Press Release No. 07/210

Press Release: Statement by the IMF Staff Mission on the Third Review Under Benin's PRGF-Supported Program Benin

October 1, 2007

The following statement was issued in Cotonou on September 27, 2007 by Mr. Mbuyamu Matungulu, International Monetary Fund (IMF) mission chief to Benin:

"An IMF mission visited Cotonou during September 12-26, 2007 to conduct the third review under Benin's Poverty Reduction and Growth Facility (PRGF) Arrangement¹. The mission met the President of the Republic, His Excellency Boni Yayi, the Senior Minister for Development, Economy and Public Policy Assessment, Mr. Pascal Koupaki, the Minister of Finance, Mr. Soule Mana Lawani, the Nationa Director of BCEAO, Mr. Marcel de Souza, and other senior officials of the government and the Central Bank (BCEAO). The mission also held fruitful discussions with members of the donor community and the private sector and civil society

"A rebound in economic activity that began in 2006 is expected to further strengthen in 2007, albeit modestly because of a weaker-than-anticipated pick up in cotton production and a severe power shortage. Inflation remains subdued, mostly reflecting increased supply of foodstuff. As a result of strong revenue performance and lower-than programmed investment outlays, further fiscal consolidation is projected to be achieved in 2007.

"All end-June 2007 program quantitative performance criteria and indicative targets were met. However, some structural reform measures remain to be completed, including privatization of the ginning factories of the state-owned cotton company (SONAPRA).

"The mission discussed key elements of the authorities' policy framework for the last quarter of 2007 and for 2008, which are broadly consistent with the medium-term macroeconomic framework under the PRGF arrangement. The mission encouraged the authorities' ongoing efforts to improve public financial management and customs administration. These efforts will help generate fiscal space for additional pro-poor spending and the restoration of investment spending to levels consistent with stronger growth, while preserving medium-term fiscal sustainability. The mission also took note of the authorities' commitment to programmed reforms in the cotton, electricity, and telecommunication sectors, and urged their timely implementation.

"The staff team would like to thank the authorities for their hospitality and for the close collaboration and constructive policy dialogue".

¹ The PRGF is the IMF's concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in the country's Poverty Reduction Strategy Paper. This is intended to ensure that PRGF-supported programs are consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5½ -year grace period on principal payments.