Question 22M.3.HL.TZ0.1a.iii

Trade
The main exports of Burundi in 2018 were gold (41.4 %), coffee (17.3 %) and tea (9.5 %), while refined petroleum (17.3 %) was its main import. Although the current account deficit was reduced to 10 % of GDP in 2019, there remains a huge imbalance between exports and imports. Reserve assets do not cover more than one month of imports, while the economy relies on foreign aid and foreign direct investment (FDI) to finance the deficit. The low level of foreign aid is likely to be insufficient to finance the deficit.

On the upside, Burundi has an abundance of minerals, including 6 % of the world’s nickel reserves. It is the only African country producing rare-earth minerals, which are used in many hi-tech products, such as smartphones. The United States (US) has been keen to diversify its supply of rare-earth minerals because of its trade dispute with China.

Figure 1 shows the market for gold in Burundi. Dd and Sd represent the yearly domestic demand and supply functions for gold, while Sw and Sw₁ represent the world supply of gold in 2019 and 2020 respectively. The price of gold is measured in US dollars (US$) per ounce (oz). The world price increased from US$1500 per oz to US$1800 per oz between July 2019 and July 2020.

Figure 1