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- GDP (PPP):
- $5.2 billion
- 4.2% growth
- 4.3% 5-year compound annual growth
- $615 per capita
- Inflation (CPI):
- FDI Inflow:
Burundi’s economic freedom score is 49, making its economy the 148th freest in the 2013 Index. Its overall score is 0.9 point better than last year, mainly because of a notable improvement in business freedom and a small gain in freedom from corruption. Burundi is ranked 34th out of 46 countries in the Sub-Saharan Africa region, and its score is worse than the world average.
Despite a significant attempt to improve the regulatory environment for business, Burundi’s overall lack of economic freedom continues to repress entrepreneurial activity. The foundations of economic freedom are fragile and uneven across the country. The Burundian economy, hampered by extensive state controls and structural problems, lags in productivity growth and lacks dynamism.
Long-standing structural problems include inefficient public finance management and a poor legal framework. The lack of enforcement of property rights and the weak rule of law have driven many people and enterprises into the informal sector. Trade and investment flows are undercut by government interference in the economy and failure to sustain open markets.
The 1993 assassination of Burundi’s first Hutu president, Melchior Ndadaye, sparked a civil war, and the violence following the death of his successor, Cyprien Ntayamira, and Rwandan President Juvenal Habyarimana in a 1994 plane crash set off the Rwandan genocide. Negotiations mediated by South Africa resulted in a power-sharing government in 2001, and the last active rebel group signed a cease-fire in 2008. A new constitution was adopted by referendum in 2005, and the National Assembly elected Pierre Nkurunziza president. Nkurunziza ran unopposed in 2010. Together with Uganda, Burundi is active in the African Union’s AMISOM peacekeeping mission in Somalia. Burundi is one of the world’s poorest nations. Agriculture accounts for over 30 percent of GDP and about 90 percent of employment. Coffee is the largest cash crop, but most of the population is engaged in subsistence farming. Burundi’s participation in the East African Community, which it joined in 2007, is expected to improve its trade prospects.
Private property is subject to government expropriation and armed banditry. The constitution guarantees the independence of the judiciary, but judges are appointed by the executive branch and subject to political pressure. Transparency International calls Burundi the most corrupt country in the region. Corruption is pervasive, and sales of government property frequently lead to allegations of bribery and cronyism.
The top income and corporate tax rates are 35 percent. Other taxes include a value-added tax (VAT) that recently replaced the general sales tax. The overall tax burden amounts to 20.1 percent of total domestic income. Government spending has risen to 50.8 percent of total domestic output, resulting in a deficit equal to 4 percent of GDP. Foreign aid makes up about 50 percent of the government budget, and public debt is equivalent to 35 percent of GDP.
Reform measures in recent years have streamlined the procedures for establishing a business, but start-ups are discouraged by other institutional deficiencies such as pervasive corruption and very limited access to credit. The labor market remains underdeveloped. The government influences prices through state-owned enterprises, subsidies, and agriculture-support programs. Electricity is routinely rationed by the state-owned power utility.
The average tariff is 5.5 percent, and the trade regime is relatively open, but inefficient bureaucracy adds to the cost of trade. Foreign and domestic investments receive equal treatment, and foreign investment generally is not subject to state screening. The small financial sector is dominated by banks, two of which are majority-owned by the state. With only 2 percent of the population holding bank accounts, many rely on informal lending.