- The IMF Executive Board today completed the Fourth Review of Benin's Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) and the First Review under the Resilience and Sustainability Facility (RSF). The decision allows for an immediate disbursement of about US$ 67 million. The Board also concluded the 2024 article IV Consultation.
- The Beninese economy has proven remarkably resilient to recent shocks, supported by continued reform drive and a robust government response made possible by policy space created pre-pandemic.
- Program performance has been strong. An important priority going forward is to continue anchoring Benin's growth and development in sustainable and inclusive policies that leave no region nor socio-economic group behind.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded today the 2024 Article IV consultation[1] with Benin and completed the Fourth Review under the 42-month blended Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) arrangements, and the First Review under the Resilience and Sustainability Facility (RSF) arrangement. The EFF/ECF was approved by the IMF Executive Board in July 2022 (see PR 22/252) and complemented by the RSF in December 2023 (see PR 23/452).
The completion of the reviews allows for the immediate disbursement of SDR 31.2 million (about US$ 41 million) under the EFF/ECF—bringing total disbursements under the program to SDR 400.2 million (about US$ 526 million)—and of SDR 19.8 million (about US$ 26 million) under the RSF arrangement. The Executive Board also approved the modification of the quantitative performance criterion on new debt contracted or guaranteed by the government for 2024, with public debt remaining at moderate risk of debt distress.
The Beninese economy has proven remarkably resilient to shocks, leveraging buffers wisely created pre-pandemic and supported by the government's continued reform efforts, with economic activity estimated to have expanded by 6.4 percent in 2023. Growth is expected to remain strong in the coming years, supported by the government infrastructure drive and by private investment, including through the Special Economic Zone. The ongoing reform of education will help prepare the labor force to a transforming economy. This could help harness the demographic dividend and translate the current growth momentum into sustained job-rich growth over the medium-and-long term. However, regional headwinds could compound global uncertainty and disrupt trade. Benin also remains vulnerable to extreme climate events.
Program performance has been strong, with all end-December 2023 quantitative targets met, and structural benchmarks (under the EFF/ECF), and reform measures (under the RSF), implemented.
Following the Executive Board discussion on Benin, Mr. Okamura, Deputy Managing Director, and acting chair, issued the following statement[2]:
"Benin's strong reform drive and sound macroeconomic management over the past several years provided policy space to navigate repeated shocks since the pandemic. After a period of warranted policy accommodation, the authorities frontloaded fiscal consolidation last year to start rebuilding policy buffers. Their homegrown reform program is gaining traction with support from international development partners and investors.
"Sound public finances have helped improve overall access to basic public services over time with poverty also declining at the national level, although inequality has persisted across regions and income groups. An important challenge going forward is to continue anchoring Benin's growth and development in policies that will leave no region nor socio-economic group behind. In this context, a swift full operationalization of the social registry will facilitate the coordination of various social assistance programs and improve their targeting to the poor and vulnerable households across regions.
"Benin's large development needs in both core social sectors (education, health and social protection) and non-traditional areas (such as digitalization and climate change) put an extra premium on domestic revenue mobilization. Maintaining the tax collection momentum—anchored in the Medium-Term Revenue Strategy (MTRS)—will support convergence to the West-African Economic and Monetary Union-wide fiscal deficit norm of 3 percent of GDP by 2025, while helping meet the country's development needs in a sustainable manner.
"Contingency planning remains paramount, considering global uncertainty and regional geo-economic and security headwinds. In this context, the authorities should maintain flexibility in budget execution and stand ready to reprioritize public investment in case shocks materialize.
"The authorities should press ahead with ongoing reforms to the rule of law and the anticorruption and AML/CFT frameworks to lay the foundations for private sector-led inclusive growth. Remaining vigilant vis-à-vis public and non-public financial sector risks will preserve macroeconomic stability and limit contingent liability risks.
"Steadfast implementation of the climate change agenda under the Resilience and Sustainability Facility (RSF) will complement the EFF/ECF in supporting overall socio-economic resilience in Benin. Initiatives underway to catalyze private climate finance are welcome developments in this regard. Reforming fuel subsidies in a way that accounts for the specificities of Benin's local fuel market and protect vulnerable groups remains a policy priority."
[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings-up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.
