Burundi’s economy rebounds—but one shock could change everything

After growth of 4.2% in 2025 and a spectacular decline in inflation, Burundi appears to have embarked on an economic recovery. Yet behind this improvement lie serious imbalances: critically low foreign-exchange reserves, a persistent external deficit, shortages of hard currency and a high risk of debt distress. The International Monetary Fund is urging Bujumbura to press ahead with reforms without sacrificing social spending and the investment essential to the country’s development.

Burundi’s economy is breathing a little easier. After several years marked by foreign-currency shortages, soaring inflation and intense pressure on public finances, the small Great Lakes nation recorded a sufficiently clear improvement in 2025 to earn praise from the International Monetary Fund. But in Washington, no one is declaring victory just yet.

The IMF Executive Board has completed its 2026 Article IV consultation with Burundi, the regular examination through which the institution scrutinises the economy of each of its member countries. Its diagnosis can be summed up simply: the recovery is real, but it remains fragile.

Burundi is still one of the continent’s most vulnerable countries. Scarred by decades of conflict, it must contend with weak institutions, widespread poverty and the consequences of persistent instability in neighbouring Democratic Republic of Congo. Against this difficult backdrop, however, the performance recorded in 2025 represents an encouraging change of direction.

Growth reaches 4.2%, driven by coffee and gold

Real gross domestic product grew by 4.2% in 2025, up from 4.1% in 2024. Stronger exports of coffee and gold played a decisive role. Agriculture remains a pillar of the Burundian economy, with coffee among its main sources of foreign currency, while mining is expected to assume a growing role in the years ahead.

The greatest relief, however, has come from prices. In April 2025, inflation was still running at a staggering 45%. One year later, in April 2026, it had fallen to 8.6%.

That spectacular decline does not mean the battle against the rising cost of living has been won. Average inflation for the whole of 2025 is estimated at 34.2%, compared with 20.2% in 2024. For 2026, the IMF still expects average inflation of 14.5%, followed by only a gradual easing: 15.3% in 2027, 13.6% in 2028, 13.2% in 2029, 10.3% in 2030 and 11.5% in 2031.

In other words, Burundi may be leaving the territory of extreme inflation, but it is likely to face double-digit price increases for years to come. For a population with low incomes, spending a large share of household budgets on food and basic necessities, there remains a considerable gap between macroeconomic stabilisation and a tangible improvement in living standards.

Foreign currency remains the Achilles’ heel

This is probably the most worrying weakness of the Burundian economy. At the end of 2025, gross international reserves covered just 1.6 months of imports. The country held approximately $213.9 million in reserves, up from $191.3 million in 2024.

That is an extremely thin cushion for an economy dependent on imports of fuel, fertiliser, medicines, machinery and a wide range of manufactured goods. In the event of an external shock, the country’s room for manoeuvre is severely limited.

The current-account deficit also remains substantial, despite signs of improvement. It narrowed from 8.6% of GDP in 2024 to 6.6% in 2025 and is expected to decline gradually to 4.6% by 2031.

The trade imbalance is even more striking. In 2025, exports were equivalent to 8.2% of GDP, compared with 22.2% for imports. The trade deficit therefore stood at 14% of GDP.

The outlook is nevertheless expected to improve. The IMF projects that exports will rise to 12.2% of GDP by 2031, supported notably by agriculture and mining. Foreign-exchange reserves could reach $511.7 million by then, covering 2.8 months of imports. That would represent a significant improvement, though hardly a comfortable safety buffer.

Then there is the delicate question of the exchange rate. According to the IMF, the official value of the Burundian franc appears significantly overvalued. A premium persists on the parallel market, even though it has narrowed. The coexistence of an official exchange rate and a different unofficial price for foreign currency is more than a statistical anomaly: it can contribute to dollar shortages, discourage some exports, complicate imports and encourage informal trading networks.

The IMF therefore wants Burundi to move gradually towards a unified and more flexible exchange-rate regime. But such a reform is politically and socially sensitive. A depreciation of the franc can make exports more competitive and reduce economic distortions, while immediately making imported goods more expensive. In a poor country, the effect on fuel, fertiliser and certain food products can be particularly painful.

The January 2026 turning point

Faced with these imbalances, the Burundian authorities adopted a macroeconomic stabilisation plan in January 2026. It opened three fronts simultaneously: public finances, monetary policy and the foreign-exchange market.

