For more information, see Benin and the IMF

Benin—Enhanced Structural Adjustment Facility
Policy Framework Paper for 1998–2001

Contents

Tables
 
Table 1. Benin: Summary and Timetable for
Macroeconomic and Structural Adjustment Measures, 1998-2001

Policy Areas

Strategies and Measures

Timetable

Technical Assistance
1. Government finance
   a. Budgetary
       procedures
  Improve budget execution and control procedures by       DANIDA and France
   
  • abolishing the procedure of the complementary period;
  December 1998  
   
  • implementing the new procurement code and application decrees; and
  March 1999   World Bank
   
  • preparing an action plan for improving spending procedures.
  February 1999   World Bank
   b. Tax department   Strengthen the unit in charge of the taxation of large enterprises (DGE) by   1998-99   IMF
   
  • rehabilitating the taxpayer register;
  November 1998    
   
  • restructuring DGE and establishing a single file per taxpayer;
  January 1999    
   
  • implementing a computerization plan for DGE; and
  1998-1999    
   
  • rehabilitating the system to ensure on-time tax payments.
  March 1999    
    Reorganize tax auditing.   1999    
    Unify rates for advance payment on profit taxes collected on imports.   January 1999    
    Improve the simplified tax reporting system (RSI).

  January 1999    
   c. Customs
       department
  Complete computerization of main custom offices, including those in charge of petroleum products.   March 1999    
    Prepare quarterly reports comparing customs and preinspection data.   April 1999    
    Ensure utilization by customs offices of the port of Cotonou database.   June 1999   France
    Computerize exemption-monitoring system.   January 1999    
    Create a database on import values.   December 1998    
    Implement the West African Economic and Monetary Union (WAEMU) common external tariff, including   1998-2000    
   
  • applying new import classification; and
  January 1999    
   
  • implementing common external tariff.
  January 2000    
   d. Current
      expenditure
  Gradually reduce the share of the wage bill in current expenditure.   1998-2001    
    Increase expenditure in education and health, as recommended in the public expenditure review.

  1998-2001    
   e. Investment
       expenditure
  Adopt and implement a three-year public investment program reflecting government sectoral priorities.   1998-2001   World Bank
    Have Ministry of Planning prepare a quarterly report on investment program execution and reconcile data with those from development partners.   April 1999    
    Increase execution rate to at least 70% in 1999, 80% in 2000, and 90% in 2001.   1999-2001    
    Increase the share of domestically financed investment.

  1999-2001    
   f. External debt   Reduce external debt burden and maintain prudent debt policy.

  1998-2001    
   g. National
       Retirement Fund
  Define a strategy for eliminating the fund's deficit.   December 1998    
    Adopt an action plan to eliminate the deficit.   March 1999    
 
2. Monetary policy and financial system
   a. Financial sector   Ensure treasury will continue recovering outstanding claims of liquidated banks.   1998-2001    
    Strengthen savings and loan associations and cooperatives.

  1998-2001    
   b. Monetary and
       credit policy
  Maintain a prudent credit policy; introduce and develop new market-based instruments for conducting monetary policy.   1998-2001    
    Continue to implement a flexible interest rate policy.   1998-2001    
    Promote the development of new instruments to mobilize savings and strengthen regional financial markets.   1998-2001    
 
3. Structural reforms
   a. Institutional
       reforms
  Adopt an action plan for implementing the devolution policy.   September 1999   DANIDA and European Union
    Evaluate the financial position of municipalities.   June 1999    
    Establish a system for monitoring municipal budgets, including        
   
  • preparation of a quarterly report on budget execution by local authorities; and
  June 1999    
   
  • preparation of a quarterly report on consolidated municipal budget execution by budget department.
  June 1999    
    Strengthen the judicial system by:   1999-2001   World Bank
   
  • providing supplementary training for judges;
  1999-2001    
   
  • preparing a plan for recruiting judges; and
  1999    
   
  • reforming clerks' offices and auxiliary functions.
  1999    
    Adopt a law for harmonizing finance laws in the WAEMU.   1999    
    Adopt new regional regulations on public accounting.   1999    
    Adopt the new regional accounting standards for public sector.   1999    
    With respect to governance,        
   
  • implement action plan of the anti-corruption agency (Cellule de Moralisation de la Vie Publique);
  1999-2000   World Bank
   
  • convert the auditing department of the Supreme Court into an auditing court;
  1999    
   
