Burundi faces foreign exchange shortage as aid dries up, crisis grinds on - Metro US

Burundi faces foreign exchange shortage as aid dries up, crisis grinds on

By Clement Manirabarusha

BUJUMBURA (Reuters) – A shortage of foreign exchange in Burundi caused by an ongoing political crisis is squeezing businesses, which say they are unable to replenish their stocks of imported merchandise.

The European Union suspended financial support to Burundi in March, saying President Pierre Nkurunziza had not done enough to resolve an ongoing political and economic crisis.

Bloody violence and a faltering economy have gripped Burundi since April of last year, when Nkurunziza said he would seek a third term in office. He went on to win an election last July.

Since then, at least three rebel groups have emerged and taken up arms against Nkurunziza’s government. Tit-for-tat assassinations and gun and grenade attacks have killed more than 450 people and forced over 250,000 to flee to nearby countries.

Along with the 2008 financial crisis and falling prices for export products like coffee, the freeze in foreign aid is making hard currency scarce, Jean Ciza, the governor of the central bank, told Reuters in an interview on Thursday.

“That is why we have to manage well all what we have, so that we spare it for the most priority sectors,” Ciza said.

Ciza did not give details of the size of the country’s foreign exchange reserves. Earlier this month, Christian Kwizera, a deputy spokesman at the finance ministry, said the reserves could cover two to two and a half months of imports.

Foreign exchange traders in Bujumbura told Reuters they could not buy enough dollars from the central bank to sell at the official exchange rate of 1,658 Burundian francs per dollar.

Instead, they were getting limited dollar supplies from neighboring Democratic Republic of Congo, the traders said, which they were selling on the black market. The Bujumbura black market rate is about 2,730 Burundian francs to the dollar, nearly double the official rate.

Some shop owners in Bujumbura said the shortage might force them to shut down their businesses as inventories were depleted.

“The warehouse is almost empty,” said the owner of a shop selling imported food in Bujumbura’s Quartier Asiatique, who declined to give her name. “I hope that the situation will change or else I will go home after closing my businesses.”

Another trader in the same neighborhood who sells building materials said she had not imported any new stock in the last two months because of the dollar shortage.

She said she had been forced to lay off two of her six workers and raise the prices of the remaining items in her shop to keep afloat.

“If the stuff you see is completely sold, we will close the businesses,” she said.

(Reporting by Clément Manirabarusha; Writing by Elias Biryabarema and George Obulutsa; Editing by Larry King)

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