Burundi Signals Potential Interest Rate Cut as Inflation Eases

AFRICAN BUSINESS AND ECONOMYSeptember 11, 2024 at 12:54 PM UTC

TLDR

Burundi's central bank may lower interest rates by the end of 2024, first cut since using borrowing costs to control inflation.
Policy rate set at 12% in March as part of reforms tied to a $271 million IMF program.
Annual inflation expected to decrease to 15% by December, down from 18.7%, potentially leading to a rate cut.

Burundi’s central bank may lower interest rates by the end of 2024, marking the first cut since shifting to using borrowing costs to control inflation, according to Governor Edouard Normand Bigendako.

In March, the central bank set its policy rate at 12% as part of reforms tied to a $271 million, 38-month International Monetary Fund (IMF) program launched in July 2023.

Annual inflation is projected to decrease to 15% by December, down from 18.7%, which could lead to a rate cut, Bigendako said. He emphasized that reducing price pressures, particularly by ensuring a steady fuel supply, remains a key priority for the central bank.

Key Takeaways

Burundi’s move to control inflation through interest rates mirrors similar steps taken by Ethiopia and Tanzania earlier this year, as both countries also secured IMF funding alongside currency liberalization efforts. Despite ongoing challenges, including previous sanctions and the impact of the coronavirus pandemic, Burundi's economy is forecast to grow 4% in 2024, driven by improvements in the agricultural sector.

Burundi

Inflation

Economy

Interest Rate

Central Bank

Finance