Burkina Faso is an extremely poor country that has been undertaking
stabilisation and liberalisation reforms since the early 1990s. Although
economic recovery ensued and substantial amounts of foreign assistance
were received, progress in poverty reduction and social development
indicators has been minimal or negative. Based on recent trends, the MDGs
are unlikely to be met. The main constraints to poverty reduction are
vulnerability to external shocks and poor public service delivery. Lack of
economic diversity means Burkina is highly vulnerable to terms of trade
shocks and adverse climatic conditions. Participatory development is strong in
Burkina Faso, and Government initiated democratic reform and, under the
PRSP process, improvements in public expenditure management. However,
institutions are weak, hindering the planning, co-ordination and monitoring of
spending programmes. Burkina piloted a Conditionality Reform Initiative,
which highlighted lack of co-ordination between donors and government as a
major constraint to aid effectiveness.
Aid, mainly in project form, accounts for over 40 per cent of public spending,
and Government plans to reduce aid dependency gradually by increasing the
share of domestic revenue. A significant increase is merited, but the doubling
of aid by 2007 implied by aid allocation models would increase it to 70% of
public expenditure, implying donor finance of over half of recurrent spending.
This level of exposure to risks from fluctuating aid commitments may be
undesirable. It would need to be provided mainly in programme form as
budget support, and would have to be predictable and sustained into the
longer term given the slow pace of revenue growth.