7 key pieces of information you should know about Burundi's 2022/2023 Budget
RegionWeek Newsletter Vol VI, Issue #212 | Wednesday, June 15, 2022
Dear RegionWeek Reader,
In the last cabinet meeting held on June 1st, at the center of discussions was the general State budget for the 2022-2023 Financial year, presented by the Minister of Finance, Budget, and Economic Planning Dr. Domitien Ndihokubwayo. Today let us review the key takeaways from the Budget as discussed by the council of ministers in Gitega, the capital city of Burundi.
1. A Particular Context, from Line-item to Program Budgeting
The 2022/2023 finance bill is prepared in a particular context of the implementation of public finance management reforms, aimed at migrating from “Line-item Budgeting” to “Program Budgeting”.
For the 2022/2023 financial year, the draft State budget is therefore transitional with results-based budgeting where budget allocations are made on the basis of well-planned projects/programs/activities in order to be able to migrate entirely to budgeting in “program mode" from the Fiscal Year 2023/2024.
This way of budgeting implies that the budget appropriations allocated to activities through the Annual Work Plan and the Budget constitute a capital investment that will generate interest in terms of expected results.
The 2022/2023 draft State budget, which marks the transition to the program budget, introduces the Annual Work Plan and Budget as a tool for its implementation.
All the Ministries and institutions, the Personalized Administrations of the State, the Public Establishments of an Administrative Nature, the Companies with Public Participation, and all the municipalities of the country have prepared their budget forecasts by indicating the activities to be carried out with verifiable indicators, to allow monitoring and evaluation of the expected results on a quarterly basis.
2. Enhancing transparency and traceability
As part of the 2022/2023 budgetary transparency and traceability, the revenue that used to be collected by the Personalized Administrations bodies of the State, the Public Establishments of an Administrative Nature or other public services operating on the basis of State subsidies will now on fall into taxation managed by the Burundi Revenue Authority.
According to the 2021 Fiscal Transparency Report by the US state department, Burundi made significant progress by providing a substantially complete picture of the government’s planned expenditures and revenue streams in its publicly available budget documents, including information on financial allocations to and earnings from major state-owned enterprises.
The government also made its enacted budget publicly available online. It did not make an executive budget proposal publicly available. Information on debt obligations was not always current. Information on debt obligations, including contingent and state-owned enterprise debt, was not publicly available, timely, or comprehensive. Natural resource revenues were not included in the budget.
Though information in the budget was not always complete, it was considered generally reliable. Burundi’s supreme audit institution did not publish an audit report within a reasonable period of time, notes the Report
3. Supporting Agriculture through cooperatives
In the field of agriculture and livestock, the 2022-2023 draft budget places particular emphasis on financing the increase in agro-pastoral production through the subsidy of organo-mineral fertilizers and the production of selected seeds, the cattle herd restocking program in favor of the population grouped in agro-pastoral cooperatives.
To encourage producers, a remunerative purchase price for the production will be set to find sustainable solutions related to the problems of crop management In the field of economic and social infrastructure.
Agriculture is the sector that contributes most to gross domestic product, using 90 percent of Burundi’s labor force and earning 90 percent of export revenues. Despite the country's dependence on the primary sector, agriculture has not been modernized and continues to rely on mainly subsistence farming, employing unreliable and inefficient technology.
4. In transport, the focus is on the Uvinza-Maragarazi-Musongati-Gitega railway
In transport, the construction of the railway linking Uvinza-Maragarazi-Musongati-Gitega has been highly privileged. Burundi and Tanzania are seeking to raise $1.9 billion. The governments of Burundi and Tanzania have agreed to construct a standard gauge railway line from Uvinza to Musongati.
