BI - Food Crisis Response Development Policy Grant

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The Food Crisis Response Development Policy Grant (DPG) Project for Burundi of US$10 million supports the Government's program to mitigate the impact of increased food prices on the poor, while maintaining fiscal stability. This in turn will help reduce the risk of worsened food insecurity, increased poverty, social unrest, and will help foster social and economic development. This grant helps to finance the revised 2008 budget which includes a number of measures, notably: (i) suspension of custom duties and domestic transaction taxes on thirteen basic food items; (ii) sustaining or extending school feeding programs (including for girls) in primary schools of vulnerable provinces; and (iii) adding more resources to the budget for the emergency humanitarian relief to cope with a threat of famine in the country following the drought. Other components of the revised budget attempt to address the fuel price increases and limit increases in transport costs, to which the poor are particularly vulnerable. The provision of budget financing will enable the Government to maintain the gains in macroeconomic stability, sustain the critical reforms under the Economic Reform Support Grant (ERSG) program, and undertake critical expenditures to respond to the food price shock. The development community is supporting Burundi's medium term poverty reduction strategy, and it is critical that the momentum of the reform program be maintained. The food response grant financing will complement other support from bilateral and multilateral agencies for mitigating the risks to Burundi's overall program. It will also support the Government's medium-term reform agenda for putting in place a better safety net system that improves Burundi's resilience and response to shocks.