Burkina Faso

Renewed growth dependent on the national security environment

In 2025, as in 2024, economic growth - although still below the standards of the 2010-2019 decade (6% per annum on average) - should continue the upward trend that has been in place since 2023, supported by agriculture, services and the resumption of gold mining activities. The rebound in gold production, which was undermined by the deterioration in the security situation in Burkina Faso in 2022, boosted by the forthcoming commissioning of the country's first refinery, makes the precious metal (80.4% of exports and 18.2% of GDP in 2023) a key driver of economic development. Cotton farming (4.4% of exports in 2023) is also helping to drive growth, as are services (50.5% of GDP in 2022), especially ICTs and financial services, and construction, which accounts for the majority of public investment spending (11.2% of GDP in 2023). However, this optimistic outlook remains dependent on developments in the security situation, while an appalling business environment in a particularly deteriorated socio-political context is undermining the confidence of foreign and private investors. Similarly, international support, almost exclusively from multilateral lenders, is declining in comparison with the period prior to the September 2022 putsch (1.6% of GDP in 2023 compared with 2.5% in 2021).

Household consumption (68.3% of GDP in 2023) is expected to grow, supported by moderate inflation in 2025 (as in 2024), thanks to the fall in global prices for imported commodities, but also in domestic food prices on back of bumper agricultural harvests. As a result, the Central Bank of West African States (BCEAO), which has kept its main key rate unchanged at 3.5% since December 2023, is likely to ease its monetary policy during 2025. Nevertheless, the humanitarian situation remains particularly worrying in Burkina Faso. A quarter of the population was still living on less than $2.15 a day in 2023, while 2.6 million people are facing serious food insecurity in a country that still relies heavily on subsistence farming, which has been badly affected by climate change.

Improving public finances under the aegis of the IMF

Burkina Faso is continuing its fiscal consolidation drive, supported by the IMF. The programme agreed between the two parties in September 2023 aims to improve discipline in public accounts, in exchange for the payment of USD 302 million over four years under the ECF, of which a total of USD 63.4 million had already been disbursed by July 2024. Although still higher than the WAEMU community standard (3% of GDP), the budget deficit should fall in 2024 and 2025 thanks to better revenue mobilisation (20.6% of GDP in 2023 compared with 17.9% in 2021), while military and social spending will remain high in response to the security and humanitarian crisis that has hit the country since 2022. Under the impetus of the IMF, the government therefore intends to simultaneously carry out several reforms, including a broadening of the tax base, the abolition of certain tax exemptions (VAT and corporation tax) and the gradual reduction in fuel subsidies (1.5% of GDP in 2023). In addition, the forthcoming revision of the mining code, which will increase the State's minimum stake in gold mines from 10% to 15% by 2025, should boost royalties from their exploitation, in addition to the rise in production (the same applies to cotton) and the world price. The weight of public debt as a percentage of GDP - only a quarter of which is held by external creditors - should ease by 2025 to a level deemed sustainable by the IMF.

The trade balance should return to a slight surplus by 2025, due to the expected increase in export volumes of gold and cotton, which account for almost all of Burkina Faso's export revenues. At the same time, lower world fuel prices (5.8% of imports in 2023) will help to curb the rise in the goods import bill. On the other hand, the services and primary income accounts will continue to show large deficits, due respectively to the increase in freight expenditure on goods and the repatriation of profits by foreign companies, two items logically affected by the progress in agricultural and mining production, but also due to transport difficulties caused by the cooling of relations with Abidjan in the case of the former. This imbalance is very partially offset by a surplus on the secondary income account, which is supplied by remittances from the diaspora and declining international aid, but much of which takes the form of direct investment aid (entered on the capital account, a means of ensuring that the funds are used properly for the planned projects. As a result, the current account deficit, financed by recourse to the regional bond market as well as by bilateral and multilateral loans, should nevertheless shrink in 2024 and further again in 2025.

Elections postponed amid political instability

Since 2015, insecurity in the Sahel, the result of constant pressure from armed Islamist groups, has killed several thousand people and displaced more than 2 million Burkinabes, while almost half the territory remains outside the control of the authorities. After a first military coup in January 2022, which led to the dismissal of President Kaboré by the Patriotic Movement for Safeguard and Restoration (MPSR), that was motivated by the government's inability to contain the jihadist insurrection, Lieutenant-Colonel Damiba was in turn dismissed in September of the same year, on the same grounds as his predecessor. The MPSR, still unable to curb the terrorist threat, and Burkina Faso have since been led by Captain Ibrahim Traoré, who was appointed President of the National Transition Council and has himself escaped several attempted putsches. Initially planned for July 2024, the presidential elections did not take place and have been postponed indefinitely for security reasons, while support from the population is gradually drying up and the humanitarian crisis is worsening. However, the autocratic nature of the regime leaves little hope of free and transparent elections.

Since September 2023, Burkina Faso, Mali and Niger, two other countries that have also fallen into the hands of military juntas, have formed the Alliance of Sahel States, a defensive coalition in response to the threat of intervention by ECOWAS from which they withdrew in January 2024 with effect from January 2025, and to regional and Western sanctions, most of which have since been lifted. The pact was transformed into a Confederation in July 2024, with the aim of achieving greater integration. All landlocked, the three member countries benefit from the indulgence of Guinea, which grants them access to the sea. As diplomatic and military cooperation with Russia have gained ground, relations with Paris have deteriorated sharply. Following the withdrawal of French forces in February 2023, France also announced the suspension of its development aid and budgetary support. Conversely, Ouagadougou is benefiting from the deployment of militiamen from the private company Africa Corps (formerly Wagner), which depends on the Russian Ministry of Defence and is responsible for providing security for Captain Traoré, in addition to instructors who accompany the army in the field.

Last updated : August 2024