Press Release No. 09/335

Press Release: Statement by an IMF Staff Mission to Benin

September 28, 2009

An International Monetary Fund (IMF) mission visited Cotonou during September 14-28, 2009 to conduct discussions on a program that could be supported by the IMF. The mission met the President of the Republic, H.E. Dr. Thomas Boni Yayi, the Senior Minister for Prospective Development, Evaluation of Public Policy and the Coordination of Government Action, Mr. Pascal I. Koupaki, Minister of Economy and Finance, Mr. Idriss L. Daouda, and other senior officials. It also held fruitful discussions with representatives of parliament, labor union leaders, donors, and the private sector.

The following statement was issued in Cotonou by Mr. Joannes Mongardini, IMF mission chief for Benin, at the end of the mission:

"The global economic crisis has adversely affected the near term prospects of the Beninese economy. Real GDP growth is projected to slow to 2.5 percent in 2009, a decline from 5.0 percent in 2008 due to the weak prospects for cotton and trade with neighboring countries. Inflation has declined because of lower agricultural prices, thanks to a good cereal harvest, and lower international food and fuel prices. On the other hand, the external current account deficit, excluding grants, is expected to widen to about 13 percent of GDP, reflecting the decline in cotton exports, which more than offset the improvement in the terms of trade.

“The analysis by the mission shows that the fiscal position has worsened during the first semester of 2009. Government revenue was below target, reflecting largely a decline in customs collection due to the slowdown in imports and lower tax collection. Slippages in government expenditures were related to higher bonuses to civil servants and a carryover of capital expenditure commitments. In that context, the authorities and Fund staff concurred that the decline in government revenue would require continued implementation of the reforms already underway of the tax and customs administrations. In addition, expenditure overruns require a limit on bonuses and other fringe benefits to civil servants, civil service reform, and a strengthening of the control of public expenditure.

"The mission had useful meetings with the authorities on challenges confronting Benin, notably on budget management and economic policy choices. It welcomed progress in the implementation of structural reforms and encouraged the authorities to continue their efforts in this area. The discussions on an economic program that could be supported by the IMF will continue in the next few months. The mission would like to reiterate its readiness to strengthen the partnership between the authorities and the IMF in order to help Benin address the challenges confronting its economy.

“The mission would like to express its gratitude for the warm hospitality of the authorities, the very constructive dialogue, and the close cooperation during its stay in Cotonou.”