BANK OF THE REPUBLIC

OF BURUNDI
THE GOVERNOR

CIRCULAR NO. 008/RC/2024 ON THE REQUIRED CONDITIONS FOR GRANTING FOREIGN CURRENCY LOANS AND/OR GUARANTEES ISSUED UNDER THE FOREIGN EXCHANGE REGULATIONS OF DECEMBER 28, 2023.

Pursuant to Law No. 1/34 of December 2, 2008 establishing the Statutes of the Bank of the Republic of Burundi; Pursuant to Law No. 1/17 of August 22, 2017 governing banking activities; Pursuant to the Foreign Exchange Regulations of December 28, 2023;

It is hereby issued:

Article 1: Purpose

This circular aims to specify the conditions for granting foreign currency loans and guarantees by credit institutions.

Article 2: Definitions

For the purposes of this circular, the following terms apply:

Foreign currency loans, credit contracted with a credit institution in foreign currency;

Foreign currency guarantee, a signed commitment by which a bank (guarantor) undertakes to pay the beneficiary (creditor) the foreign currency amount of the commitment in case of default by the debtor (guaranteed), subject to a commission paid directly by the guaranteed party.

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Article 3: Conditions for Granting Foreign Currency Loans

Credit institutions are authorized to grant foreign currency loans to residents and non-residents, provided that:

1. these loans are directed toward financing investments in Burundi, generating foreign currency revenues or alleviating pressure on foreign currency outflows (import substitution);
2. the borrower demonstrates repayment capacity, notably through foreign currency revenues amounting to at least 150% of the loan repayment schedule;
3. the institution ensures the management and hedging of the exchange rate risk inherent to this loan;
4. the credit institution ensures compliance with the provisions of the Circular on the division of credit risks;
5. the borrower provides a guarantee covering at least 150% of the loan amount.

The disbursement of said loan must be traceable on the borrower's account at a local bank.

Article 4: Conditions for Granting Foreign Currency Guarantees

Credit institutions are authorized to grant foreign currency guarantees, provided that they ensure the availability of consideration from the guarantee applicant and compliance with the Circular on the division of credit risks.

Article 5: Reporting Obligation

Credit institutions notify the Central Bank of the granting of a foreign currency loan or the issuance of a foreign currency guarantee as soon as the transaction is concluded.

Article 6: Entry into Force

This circular enters into force on the day of its publication on the Central Bank's website and in the Official Gazette of Burundi.

Done at Bujumbura, on March 25, 2024
Edouard Normand BIGENDAKO
Governor

1, Government Avenue - P.O. Box 705 BUJUMBURA - Tel: (257) 22-20 40 00 / 22 22 27 44 - Fax: (257) 223128 - Email: brb@brb.bi