Macroeconomic Problems

Macroeconomic Problems In Burkina Faso From

1990 - 2000
30 2.6
2.58
2.57 2.57
25 2.55
25.18 2.55
20 2.52 2.52
2.51
Inflation Rate
2.5 Unemployment rate
15 2.48 2.48

10 7.46 2.44 2.45

6.1

5 2.32
2.16
0.55
5.08
-0.5 -0.3 2.4
-1.07
0 -1.99
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
-5 2.35

  In January 1994, there was an unexpected problem that has happened which is that many
groups in Burkina Faso have lost purchasing power but the government still stimulated domestic
production and increased exports activity. In Burkina Faso, their exports activity is very narrowly
based. Then, because of its weak export sector, the Burkina Faso trade deficits are structural.
This country depends more on the cotton earnings and this cotton manufacturing sector alone
brings half of their foreign earnings for the country and the balance it has caused the inflation
rate to significantly increase from 0.553% in 1993 to 25.178% in 1994. At the same time, it has
caused the unemployment rate tend to increase too from 2.57% to 2.58% on 1993 until 1994
but then between 1995 and 1998, increased on imports was more than the export growth,
mostly on machinery activities, for the influx of foreign direct investments linked to the
expanding mining and construction sectors. From the line charts above, it has shown that this
problem and issues has affected the inflation rate and unemployment rate to decrease sharply
from 1994 until 1998. Since 1998, we can see that the exports sector has stagnated; it is
because of ups-and-downs in the cotton and gold sector. Dependence on external funding is a
major feature of the Burkina economy and at the end of 1999 the national debt was 97%external
and 85% multilateral. However, as the external debt was 40% soft loans, its NPV was only
26.4% of GDP while the nominal debt was 59%. The internal debt, mostly to commercial banks,
dropped sharply in 2000. In September 1997, Burkina Faso became one of the first countries
declared eligible for the Heavily Indebted Poor Countries (HIPC) Initiative. It achieved
completion point in July 2000, giving it a right to $400 million in debt relief ($229 million NPV)
and automatically qualifying for the Enhanced HIPC, which provided a further $300 million ($169
million NPV).
 Macroeconomic Problems In Burkina Faso From
2000-2010
16
3.75
14

12 8.6 10.67
4
10 Unemployment rate
2.63
Inflation rate
8
6.41
6 4.73 2.72 2.33 4.19
4.65
3.3
4 3.37
2.57 2.3 2.04 2.34
2 0.86
0.23
-0.17 -0.4
0 -0.61
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-2

In the year of 2003, based on the survey of Burkina Faso on household living conditions, it was
estimated the unemployment rate was 2.4% of the active population against 2.6% in the 1994.
The unemployment’s striking feature in Burkina Faso concerns strong geographical inequalities.
The unemployment rate in 2003 was 8.6% in urban areas compared to in the rural areas which
was 0.7%. The contrast between urban and rural area reflects the differences in the risks of
unemployment of the non-poor which are mostly the residents in the urban areas and mostly the
poor are from the residents in the rural areas. In 2003, 3.2% of the non-poor were unemployed
compared to 1.2% of the poor. In urban areas, the youth, first-time labour markets entrants and
educated people that are either secondary or higher were the most affected ones by the
unemployment. Other than unemployment, in the rural areas, it is agricultural underemployment,
and its downward impact on labour productivity that condemns many rural people to chronic
poverty. In the year of 2009, Burkina Faso’s economic activities were subdued. This was
caused by the impact of the adverse exogenous shocks which must be the downturn of the
global economic. The downturn of the global economic has affected the cotton sector and
downstream activities. Through both the cotton sector and downstream activities the strongest
impact was felt. The unfavourable weather condition has weighed heavily on the economic
activities and the domestic demand in 2009. The real GDP has slowed down to 3.2% compared
to 5.2% in 2008. The inflation was eased, the declining in global food and fuel prices were the
most reflected. The average inflation rate stood at 2.6%, down from 10.7% in 2008. The real
effective exchange has been stabilized after a 7% appreciation in 2008. The economic growth
during 2007 until 2009 was below expectations, Inflation rate was generally low. Other than that,
risk of debt distress in Burkina Faso high. Preserving the macroeconomic stability was
instrumental for the program.
In the year of 2007, Burkina Faso’s economy experienced and suffered several adverse shocks
and was also in a drought. In 2008, the country experienced the global energy and food crisis.
Burkina Faso also suffered during the global economic crisis in 2009. Severe floods were
experienced by the capital city of the country in September 2009. The country’s economic
growth was average because of these shocks that happened. Per year from 2007 until 2009 the
economic growth was about 4% compared to the previous decade which was around 6%. The
inflation remained to be low generally, but in the year 2008, the inflation has speed up to almost
11%. In the global prices, it owes a sharp increase. The coming on stream of gold exports has
helped in improving the external current account. The financial sector’s overall health was
sound. Generally, with the regional prudential ratios, the banks were capitalized and compiled
well. The effects that Burkina Faso had to face because of these problems are the downfall of
the economy that has suffered from severe problems such as floods, global economic crisis and
the unfavourable weather condition that has weighed heavily.
 Macroeconomic Problems in Burkina Faso On
2010 - 2019
8
6.48 6.42 6.34 6.22 6.26
6.09 6.09
5.6
6 5.14
4.72
3.82
4 Inflation Rate
2.76 Unemployment Rate
1.96
2 1.48
0.76 0.53 0.72
0.44
-0.26
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-2
-3.23