  • have treasury and budget departments to prepare annual budget execution reports;
  2000    
   
  • strengthen administrative capacity of treasury and budget departments;
  1999   France
   
  • submit annually a law certifying budget execution (loi de règlement);
  2001    
   
  • rehabilitate the general inspectorate of finance (IGF);
  1998-2000    
   
  • effectively implement recommendations of IGF's audit reports; and
  1998-2000    
   
  • organize a regional seminar on good practices in public sector financial management.
  March 1999    
   b. Civil service reform   Establish a new promotion and compensation system for civil service by     World Bank and UNDP
   
  • adopting a revised wage scale, nonwage benefits, and a performance assessment mechanism;
  March 1999    
   
  • adopting related legislation;
  March 1999    
   
  • experimenting with the new system in selected ministries;
  September 1999    
   
  • implementing the new performance-based promotion and compensation system; and
  January 2000    
   
  • granting performance-based salary increases.
  2001    
    Create a single civil service database by     World Bank and UNDP
   
  • selecting a software package for the Ministry of Civil Service;
  December 1998    
   
  • verifying the accuracy of April 1997 census data;
  March 1999    
   
  • updating the database and prepare a semiannual report on civil service employment;
  June 1999    
   
  • installing and testing the new computer system at the Ministry of Civil Service; and
  June 1999    
   
  • merging payroll department and Ministry of Civil Service databases.
  August 1999    
   c. Public enterprise
       reform
  Liberalize the petroleum sector by      
   
  • selecting a bidder to take over 55% of capital of the public oil company (SONACOP);
  December 1998    
   
  • completing the sale of 55% of SONACOP's capital;
  March 1999    
   
  • adopting a policy liberalizing petroleum product prices; and
  June 1999    
   
  • implementing the new pricing policy.
  July 1999    
    Adopt a strategy and an action plan for government's divestiture from the textile sector (COTEB and SITEX).   December 1998    
    Privatize the management of the Hôtel Croix du Sud by        
   
  • selecting a bidder for concession; and
  December 1998    
   
  • awarding the concession.
  March 1999    
    Privatize management of the two enterprises (SCO and SSS) jointly owned with Nigeria.   December 1998    
    Finance liquidation gap of SONAR (public insurance enterprise).

  1998-2000    
   d. Private sector
       development
  Prepare a new regional investment code in cooperation with the other WAEMU member countries.   1999-2000   World Bank, UNDP, USAID
    Make institutions financing micro enterprises and small and medium-sized enterprises autonomous and financially viable.   1999-2001    
    Strengthen organizations in charge of facilitating communications between the government and the private sector.   1999-2001   UNDP, Germany
    Promote vocational training.   1999-2001    
    Remove the administrative and regulatory obstacles to export development.

  1999-2001    
   e. Agriculture   Prepare a multiyear budget, including current and investment expenditure.   1999   World Bank, DANIDA, UNDPs
         Cotton   For the crop year 1998/99, sale of seed cotton by SONAPRA to private ginning companies through an auction system, with the support of development partners.   December 1998-March 1999   World Bank, France, and Switzer- land
    Strengthen producers' organizations.   1998-2000   France
    Establish a trade association consisting of producers, ginning enterprises, and banks.   1999    
    Eliminate SONAPRA's monopsony on the purchase of seed cotton.   2000-2001    
         Environment   Promulgate legislation on the environment and adopt related decrees.   1998-1999   UNDP
    Implement the sectoral strategy governing public investment in urban areas.   1998-1999   World Bank
         Forestry   Finalize the program for restructuring forestry institutions.   1999   World Bank
    Privatize the commercial and industrial activities of ONAB (the National Timber Office).

  June 1999    
   f. Transportation and
       port infrastructure
  Connect all public operators involved in port activities to the computerized port management system (PORTWARE) and encourage its utilization.   January 1999    
    Strengthen the port management's and impose performance objectives on port operations.   February 1999    
    Prepare a financial recovery plan for the port of Cotonou.   December 1998    
    Include annual allocation for maintenance in the port's budget.   1999-2001    
    Restructure the National Council of Benin Shipping Agents (CNCB).   1999    
         Road          transportation   Diversify the sources of financing for the Road Fund.   1998-2001    
    Encourage the participation of small and medium-sized enterprises in road works by improving contracting procedures.   1998-2001    
    Transform the department of equipment and public works into a semipublic enterprise by   1998-2000   World Bank
   
  • adopting an action plan; and
  March 1999    
   
  • implementing the action plan.
  September 1999    
    Implement the strategy for rural roads and mobilize financing for the road fund.   1998-2000   World Bank, France, and UNDP
    Implement an action plan in coordination with transport enterprises and other users in order to reduce roadblocks.   1999   France
    Improve traffic safety.   1999   World Bank
         OCBN (railways)   Restructure OCBN, focusing on its competitive activities, settling arrears, and dismantling the transport sharing-arrangement.

