Moody’s says the political crisis in Burundi is credit negative for the country.
Citing the United Nations High Commissioner for Refugees who said more than 105,000 people have fled Burundi to neighbouring countries to escape political violence after three weeks of demonstrations and a failed coup last Wednesday, the ratings agency indicates that the worsening political situation in Burundi threatens to disrupt economic activity and administrative stability,weaken the political will and capacity to implement much-needed structural reform, and jeopardise multilateral and bilateral donor support.
“Additionally, the crisis has the potential to reignite longstanding ethnic hostilities between Hutus and Tutsis and further destabilize the East African region, a salient reminder of broader political event risk across the continent,” it stated.
Burundi has been at the edge of social and political conflict following President Pierre Nkurunziza’s decision to alter the country’s constitution and stand for a third term in elections. Most citizens opposed the decision and began protests mostly in the capital Bujumbura.
Burundi’s constitution allows a president to be elected twice, for a total of 10 years in power.
But while Nkurunziza was in Tanzania for talks with fellow East African leaders to resolve the matter, some military officers led by Army Chief of Staff, Major General Godefroid Niyombare announced a coup. However, Major General Niyombare later in the week conceded that the coup had failed and Mr. Nkurunziza returned to Burundi, rival soldiers continued to battle for control of the capital Bujumbura into the weekend with the Presidential elections originally scheduled for 26 June seemingly certain to be postponed.
Moody’s believes the events of the past three weeks and increased uncertainty regarding the capacity of Burundi’s administrative apparatus threaten the country’s international support.
It also noted that, Burundi benefitted from debt relief late in the past decade that lowered total government debt to around 30.5 percent of GDP in 2014 from around 170 percent in 2004, according to the International Monetary Fund (IMF).
By Emmanuel K. Dogbevi