Perhaps the most important measure was the freeze on central-bank financing of the government. When public spending is directly financed through money creation, the increase in the money supply can fuel inflation and intensify pressure on foreign currency. Ending this practice is therefore intended to break that cycle.

The first effects are already visible in the figures. Growth in broad money, which reached 29.3% in 2024, slowed to 19.4% in 2025. The IMF nevertheless expects it to rise again to 27.7% in 2026 before gradually slowing to 15.2% in 2031.

The tightening comes at a cost. Growth in credit to the private sector slowed from 27.2% in 2024 to 23.8% in 2025 and is expected to fall to 19% in 2026. The challenge facing the authorities is a familiar but formidable one: slowing money creation enough to bring inflation under control without choking off businesses and private investment.

The IMF’s executive directors are therefore calling on the Bank of the Republic of Burundi to maintain a tight monetary stance and actively manage liquidity. The objective is not only to contain inflation but also to prepare the ground for exchange-rate reform.

Tighter public finances, but pressure remains

Fiscal consolidation is also under way. In 2025, central government revenue and grants represented 16.5% of GDP, down from 19.9% in 2024. Domestic revenue itself stood at 14.4% of GDP, while grants accounted for only 2.1%.

Spending also declined, to 22% of GDP in 2025, from 24.9% the previous year. Nevertheless, the overall deficit widened slightly, from 5% to 5.5% of GDP. Excluding grants, it reached 7.6%.

Over the medium term, the government hopes to strengthen revenue collection while containing expenditure. According to current projections, revenue and grants would recover to 19.3% of GDP by 2031, of which 16.3% would come from domestic revenue. Expenditure would then stand at 23.1% of GDP.

The IMF nevertheless regards the authorities’ fiscal programme as highly ambitious. It recommends a more gradual reduction in public debt to avoid sacrificing social spending, infrastructure and investment essential to development.

This is a crucial point. Burundi could improve some of its fiscal ratios rapidly by sharply cutting public expenditure, but excessive austerity could undermine future growth, particularly if it affects education, healthcare, electricity, roads or agricultural investment.

The Fund is therefore calling not for indiscriminate austerity but for a rebalancing: greater mobilisation of domestic revenue, more efficient spending and priority for social sectors and infrastructure.

Public debt falls sharply, but risks remain high

On paper, the improvement is striking. Gross public debt fell from 53.3% of GDP in 2024 to 41.6% in 2025. It is expected to decline further to 38.4% in 2026 and 32.4% by 2031.

That rapid fall should nevertheless be interpreted cautiously. The IMF considers Burundi’s debt sustainable but continues to assess the country as facing a high risk of both external and overall debt distress.

The apparent paradox is explained by the country’s vulnerability. A moderate debt-to-GDP ratio does not in itself guarantee financial security. Much also depends on the government’s ability to raise revenue, the availability of foreign currency needed to service external debt, borrowing conditions and the economy’s capacity to withstand shocks.

Burundi is vulnerable on precisely these fronts: limited government revenue, weak foreign-exchange reserves, an external deficit, substantial domestic financing needs and exposure to swings in commodity prices.

The IMF is also concerned about arrears, weak execution of certain investment projects and risks associated with state-owned enterprises. It is calling for greater fiscal transparency and improvements in debt management and the governance of public companies.

Growth of around 4% will not be enough on its own

For 2026, the IMF expects economic growth of 3.9%. Growth is then projected at 4.2% in 2027, 4.5% in 2028, 4.3% in both 2029 and 2030, and 4.2% in 2031.

Average growth between 2027 and 2031 would therefore be approximately 4.3%. The expansion is expected to be driven by electrification, agriculture, mining, investment and the gradual transformation of the labour market.

But Burundi’s demographic challenge is immense. The population, estimated at 14 million in 2024, is projected to reach 17.2 million by 2031. Economic growth of 4% looks considerably less impressive when it must be shared among a rapidly expanding population.

Nominal GDP per capita, measured in dollars, illustrates the difficulty. After standing at $342.7 in 2024, it rose to an estimated $467.7 in 2025 and is projected to reach $533.4 in 2026. Thereafter, however, the trajectory becomes far more hesitant: $575.5 in 2027, $578 in 2028, $575 in 2029, $556 in 2030 and $567 in 2031.

The message is clear: headline economic growth will not be enough. To achieve a genuine improvement in living standards, Burundi will need to raise productivity, create better-paying jobs and transform the very structure of its economy.