  1999    
   g.  Mining and energy
         Mining   Conduct a mining sector assessment.   June 2000    
    Formulate a development strategy for the mining sector.   December 2000    
    Revise the mining code to bring it into line with international standards.   1999-2000    
    Create a property register.   1999    
    Establish a geological information management system.   1999    
         Energy   Reform the water and power sectors, and disengage the public sector from these activities by      
   
  • launching studies on the reform strategy and the modalities of the government's disengagement from the management of the power and water company (SBEE);
  January 1999   World Bank and France
   
  • adopting reform strategy;
  July 1999    
   
  • implementing the reform strategy for the water and power sectors; and
  1999-2001    
   
  • adopting and implementing the strategy for government withdrawal from SBEE management.
  December 1999    
   h. Postal and telecom-
       munications services
  Adopt a strategy for liberalizing the telecommunications sector and restructuring the postal service.   February 1999   France
    Issue new licenses for cellular services, contingent upon adoption of the liberalization strategy for the telecommunications sector.   1999    
    Adopt plan for separating postal and financial services from telecommunications.   June 1999    
    Adopt an action plan for restructuring postal and financial services.   July 1999    
    Adopt draft laws on telecommunications and postal and financial services.   July 1999    
    Create separate entities for postal and financial services, and telecommunications.   October 1999    
    Open the capital of the telecommunications entity to private investors.

  December 1999    
   i. Health and
       family planning
  Finalize the three-year development plan.   December 1998    
    Complete feasibility studies on health districts by establishing 29 additional health districts.   December 1999 1999-2001    
    Disseminate management tools and manual of procedures.   June 1999    
    Increase the annual budget allocations and credit consumption as a share of total expenditure.   1999-2001    
    Strengthen institutional capacity of the department in charge of women's issues and prepare an action plan for promoting women's role in economic development.   1999-2001   World Bank, UNDP, and UNICEF
    Adopt, disseminate, and implement the family code.

  1999-2001    
   j. Education   Prepare an inventory of school infrastructure at primary and secondary levels.   1999    
    Carry out studies on double-shift and multigrade systems.   March 1999    
    Strengthen education of girls by        
   
  • preparing an inventory of innovative initiatives to promote girls' participation; and
  April 1999    
   
  • preparing an action plan to increase girls' enrollment in education.
  June 1999    
    Prepare and adopt development plan for teaching schools (ENIs), including by   March 1999    
   
  • implementing the development plan for ENIs;
  1999-2000    
   
  • pursuing training program for ENIs instructors.
  1998-2001    
    Evaluate the system of competitive examinations.   March 1999    
    Strengthen domestic capacity for producing and evaluating textbooks.   1999-2001    
    Reform higher education by   1998-2001    
   
  • organizing the national seminar on the audit of the University of Benin (UNB);
  December 1998    
   
  • adopting a reform program;
  December 1999    
   
  • implementing the reform program.
  2000-2001    
    Prepare and implement a program for redeploying and training administrative staff, including by   1999-2001    
   
  • introducing a computerized human resource management system.
  June 1999    
    Strengthen technical and vocational education, in line with demand from the labor market, including by   1999-2001    
   
  • evaluating technical and vocational education programs.
  December 1999    
   k. Poverty alleviation
       and promotion of
       employment
  Promote local initiatives for community development by       World Bank, UNDP,
   
  • establishing community development units (UDCs);
  1999-2001   UNICEF, DANIDA,
   
  • establishing 100 pilot community development units; and
  1999   and Germany
   
  • evaluating the pilot units.
  December 1999    
    Promote employment by     World Bank and France
   
  • providing assistance for the establishment of microenterprises and the implementation of micro projects;
  1999-2001    
   
  • providing assistance for developing skills of unemployed young people; and
  1999-2001    
   
  • pursuing labor-intensive public work programs.
  1999-2001    
    Strengthen capacity for analyzing, formulating, and monitoring social policies.   1999-2001    
    Implement the United Nations initiative on the allocation of 20 percent of government expenditure and foreign assistance to social sectors ("20/20" initiative).   1999-2001    
 

