Burundi

Economic activity boosted by public investment, but held back by inflation

Economic activity accelerated in 2024, driven by agriculture, domestic demand – particularly public demand – and improved access to electricity thanks to the commissioning of new hydroelectric power stations.

In 2025 growth has slowed due to a decline in private consumption, which has been penalised by high inflation and hit food prices hard. The activity is mainly supported by increased public spending related to the organisation of parliamentary elections, such as increases in civil servants' salaries, and, above all, investment. In 2026, growth is expected to pick up again: investment will accelerate further, notably with the Tanzania-Burundi railway line, financed by funds raised by the African Development Bank from institutional investors, development finance institutions and commercial banks. Investments will also be made in electrification and the construction of hydroelectric dams. The commissioning of the long-delayed Jiji-Mulembwe dam should enable a rebound in mining activity, which has so far been hampered by persistent energy shortages. Suspended since 2021 to renegotiate the operating contracts on more favourable terms for the state, mining production only resumed in January 2025. The primary sector could thus increase its contribution to growth through exports, benefiting from higher prices for coffee, tea and gold.

Inflation is being fuelled by the use of monetary financing of the public deficit, the widening gap between the official exchange rate and the parallel market rate, the reduction in foreign aid and the crackdown on imports. It should begin to ease in the second half of 2025 and in 2026 on back of lower prices for imported goods (fuel and food), the continued recovery in agricultural production following the floods of 2024 and a more moderate depreciation of the Burundian franc against the dollar. However, frequent flooding that have destroyed crops, particularly on the shores of Lake Tanganyika, the withdrawal of US aid and recurring shortages of essential goods due to the difficulty in accessing foreign currency pose a high risk.

Expansionary budget and high risk of default

The 2026 fiscal year, which runs from 1 July 2025 to 30 June 2026, will see an increase in public spending. The spending trend is due to an acceleration in investment and to an increase in current expenditure. This will be driven by the partial repayment of domestic and foreign debt, which alone will account for 21% of the budget, and by increases in the wage bill and operating budgets of several institutions. The Presidency of the Republic will see its budget increase by 87%, while the Ministries of Defence, Health and Education will see increases of 36%, 24% and 9%, respectively. At the same time, public revenues are expected to increase despite the reduction in foreign aid, driven by the broadening of the tax base, the strengthening of anti-fraud measures (particularly in the mining sector) the gradual increase in the state's shareholding in extractive companies from 10% to 15% and the increase in levies. These include an increase in the mining tax (from 7% to 16%), the introduction of administrative and IT fees, a 15% surcharge on imports of reinforced concrete and an upward revision of the price of travel documents.

The budget forecasts are based on ambitious growth assumptions, which could be undermined by the potentially recessionary effects of the new fiscal measures, persistent inflation or vulnerability to external shocks. The effectiveness of the fight against fraud and corruption is not guaranteed. The public deficit is financed by the central bank. The burden of public debt, two-thirds of which is held by domestic creditors – mainly the central bank – could decrease slightly, benefiting from negative real interest rates. External debt is mainly held by multilateral creditors, but also by a few countries, including China, India, the United Arab Emirates and Kuwait. The country remains exposed to a high risk of debt distress.

The current account deficit narrowed in 2024 and is expected to continue improving in 2025, despite the reduction in foreign aid. Rising global prices for coffee, tea and gold should support export revenues. In addition, the recovery in mining and the signing of new contracts on more favourable terms could also contribute to this. The current account deficit is financed mainly by multilateral partners (World Bank, development banks and the EU) in the form of project grants. Foreign direct investment, on the other hand, remains very low. Even if increased, foreign exchange reserves will remain low, leading to continued import restrictions. The parallel exchange rate is 2.5 times higher than the official rate.

Relative improvement in international relations and political stability

Under the presidency of Evariste Ndayishimiye, who has been in power since 2020, Burundi is working to reconnect with international donors who left in 2015, when former President Pierre Nkurunziza's decision to run for a third term – in violation of the Constitution – sparked widespread popular protests that were violently suppressed. The sanctions and suspension of international support caused serious economic harm, including severe shortages. There have been signs of improvement in the respect for human rights since 2022, albeit very relative. In addition to humanitarian aid, which had never ceased, project grants have returned. However, the budgetary support and project loans mentioned by international partners (IMF, World Bank, EU, etc.) have not resumed.

The ruling party's stranglehold on political life was further strengthened in June 2025 during the general elections when it won all the seats – a landslide victory that reflects the muzzling of the opposition. Despite this repression, difficult access to inadequate public services which is being exacerbated by the mass arrival of Congolese refugees and people displaced by flooding, rampant inflation that erodes purchasing power, and a history of political violence (civil war, coups d'état), have heightened the risk of popular uprisings.

Landlocked in the Great Lakes region, Burundi's access to global trade depends largely on Tanzania, its coastal neighbour. The construction of a new railway line, entrusted to Chinese companies (due for completion in 2030), connecting the country to the port of Dar es Salaam, through which 80% of its trade passes, will facilitate the country's food supply and mineral exports. Nickel mining, in particular, is expected to be highly profitable for Burundi, whose government signed a 10-year, USD 15 billion contract with the Russian company East African Region Project Group in 2022. Furthermore, in the context of regional instability, diplomatic and trade relations with Rwanda deteriorated in 2024 after President Ndayishimiye decided to block the border with his neighbour, accusing it of harbouring and training a rebel group hostile to the government in Gitega, the new capital. Tensions are all the more acute as Rwanda supports rebel groups in eastern DRC, which Burundi is fighting alongside the Congolese government.

Last updated: September 2025