Electricity, agriculture and mining at the heart of Burundi’s economic bet

The IMF identifies three sectors as particularly decisive: agriculture, mining and electricity.

Electrification could have effects across the entire economy. More reliable access to power lowers costs for businesses, facilitates industrialisation, enables the storage and processing of agricultural products and improves living conditions. Foreign direct investment linked to the electricity sector is also expected to help finance the external deficit.

Agriculture remains indispensable, both for employment and exports. Strong coffee exports already contributed to growth in 2025. Yet the sector remains exposed to weather conditions, fluctuations in global commodity prices and difficulties in obtaining agricultural inputs.

Mining, meanwhile, offers an opportunity for diversification. Gold contributed to the recent export recovery, and Burundi’s mineral potential could generate additional foreign-exchange earnings. But that will require proper regulation, effective collection of public revenue and sufficiently strong governance to prevent mining wealth from disappearing into opaque channels.

Banking sector resilient, but under scrutiny

Burundi’s banking system is considered broadly resilient by the IMF’s executive directors. That endorsement, however, comes with a call for continued vigilance.

The Fund notably recommends an asset quality review of the banking sector. Such an exercise is intended to establish the real value of loans recorded on bank balance sheets and identify potentially weak or inadequately provisioned assets.

The IMF is also calling for stronger financial supervision and further progress in combating money laundering and terrorist financing. These reforms are not simply a matter of international compliance: they directly influence the confidence of foreign banks, investors and financial partners.

The 2027 elections loom over the outlook

The outlook remains positive, but short-term risks are clearly tilted to the downside. The IMF specifically highlights the possibility of fiscal slippages ahead of the 2027 elections.

The danger is familiar in many countries. Before an election, governments may be tempted to increase spending, public-sector recruitment, subsidies or highly visible investments. In an economy with limited fiscal space and low foreign-exchange reserves, such a drift could quickly undermine recent progress.

Other threats come from abroad. A fall in the prices of Burundi’s exports would reduce foreign-currency earnings. Conversely, a surge in fuel or fertiliser prices would increase the import bill, fuel inflation and weigh on agricultural production.

The IMF nevertheless believes that the short-term impact of the war in the Middle East should remain limited for Burundi because of the country’s relatively low integration into global trade and currently favourable terms of trade.

Savings rise, but remain below investment

Another indicator neatly summarises Burundi’s financing needs. Investment stood at 19% of GDP in 2025, while national savings represented only 12.3%. That gap inevitably requires the economy to find external financing.

The projections are nevertheless encouraging. Savings could gradually rise to 16% of GDP by 2031, while investment would reach 20.6%.

Narrowing that gap would help reduce external dependence. But doing so requires higher incomes, greater confidence in the financial system and a stronger ability among households and businesses to accumulate sustainable savings.

Governance remains the common thread running through the IMF’s diagnosis

Beyond growth rates and deficits, the IMF’s assessment repeatedly returns to a deeper structural weakness: governance.

The executive directors are encouraging the authorities to build on the 2024 governance diagnostic assessment and develop a genuine action plan. Improving governance concerns public finances, state-owned enterprises, mining, debt management and the quality of institutions more broadly.

The Fund also emphasises gaps in economic data. This may sound like a secondary issue, but managing an economy without reliable statistics is rather like navigating with an incomplete map. Inaccurate data on prices, public finances, trade or the financial sector complicate policymaking and reduce visibility for investors.

An improvement that must still stand the test of time

Burundi therefore enters the second half of the decade in a paradoxical position. The numbers are improving: growth is holding up, inflation has slowed dramatically, public debt is falling and foreign-exchange reserves are projected to increase gradually. The end of monetary financing of the government also marks an important shift in economic policy.

Yet the foundations remain fragile. In 2025, reserves still covered only 1.6 months of imports. The current-account deficit remained substantial. The official exchange rate was still overvalued. Debt, although declining, continued to expose the country to a high risk of distress. And with the population expected to exceed 17 million by 2031, economic growth will have to become stronger, more productive and more broadly shared.

The IMF is therefore asking Bujumbura to walk a narrow path: maintain fiscal discipline without sacrificing development, fight inflation without suffocating credit, reform the exchange rate without triggering a social shock and exploit mineral resources without reproducing the governance failures seen elsewhere.

The next Article IV consultation is expected within twelve months. By then, the real test will not simply be whether the favourable indicators hold. It will be whether economic stabilisation finally begins to make a visible difference in the daily lives of Burundians.