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The Economy of Burkina Faso performed really over the years and was therefore able to resist to external influences caused by the crisis in Côte d’Ivoire, the fall of the dollar, the rising oil prices and the steep fall of the cotton prices, for which our country remains, since 2005, the first producer in Africa.

Considering these remarkable results in political and economic governance, Burkina Faso deemed eligible to the Millennium Challenge (M.C.C), allowing benefit from substantial additional financial resources for its development.

ECONOMIC GROWTH

Despite the difficult sub-regional context and a hard international environment, Burkina Faso's economy remains in 2006 on a growth path unfolded since a decade. Thus, the growth of the real GDP was at 6.5 % in 2006, with a growth per capita of 4.5 %.

These satisfactory results are attributable not only to reforms put in place by the Government, to skillfull handling of the exogenous shocks and to good harvest years, but also to the final private consumption growth, which has grown from 2.5 % in 2005 to 10.1 % in 2006, and to the strong 36.1% growth of cotton exports as well.

The inflation rate was brought under control at a 2.4 % level in 2006 from 6.4% the previous year resulting from the fall in the prices of cereal products due, as a result to the good harvest year 2005-2006,

EFFECTIVENESS IN PUBLIC FINANCES

In the field of public expenditure, the improvement of quality and transparency of the finance act represent one of the main concerns of the Government, which undertook several actions to improve effectiveness in its execution, among others : the creation of the National Coordination and Monitoring Committee for the Reform of tender bid, the incorporation of the West African Economic and Monetary Union’s directives (WAEMU) in the national legal system, the formation of an integrated system from tender bid and the application of the Plan of actions for the strengthening of public finances.

The execution of the State budget at the end of December 2006 is overall satisfactory, viewed as per the mobilization of the revenues as well as per the execution of the expenditure. The total balance, including grants was assessed to represent 5.2 % of the GDP.

The records show a deficit of Burkina Faso balance up to CFA 254.7 billion of CFA francs in 2006, against 300 billion in 2005. The evolution of monetary aggregates, as from end of December 31st, 2005 to December, 31st 2006, is characterized by an increase in the net external assets, a shrinkage of internal credit and an 8 % increase of the monetary mass ranging from CFA 601 billion at the end of December, 2005, to 649.1 billion of CFA francs at the end of December 2006.

Concerning the national debt, it is worthy to acknowledge the real implementation of the initiative of cancellation of the Multilateral Debt decided in June 2005 by the Group of Eight (G8), which resulted in the forgiveness of the outstanding debt for a total of 708,1 billion of CFA francs.

With respect to the Community rules, the main figures of the country's macroeconomic frame (inflation, deficit of the outside checking account, debt ratio) matched acceptably the requirements in the course of the year 2006 and the incorporation of the UEMOA directives in the national legal system remains in progress.

The review of the perception made of 80 % of VAT which went to 20 % as part of the finance act 2007;

Organization of special operation for the renewal of taxi parking areas which …

Reduction of transfer expenses from 15 % to 10 % which is effective in the finance act of 2007;

Effective launching of a program so called “doing business in Burkina Faso” ….

Given the awareness of the importance of mining sector in the development of Burkina Faso, the Government intensified over the past year the geological and mining activities research and some careers substances resulting in an increase in the number of mining titles and approvals (from 133 in 2005, to 237 in 2006, which represents a 78 % progress).

Let’s underscore with contentment the effective kickoff of the construction of the gold mines of Youga in Boulgou and of Taparko in Namentenga, from which the first gold bars are expected before the end of the ongoing year.

It is also necessary to underline the termination of the study of practicability of the three (3) mining projects of the gold mines of Mana-Fobiri in the Balé, of Inata in the Soum and of the zinc mine of Perkoa in the Sanguié, for which the exploitations are ongoing since March 2007.

As part of the promotion of the private sector, the permanent dialog inaugurated by the government was continued in 2006 resulting in important measures taken by the government such as : the launching of a special operation for issuing land ownership titles all over the thirteen regional capitals cities ; (the review of the perception mode of the 80 % VAT deduction which is now at 20 % as part of the finance act 2007); the organization of a special operation for the renewal of the taxis (parking cars areas), which is under way; the reduction of transfer expenses from 15 % to 10 %, which is effective in the finance act 2007; and the effective launching of a program so called "Doing Business in Burkina Faso," with the purpose of speeding up reforms for the improvement of the business climate and making the country one of Africa’s most attractive country.

The implementation of a Center for business development to help business formalities and complexities (Known by its French acronym CEFORE) has led to reducing the administrative costs by 40 % as well as the time to start up a business from 23 days to 7 days. As a result, a total of 4,700 new firms were created in 2006, which represents an increase of more than 23 % in comparison to 2005.

In the same way, the government has taken actions aiming at improving the investments frame resulting in the issuance of 43 consents (Click here to view the investment codes) (Click N0.) including 22 in the industrial sector, for projected investments of 193.5 billion CFA francs and the creation of 2,346 jobs

The Government also developed rehabilitation campaigns for the industrial firms listed below and created in 2005 some others with the purpose of consolidating existent industrial gap: FILSAH, JOSSIRA, Les Grands Moulins of Burkina (the Big Mills of Burkina) and Burkina Faso Textile (FASOTEX by its French acronym).