Table 2. Benin: Economic Indicators, 1995-2001
    Est. Est. Program
  1995 1996 1997 1998 1999 2000 2001
  (Annual changes in percent, unless otherwise indicated)
National income              
   GDP at current prices 20.7 12.7 10.6 9.6 8.5 7.5 7.7
   GDP at constant prices 4.6 5.6 5.6 4.4 5.7 5.6 5.9
   GDP deflator 15.4 6.7 4.7 5.1 2.6 1.7 1.7
   Consumer price index (average) 14.9 4.7 3.8 5.6 3.0 3.0 2.5
   Consumer price index (end of period) 3.1 6.7 2.4 3.7 2.8 3.0 2.5
               
Central government finance              
   Revenue 40.2 15.3 5.8 14.9 8.8 9.6 10.5
   Expenditure and net lending 34.9 -0.7 6.4 -4.7 19.6 11.4 8.7
               
Money and credit              
   Net domestic assets 1 6.5 -0.2 2.9 -0.4 0.6 ... ...
   Domestic credit 1 6.7 1.8 1.7 2.5 0.6 ... ...
      Net claims on central government 1 5.0 -6.6 -0.6 -3.9 -1.9 ... ...
      Credit to the nongovernment sector 8.9 48.0 10.1 29.3 9.7 ... ...
   Broad money 16.3 11.3 16.9 8.0 9.2 ... ...
   Velocity (GDP relative to average M2) 4.3 4.2 4.1 4.0 4.0 ... ...
               
External sector (in terms of CFA francs)              
   Exports, f.o.b., excluding reexports 21.1 15.3 6.7 4.2 4.4 11.6 8.9
   Imports, f.o.b., excluding reexports 40.6 1.0 10.5 3.9 6.5 7.7 6.9
   Export volume , excluding reexports  2.8 23.6 7.1 1.5 4.2 5.0 5.8
   Import volume, excluding reexports 46.3 -0.9 9.5 6.3 5.7 5.9 5.9
   Terms of trade 22.5 -8.5 -1.3 5.0 -0.5 4.5 2.1
   Nominal effective exchange rate (- deprec.) 10.4 2.5 -2.6 ... ... ... ...
   Real effective exchange rate (- deprec.) 14.5 1 0.6 ... ... ... ...
               
  (In percent of GDP, unless otherwise indicated)
               
Basic ratios              
   Gross investment 19.6 17.1 18.5 16.4 17.9 18.7 19.3
      Government investment 7.8 6.4 6.7 4.7 6.2 6.7 7.0
      Private sector investment 11.8 10.7 11.8 11.7 11.6 12.0 12.3
   Gross domestic saving 10.2 8.8 10.1 8.7 10.4 11.4 12.4
      Government saving 3.1 3.6 4.0 4.9 4.7 4.9 5.3
      Private saving 7.2 5.2 6.1 3.8 5.7 6.6 7.1
   Gross national saving 2 13.2 12.6 13.3 11.5 13.5 14.2 14.8
               
Central government finance              
   Revenue 14.9 15.2 14.6 15.3 15.3 15.6 16.0
   Expenditure and net lending 22.1 19.5 18.8 16.3 18.0 18.6 18.8
   Primary balance 3 -4.5 -1.9 -2.5 0.3 -1.4 -1.8 -1.7
   Overall fiscal deficit (payment order basis) 4 -7.3 -4.3 -4.2 -1.0 -2.7 -3.0 -2.8
   Overall fiscal deficit (cash basis) 4 -8.9 -6.0 -5.4 -5.7 -3.3 -3.2 -2.8
   Debt service (after debt relief) 5 29.9 20.7 18.4 18.9 18.1 18.5 16.2
               
External sector              
   Current account balance (- deficit)  2 -6.4 -4.5 -5.2 -4.9 -4.4 -4.5 -4.5
   Overall balance of payments (- deficit) -2.9 1.1 0.1 1.1 1.4 0.9 1.2
   Debt-service ratio (before debt relief)  6 16.4 15.3 13.3 12.1 11.7 12.2 10.9
   Debt-service ratio (after debt relief)  6 8.2 12.4 13.3 11.8 11.7 12.2 10.9
   Net present value of debt-to-exports ratio              
      (after debt relief) 6 ... 193.0 176.2 150.8 141.9 128.9 117.9
   Debt-to-GDP ratio (after debt relief) 82.0 70.1 64.4 58.5 54.1 50.8 47.9
               
               
Nominal GDP (in billions of CFA francs) 1,002.9 1,130.5 1,249.8 1,370.1 1,486.4 1,597.5 1,721.2
CFA francs per U.S. dollar (period average) 499.1 511.6 583.7 ... ... ... ...
Population (midyear, in millions) 5.5 5.6 5.8 6.0 6.1 6.3 6.5
   Sources:  Beninese authorities; and staff estimates and projections.
               
