Press Release No. 10/377

Press Release No. 10/377
October 4, 2010

An International Monetary Fund (IMF) mission visited Cotonou during September 21–October 4, 2010 to conduct the first review of a program supported by the Extended Credit Facility, approved by the IMF Executive Board on June 14, 2010. The mission met with President Thomas Yayi Boni; Mr. Pascal Koupaki, Minister of Forecasting, Development, Public Policy Evaluation, and Coordination of Government Action; Mr. Idriss Daouda, Minister of Economy and Finance, and other senior officials. The mission also held discussions with representatives of donor organizations, the private sector, and banking institutions.

At the end of the mission, Mr. Mario de Zamaróczy, mission chief for Benin, issued the following statement:

“The adverse effects of the global economic crisis continue in Benin, where growth will remain modest in 2010 and the authorities predict only a gradual recovery in growth to 3.5 percent next year. Inflation remains under control, below the objective set in the framework of multilateral surveillance within the West African Economic and Monetary Union. The external current account deficit excluding grants is expected to improve, mainly reflecting a rebound in exports, particularly cotton.

“Budget performance in June 2010 fell short of program expectations. Revenues were down with respect to program objectives, owing largely to the continuing effects of the global crisis and a sharp drop in imports for domestic consumption. To offset this underperformance, the authorities cut non-priority current spending and domestically financed capital expenditure. As a result, all of the program’s quantitative indicators were met at end-June with the exception of that on net domestic financing, which was driven up among others by loans to public enterprises. The authorities have made vigorous efforts to strengthen customs and tax administration capacities and controls to resume growth in revenue collection.

“To achieve further fiscal consolidation, the mission recommended a prudent budget policy for the remainder of this year and 2011, in line with program objectives. The mission underscored the need to move to a small basic primary budget surplus in 2011 through increased revenues and continued control of public spending.

“The authorities took precautionary measures following the bankruptcy of a number of illegal deposit-taking institutions, including their closure. The impact of the illegal activities on the banking and microfinance sectors appears contained at this time, but fell heavily on households and therefore on household consumption. The authorities are studying the recommendations of a recent IMF technical assistance mission for achieving a transparent resolution of the crisis, and for strengthening the regulatory and operational framework in order to prevent the recurrence of such fraudulent activities.

“The mission noted progress in structural reforms, but recommended accelerating the completion of unfinished ones. In particular, a call for tenders was launched to privatize Bénin Télécom. The authorities also continued efforts to implement a one-stop window for the Port of Cotonou.

“The mission and the authorities agreed to continue discussions in Washington during the Annual Meetings of the IMF and World Bank.

“The mission would like to thank the authorities for their warm welcome and close cooperation.”