-4

In 2011, Burkina Faso economics was badly hit by social crisis in all sectors, including with the
administration, the army, the police, the judicial system, the informal sector, agriculture, trade
and etcetera. This crisis has made the economy in Burkina Faso continue to grow. The
economic growths in Burkina Faso’s are driven by the mining industry, which has made the
production tend to increase by 21% for that year. Even though the economic growths in 2011
are a little bit slower than in 2010, it has fallen from 7.9% to 5.1% from year to year. In 2011, the
cotton activities sector was seriously shaken up too. The producers are demanding a high price
on purchasing it in line on world cotton prices. The demand on cotton has led to the public
authorities. The unfavorable distribution of rainfall that had happened in 2011 has caused the
cotton production rose to decrease to 10.9%. It made the unemployment rate  shockingly
increase from 4.72% to 5.14% in a year which is from 2010 until 2011.These crises are
expected to continue from 2012 until 2013, which is the annual growth will be at least 10.0% in
that year. While in 2012 and 2013, the unemployment rate was relatively low. The labor forces
in Burkina’s are usually from poor people, people from rural areas and unskilled young people.
So, because of this labor force their productivity will remain low. It affects the unemployment
rate in the country from 2012 to 2013; the unemployment rate has increased from 5.6% to
6.09%. It also leads the inflation rate to decrease from 3.82% to 0.53%. The unemployed people
are generally from the young, educated and not poor section. This happens because the people
who are unemployed have poor skill levels and the company offers low wages to them. These
happen particularly in the rural areas that always keep workers in poverty. Moreover, the private
sector is very poorly developed and structurally unable to give an opportunity to job seekers.
The impacts of the crisis that had happened in Burkina Faso’s for this Phase 3 are the country
was distressed in debt and it was really high. The evidence that we got from the Debt
Sustainability Analysis, showed that the present value of debt to export ratio will surely be
breached starting from 2015. It is pointing to the lack of diversification and dependence on
cotton in Burkina Faso’s. Well, the sensitivity test also shows that the debt for Burkina Faso’s
country outlook is large on fiscal deficits.

References

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%20unemployment%20rate%20for,a%200.13%25%20decline%20from%202016.

OECD/AfDB (2002). African Economic Outlook, Burkina Faso gb, 12(1-10), 1990-2000.
https://www.oecd.org/countries/burkinafaso/1822794.pdf

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portal.org/smash/get/diva2:67217/FULLTEXT01.pdf

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%20Country%20Note.pdf

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International Monetary Fund. (2010). Burkina Faso: Request for a Three-Year Arrangement Under the
Extended Credit Facility: Staff Report; Staff Supplement; Press Release on the Executive Board
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Burkina Faso- inflation rate 2025. (n.d.). Statista. Retrieved January 7, 2021, from
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Burkina Faso Unemployment Rate | Moody’s Analytics. (n.d.). Www.Economy.com. Retrieved January 7,
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