    1  In percent of broad money at the beginning of the period.
    2  Including current official grants but excluding project grants.
    3  Total revenue minus all expenditure excluding interest and net lending. 
    4  Before all official grants.
    5  In percent of fiscal revenue.
    6  In percent of  current-year exports of goods and services, and including IMF debt.


 

Table 3. Benin: External Financing Requirements, 1995-2001
    Est. Est. Program
  1995 1996 1997 1998 1999 2000 2001
External Financing Requirements 134.7   129.1   136.4 165.0 131.0 128.1 116.5
   Current account deficit 82.2 76.0 80.6 77.7 79.1 81.7 79.5
   Medium- and long-term  
   public debt amortization 19.4 17.8 20.5 21.0 18.9 19.7 17.1
   Private capital outflows 35.2 7.4 30.3 7.8 5.0 5.0 0.0
   Reduction in external payments arrears 0.0 -11.9 -7.9 38.7 0.0 0.0 0.0
   Reduction in Central bank foreign liabilities -2.1 39.8 12.8 19.8 28.1 21.7 19.8
 
Resources 127.8 119.0 132.7 158.1 123.8 120.9 116.4
   Official grants 53.4 53.2 65.2 42.2 59.9 60.9 60.1
      Of which:  
         project grants 35.2 28.6 49.1 31.2 46.4 50.8 57.8
         program grants 13.8 20.6 14.2 9.0 11.4 7.9 0.0
   Medium-term loan disbursements 50.1 57.1 30.7 39.1 27.9 32.1 36.9
      Of which:              
         project loans 48.3 44.2 30.7 21.4 27.9 32.1 36.9
         program loans 1.8 12.9 0.0 17.7 0.0 0.0 0.0
   Private capital inflows 2.1 0.7 36.8 40.1 36.1 27.9 19.4
   Debt relief already obtained 22.3 8.0 0.0 36.6 0.0 0.0 0.0
 
Financing gap 6.9 10.1 3.6 7.0 7.2 7.2 0.0
   Use of IMF resources (ESAF) 6.9 10.1 3.6 0.0 7.2 7.2 0.0
   Possible debt relief 0.0 0.0 0.0 7.0 0.0 0.0 0.0
   Remaining financing gap 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Sources: Beninese authorities; and staff estimates and projections.


 

Table 4. Benin: Selected Demographic and Social Indicators

  Sub-Saharan   Latest Single Year
Indicator Africa   1970-75  1980-85  1990-95
Population (In units indicated)
   Total (thousands) 546,390   3,029 4,043 5,475
   Annual growth rate (in percent) 2.9   2.6 3.2 2.8
   Urban population (percent of total) 29.5   24.9 34.8 41.8
   Poverty  (in percent of total) ..   .. .. ..
   Life expectancy (years) 52   45 48 50
   Total fertility rate (births per woman) 6   7 7 6
   Total, ages 15-64 (thousands) 224,025   1,536 1,902 2,476
 
Education (Percent of school-age population)
   Primary school enrollment ratio (gross) 66   50 68 66
      Male 79   70 90 88
      Female 62   31 45 44
   Secondary school enrollment ratio 18   9 17 12
 
  (In units indicated)
   Primary school pupil-to-teacher ratio (in percent) 39   53 33 49
   Adult illiteracy rate (in percent of total)  
      Population ages 15 and above 51   .. 81 63
      Female 62   .. 88 74
 
Health
   Persons per hospital bed 1,329   851 2,800 4,281
   Infant mortality rate (per 1,000 live births) 99   151 118 95
   Access to safe water (in percent of total)
      Total population 41   34 14 70
         Urban ..   83 45 82
         Rural ..   20 9 63
 
Food production index
    (1989-91=100) ..   48 78 112
 
Child malnutrition
    (percentage of children under age 5) 28   .. .. 36
 

Source:  World Bank, World Development Indicators.


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