Burundi plans to borrow 545 billion francs from domestic banks in 2026/27 as net external financing turns negative, while the World Bank warns that the poorest economies are paying their highest private lending rates in nearly four decades.
Burundi is increasingly relying on domestic borrowing to finance its budget as international financing conditions become more expensive for developing economies, exposing the country’s limited options for funding its development priorities.
The World Bank said Thursday that countries eligible for concessional financing from its International Development Association (IDA), including Burundi, paid an average interest rate of 8.2% on new private-creditor commitments in 2025, the highest level since 1989.
The average interest rate on new bonds issued by these countries reached 9.4%, according to the World Bank Group’s International Debt Report 2026.
Although Burundi has not accessed international private capital markets, the figures highlight the increasingly expensive financing environment facing low-income countries seeking resources beyond concessional loans from multilateral institutions and bilateral partners.
“The return of private lending to low- and middle-income countries is welcome, but these countries are borrowing more, paying more, and in many cases leaving less for long-term development,” said Haishan Fu, the World Bank Group’s chief statistician and director of development data.
“Managing debt responsibly means giving everyone—including future generations—a chance to thrive,” Fu said.
Burundi shifts toward domestic financing
Burundi’s 2026/27 national budget points to a growing reliance on domestic financing as net external financing is projected to remain negative.
The government expects net external financing of minus 103.8 billion Burundian francs ($34.7 million) during the current fiscal year, compared with minus 51.6 billion francs in 2025/26.
The negative balance indicates that external debt repayments and other outflows are expected to exceed new external financing recorded under that budget financing measure.
To cover its financing needs, the government plans to borrow 545.25 billion francs from domestic banks and financial institutions.
The figures were reported by Burundi Times in its analysis of the country’s record 7.02 trillion-franc budget for 2026/27, which projects domestic revenue of 4.22 trillion francs, a 26.1% increase from the previous fiscal year.
The budget also projects a fiscal deficit of 441.3 billion francs, up from 335.7 billion francs in 2025/26.
The financing strategy comes as Burundi seeks to expand domestic revenue collection while maintaining spending on infrastructure and other development priorities.
However, the government’s ambitious revenue target follows persistent challenges in meeting collection objectives.
Revenue pressure and debt risks
An earlier Burundi Times analysis of figures published by the National Institute of Statistics of Burundi found that government spending exceeded domestic revenue by 260.5 billion francs during the period covered by its August 2026 economic bulletin.
Revenue excluding grants stood at 894.2 billion francs, against total expenditure of approximately 1.155 trillion francs.
The government also received 238.7 billion francs in capital grants, bringing total resources to about 1.133 trillion francs and narrowing the gap to approximately 21.8 billion francs.
The figures illustrate the importance of external support in financing government expenditure, particularly investment spending.
The International Monetary Fund has also warned that Burundi’s narrow revenue base and high domestic financing needs remain sources of fiscal vulnerability.
Public debt declined from 53% of gross domestic product at the end of 2024 to 42% at the end of 2025, largely reflecting strong nominal economic growth.
Despite the improvement, the IMF maintained that Burundi faces a high risk of external debt distress and a high overall risk of debt distress, although it assessed the country’s debt as sustainable under its baseline projections.
The Fund has also cautioned that greater reliance on domestic borrowing could increase financing costs and reduce credit available to private businesses.
Government securities now account for about a quarter of commercial banks’ assets, according to the IMF’s 2026 assessment.
Developing countries pay more to service debt
The World Bank reported that developing countries’ external debt increased 5.5% to a record $9.4 trillion in 2025.
Debt among IDA-eligible countries rose 8.1% to $1.3 trillion, while bond issuance by public entities across developing countries increased nearly 35% to $251 billion.
Despite improved access to international capital markets, repayment pressures remained high.
Low- and middle-income countries paid $1.4 trillion in principal and interest in 2025, marking a fifth consecutive annual increase.
Between 2022 and 2025, developing countries paid $436 billion more in debt service than they received in new financing.
The World Bank said many governments issued new bonds to buy back maturing debt, extending repayment schedules without significantly reducing their overall debt stocks.
For Burundi, which relies largely on concessional external financing, the challenge is not simply the prevailing interest rate on international markets but the availability of affordable funding, the capacity to raise domestic revenue and the cost of financing its growing public investment needs.
The World Bank warned that high debt burdens in the poorest countries risk crowding out essential investments in people and long-term development.
