Burundi Inflation Fell From 45% to 8.4%. The Dollar Shortage Did Not

Burundi's inflation rate plummeted from 45% to 8.4% between April 2025 and August 2026, according to the national statistics institute. This drastic reduction in prices marked the sharpest disinflation in East Africa. While the year-on-year inflation peaked at 45.5% in April 2025, the 12-month moving average for August 2026 stood at 14.3%, indicating that the average household has been experiencing more stable price levels.

The decline in inflation was largely driven by a surge in export earnings from coffee and gold. Coffee exports roughly doubled in 2025, while gold exports tripled, resulting in a 45.3% increase in export volumes. This export growth was transformative for the country, which relies heavily on a limited range of revenue-generating products.

The surplus of foreign currency entering the economy stemmed from the booming export sectors. As a result, the parallel exchange rate stabilized, alleviating pressure on prices. The government also shifted its deficit financing strategy, moving away from central bank advances, which further contributed to the stabilizing economy.

However, the underlying issue of a dollar shortage persisted. Burundi operates two exchange rates – an official rate and a parallel market rate. The parallel market rate is roughly double the official rate, creating a situation where foreign currency is rationed rather than readily available. This restriction has made it difficult for foreign companies operating in Burundi to repatriate profits, service dollar debt, and import essential goods.

Burundi's macroeconomic situation remains complex. While inflation has declined, the country's public debt levels are a cause for concern. The IMF estimates public debt at 41.6% of GDP for 2025, down from 53.3% in 2024, while the World Bank and African Development Bank cite higher figures. Despite the IMF's assessment that debt is sustainable, foreign reserves are insufficient to cover import expenses, leaving the country vulnerable to external shocks.

In summary, Burundi's macroeconomic numbers have improved, but the business environment has not kept pace. The country's success hinges on maintaining strong export earnings, particularly from coffee and gold, while addressing the persistent dollar shortage that hampers economic growth and stability.