As part of the approvals of the establishment of industrial units, the year 2006 recorded fifty one (51) approvals for projected investments of around 16 billions CFA francs and projected 1,316 new jobs. Moreover, important efforts were unfolded with the objective of starting the transformation of our cotton on site, which will increase the added value for our economy.

In the commercial sector, the emphasis accent was put on the promotion of our own made products. In this regard and due to the creation of the Burkinabè company of fruits and vegetables (Known by its French acronym SOBFEL) and the activation of the fruit Terminal of Bobo-Dioulasso, the fruits and vegetables industry goes through a certain revival and already shows very encouraging results.

By obtaining textile visa as part of the African Growth and Opportunity Act (AGOA), the Government nowadays displays informative actions, awareness and support to the economic operators, with the objective of reinforcing the volume of our exports and notably to the American market, (where all should allow the promotion of our textile and craft products at best).

Burkina Faso also took part in the different negotiations rounds on Economic Partnership Agreements (EPA), voicing together with other countries of the Region the necessity of reaching agreements deemed true instrument in the development of our economies.

In the course of the 2005/2006 harvest year, the organization of the cotton industry was consolidated by the setting up of an inter-branch organization and the adoption of a new mechanism to set up producer’s price. On the performance plan, Burkina Faso’s cotton production settled at 806,000 tons of cotton seed, which represents a 13 % increase compared to the production of the previous year.

The industry remains nevertheless confronted to a deep financial disequilibrium mainly due to the weakness of worldwide costs in most cases. The government and the actors of the industry have put in place an exit strategy from a crisis, which puts the emphasis on the conditions of its sustainable development.

Besides, the marketing campaign of 2006/2007 would have been disastrous without the Government’s special and significant financial effort.

One of the major points of the Government's strategy when it comes to the commercial field is to transform our country into a major economic pole in West Africa. It is in this perspective that the government has launched an international Railway freight station of 5 billion in cost in Bobo-Dioulasso, thus becoming the crossroad and the meeting point of the sub-region.

Finally, besides the building of facilities for the reception and treatment of goods in the harbor of Téma, the abilities of the international railway station when it comes to the goods from Ouagadougou (OUAGARINTER) are going to be reinforced by the building of a container terminal.

In the field of privatization, the year 2006 has experienced the release of 51 % of ONATEL's shares by the burkinabè Government to the favor of Morocco Telecom. This first stage in ONATEL’s privatization process was made effective with the signature of the release convention on December 29th, 2006.

The partial withdrawal of the State from ONATEL will continue in 2007, with the realization of public offering of securities at a set price (French acronym: OPV) which will consist of the release of 20 % of ONATEL's shares through the regional stock market (French acronym BRVM), to promote people’s shareholding. Six percent (6 %) of the shares will return to the personnel. At the end of the process, the State will remain a minor sharehold in the firm’s capital with a 23 % share.

In March, 2006, Burkina Faso possessed a network of 630,000 mobile phone customers, with a 30 % growth rate compared to 2005. On January 1st, 2007, the number of subscribers has reached 1.016.605 customers, which is a 62 % progress rate.

The number of fixed telephone lines has gone from 91,000 to about 100,000 main lines. This represents a total of 5.5 – 8.5 telephones for 100 inhabitants (mobile and fixed).

The bandwidth of the international connection to the Internet has gone from 42 to 197 megabits / seconds, upward, and from 60 to 215 megabits / seconds downward

For the rural telephone, 27 new localities are from now on equipped.
The development of electronic communications has recorded stupendous progress in 2006.

Being an essential factor in development and in the fight against poverty, employment remains a constant concern for the Government

In the field that finances micro-projects, the Support funds for the promotion of employment (French acronym FAPE) financed in 2006, a hundred and four (104) firms in the agro-pastoral, craft, commercial field, services performance and transport at a cost of 371 million CFA francs. These actions of financing firms and pre financing promoters generated 670 new jobs in total.

As for the Support funds to the Informal sector (French acronym FASI), it has financed 623 micro-projects at a cost of 755.6 million CFA francs, thus allowing the creation of 339 jobs and the strengthening of 4,087 others.

While ensuring the improvement of professional training quality, the certification of professional trainings to promote and open bigger perspectives to the trained youth was tested in 2006.

The 2007 macro economic program aims at specifying macro economic stability and lays the foundations for a favorable growth to the poor.
The growth rate is projected to be 6.5 % supported by the transformation of the good cotton crops year in 2006. The expected improvement from the terms of exchange will rise up to 4 %.

Based on the good cereal revenue in 2006, inflationary pressures will be weak and the inflation rate is projected to reach 2 % in conformity with WAEMU’s convergence criteria.
On the subject of public finances, with the intention of supporting a careful macroeconomic management and in order to preserve the sustainability of debt, the total balance, including donations, is projected to be 4,1 % of the GDP.

In the area of structural policies, the government will continue to improve the business climate, to carry out the privatization program, the promotion of good governance and the fight against corruption, and simplification of the fiscal system to develop the private sector in order to strengthen growth.