.

But, the economy remains very vulnerable to external shocks, resulting in considerable fluctuations in growth. In 2004, growth fell to 4.6 percent from 8.0 percent in 2003, with the economy hampered by the oil price hike, the euro's appreciation falling world prices for cotton (the main export), an invasion of locusts, and drought. Around 80 percent of the population remains dependent on agriculture, which is affected by poor rainfall and desertification, and just under half the population remains below the official poverty line.

Over the past decade, the government has substantially increased budget allocations for social services resulting in key education and health indicators improving. But Burkina Faso has a long way to go to reach the MDGs and cannot do so without external aid. In order to implement our poverty reduction strategy and to boost spending further on infrastructure and the social sectors (including health, education, and water supplies), we will rely on a significant increase in external aid flows over the medium-term. The main framework for donor support is our Poverty Reduction Strategy Paper (PRSP), which was finalized in June 2000. A revised PRSP was adopted by the Council of Ministers on October 27, 2004, along with a priority action plan.

Diversifying the economy

Our medium-term growth strategy aims to diversify the economy and increase productivity while maintaining a stable macroeconomic environment. This will be done by focusing on rural development, agricultural diversification, and increased agricultural productivity, supported by the reform of public utilities and improvements in governance, with the aim of strengthening the business climate and promoting the development of the agricultural processing industry.

The main difficulty still facing...