The Economy of Burundi

THE ECONOMY OF BURUNDI 4

TheEconomy of Burundi

TheEconomy of Burundi

Overthe years, the Burundi’s economy has been characterized byunderdevelopment due to unchecked balance of trade. In October 2003,there was a trade deficit of 85931.90 million, this averaged to-95417.77 million for the year 2000 to 2013. In fact, the highestbalance of trade reached its peak at -31731.30 million BIF in 2010and the lowest recorded was in December 2008 at -402562.30 millionBIF (Agency, C. I., 2013).

Infact, Burundi’s economic growth is restricted by the trade deficitsince the country runs in selling its capital assets or borrowingfrom other countries. Consequently, this hampers economic growth andincrease the national debt. Similarly, the country experiencesinflationary pressure, which yield poverty, inequality, and lack ofinfrastructure (Vervisch, Vlassenroot, &amp Braeckman, 2013).Balanced trade would ensure that Burundi’s flow of money and tradeare at equilibrium that will guarantee the creation of jobs since thegovernment will be able to support its economy without borrowing.

Thehigh equilibria can be regarded as a trade surplus where countryexports more than its import, and the low equilibria is during tradedeficit where the country imports are more than exports.Essentially, not many countries are able to deviate from lowequilibria since resources are scarce, and no single country canproduce all what they require. In addition, when the country is undertrade surplus it enjoys a net inflow in terms of monetary payment.Therefore, this generates aggregate income which facilitate saving,investment, consumption and tax revenue.

Specifically,Burundian economy requires expenditure policies to shift its economyto higher equilibrium. Those policies should levy tariffs on imports,which will increase prices for imported good compared to domesticallyproduced goods. Therefore, the domestic producers will beencouraged to produce more, and this will make the deficit fall inthe current account. Secondly, the devaluation of the exchange ratewill make export cheaper and imports relatively expensive.

References

Agency,C. I. (2013).&nbspTheCIA World Factbook 2014.New York: Skyhorse Publishing, Inc.

Vervisch,T. G. A., Vlassenroot, K., &amp Braeckman, J. (2013). Livelihoods,power, and food insecurity: Adaptation of social capital portfoliosin protracted crises-case study Burundi.&nbspDisasters,&nbsp37(2), 267-292.