The railway line from Musongati will ease the exportation of Nickel from Musongati via Uvinza to join the Tanzania central line to the Port of Dar es Salaam as a gateway to the foreign markets in the world. The railway line will be mainly in Tanzania about 150Kms and Makamba region 50Kms with a total distance being about 200Kms built to preferably be AREMA's latest standard (inter-operability) mainly for freight (mining inputs/outputs, agricultural inputs/outputs, and other freight including passenger).
The main objective of constructing the new railway line and upgrading the existing line is to increase the freight transport traffic and in the alternative, the passenger traffic. This will also enhance the financial attractiveness of various mining developments that international mining companies are presently exploring.
This railway project is the number one priority within the framework of the East African Railway Master Plan (June 2009). The Master Plan examined many proposed extensions of the meter gauge railways in Kenya, Tanzania, and Uganda, both within the EAC and in countries beyond its borders.
5. More funds for the Youth Investment Bank
In order to finance development projects and youth employment, the Government will grant allocations to the Youth Economic Empowerment and Employment Program and increase the capital in the Youth Investment Bank and the Impulse, Guarantee, and Accompaniment Fund.
The youth investment bank (BIJE) was launched with a capital of 10 billion Bif (USD 5.3 million). Of which 15% share is owned by the government and 85% is owned by communes.
Burundi has embarked on the path of its political and economic emergence through the adoption of the National Development Plan of Burundi 2018-27. One of its priorities is to ensure the involvement of youth in all the processes of its development and to support the youth through policies and programs.
6. Digitization of public service
The 2022/2023 draft budget provides financial support for the digitization of public services, which is a reform to modernize the collection of public revenue. In an effort to increase revenues, significant measures are planned to ensure that the set objective is achieved, it will all start with the improvement of revenue collection tools, namely the revised laws and the IT infrastructure.
Thus, the Burundi Revenue Authority will pursue and undertake actions such as strengthening the collection of taxes on mining sector activities, taking steps to reduce the informal sector through local taxation and rigorous application of the law concerning dividends to be paid to the State.
Among other activities to be undertaken are the strengthening of mechanisms to fight against corruption, fraud, and smuggling, on one hand. On the other hand, the draft budget notes the importance of improving mechanisms for broadening the tax base, the computerization of all OBR services, and rigorous monitoring of VAT refunds.
7. The Budget at a glance
For this budget year 2022/2023, overall revenue increases from BIF 1,562.06 billion in 2021/2022 to BIF 2,193.6 billion in 2022/2023, an increase of 40.4%
As for expenses, they go from 1,713.8 billion BIF in the State budget, for the Fiscal Year 2021/2022 to 2,391.08 billion BIF in the draft State budget for the Fiscal Year 2022/2023, an increase of 39.5%. The overall deficit of the 2022/2023 General Budget project amounts to BIF 197.4 billion against BIF 151.8 billion (2.02%) in 2021/2022, an increase of 2.38%.
As part of the execution of the budget for the Fiscal Year 2022/2023, a quarterly expenditure commitment plan will be prepared and implemented based on the Work Plans and Annual Budget of the ministries and institutions.
The quarterly commitment plan will be validated by the Council of Ministers. All budgetary expenditure will be subjected to the prior authorization of the Minister in charge of Finance and executed taking into account available resources.
The bottom line
Burundi's corruption watchdog OLUCOME (Observatory for the Fight against Corruption and Economic Malpractice) asks the member of parliament to carefully study the draft general state budget for 2022-2023. Gabriel Rufyiri, the president of this organization in a press conference held on June 14, 2022, criticized a huge increase in taxes and duties falling mainly on less privileged Burundian citizens.
According to him, the Burundian government seeks to live beyond its own financial means. Expenditure on goods and services increased from BIF 977.7 billion in the 2021-2022 budget to more than BIF 1,131.9 billion in the 2022-2023 budget, an increase of 15.7%. This increase will, according to Gabriel Rufyiri, weigh heavily on the lower classes who already suffer from extreme poverty.
Thanks for reading!
Fabrice Iranzi, Editor in Chief | RegionWeek.com