On December 11, 2015, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Benin.
For the third consecutive year, Benin is expected to reach solid economic growth in 2015 at around 5 percent, despite recent headwinds from the economic slowdown in Nigeria—Benin’s major trading partner. In 2016, increased public investment is expected to keep real GDP growth at about 5½ percent, with inflation to remain subdued. The medium-term outlook is also positive overall, but subject to significant risks, including a further slowdown in Nigeria and delays of structural reforms that could weaken growth dynamics.
Low debt levels help accommodate the government’s ambitious plans to further scale up investment over the medium term. To implement investment plans for 2015 despite revenue shortfalls, the government has sharply increased the amount of bonds issued in the regional financial market to support higher investment spending prior to the February 2016 elections. Reliance on the regional financial market for budget financing has been facilitated by the regional central bank’s (BCEAO) accommodative monetary policy.
Executive Board Assessment2
Executive Directors commended the authorities’ prudent policies, which have contributed to a solid macroeconomic performance. Nevertheless, higher, sustainable, and more inclusive growth is required to reduce poverty against the backdrop of a more challenging environment, including the economic slowdown in neighboring Nigeria. Directors emphasized the need for further progress in improving fiscal policy management and faster implementation of structural reforms to enhance the business environment and foster greater diversification.
Directors agreed that the authorities’ plan to scale up infrastructure investment is well placed to strengthen growth, and that prudent fiscal policy in the past provides some space to finance higher investment. However, they recommended a more gradual and prioritized approach to raising investment. This would provide more time to further improve public financial management, which is crucial to ensure high-quality investments with a strong impact on economic growth. Directors also recommended caution regarding the sharp increase in domestic financing, stressing that the higher fiscal costs of such financing compared to concessional financing, as well as the associated macro-financial risks from sovereign-bank linkages, need to be closely monitored.
Directors supported the authorities’ efforts to undertake structural fiscal reforms and called for their timely implementation. In view of rising debt to finance investment, they stressed that internal revenue mobilization, through a further deepening of customs and tax reforms, will be crucial to ensure fiscal sustainability over the medium term. Further improvements in debt management, including broadening the coverage to include the debt of state-owned enterprises, will also be important to monitor risks.
Directors called for further improvements in the business environment and the financial market infrastructure to strengthen the foundation for more diversified, private sector-led growth. Accelerating the establishment of a credit bureau and reforming property titles, would go a long way in improving financial inclusion and supporting private credit growth, while pressing ahead with judicial reform would facilitate contract enforcement and financial deepening. Directors noted that improvements to the business environment, together with timely payment of government obligations to banks and private companies, would help bring down high non-performing loans. They also called for stronger supervision in view of loan concentration risks, and for action to improve oversight of the microfinance sector to preserve its role in facilitating access to financial services for low-income households.
Directors looked forward to continued efforts to improve the quality and timeliness of economic data, in particular fiscal and external sector data.
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| Benin: Selected Economic and Financial Indicators, 2011–20 |
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2011 |
2012 |
2013 |
2014 |
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2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
| |
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Prel. |
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Projections |
| |
| |
(Annual percentage change) |
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National income |
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|
GDP at current prices |
6.8 |
12.4 |
8.6 |
5.2 |
|
6.0 |
7.5 |
7.7 |
8.1 |
7.9 |
8.2 |
|
GDP at constant prices |
3.0 |
4.6 |
6.9 |
6.5 |
|
5.2 |
5.5 |
5.5 |
5.7 |
5.8 |
6.0 |
|
GDP deflator |
3.7 |
7.4 |
1.6 |
-1.3 |
|
0.8 |
1.9 |
2.1 |
2.2 |
2.0 |
2.1 |
|
Consumer price index (average) |
2.7 |
6.7 |
1.0 |
-1.1 |
|
0.5 |
2.2 |
2.4 |
2.6 |
2.7 |
2.7 |
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Consumer price index (end of period) |
1.8 |
6.8 |
-1.8 |
-0.8 |
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2.3 |
2.3 |
2.5 |
2.7 |
2.7 |
2.7 |
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Central government finance |
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Total revenue |
0.4 |
19.3 |
10.1 |
-1.9 |
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7.1 |
7.5 |
7.7 |
8.7 |
8.6 |
8.9 |
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Expenditure and net lending |
7.5 |
8.1 |
16.7 |
-3.7 |
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26.5 |
4.8 |
5.9 |
7.0 |
8.2 |
7.7 |
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External sector |
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Exports of goods and services |
-4.6 |
-3.0 |
27.9 |
6.3 |
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15.2 |
5.2 |
14.7 |
14.8 |
12.5 |
9.6 |
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Imports of goods and services |
-4.5 |
17.1 |
21.4 |
7.2 |
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15.4 |
10.0 |
10.3 |
13.8 |
9.9 |
10.0 |
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Terms of trade (minus = deterioration) |
-0.1 |
0.7 |
0.7 |
2.1 |
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6.2 |
-2.2 |
-1.9 |
-1.8 |
-3.1 |
-2.1 |
|
Nominal effective exchange rate (minus = depreciation) |
1.2 |
-5.0 |
3.6 |
2.7 |
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… |
… |
… |
… |
… |
… |
|
Real effective exchange rate (minus = depreciation) |
-0.6 |
-1.8 |
1.5 |
-1.1 |
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… |
… |
… |
… |
… |
… |
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(Change in percent of beginning-of-period broad money) |
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Money and credit |
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Net domestic assets |
10.0 |
4.7 |
10.6 |
8.4 |
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9.3 |
8.5 |
… |
… |
… |
… |
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Domestic credit |
12.8 |
4.4 |
16.5 |
0.4 |
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8.6 |
8.5 |
… |
… |
… |
… |
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Net claims on central government |
6.5 |
-0.9 |
0.9 |
1.7 |
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5.0 |
3.7 |
… |
… |
… |
… |
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Credit to the nongovernment sector |
6.0 |
5.0 |
15.6 |
-1.2 |
|
3.6 |
4.8 |
… |
… |
… |
… |
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Broad money (M2) |
9.1 |
9.0 |
17.3 |
16.7 |
|
12.5 |
14.6 |
… |
… |
… |
… |
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(Percent of GDP, unless otherwise indicated) |
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National accounts |
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Gross investment |
24.1 |
22.7 |
28.5 |
25.0 |
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27.5 |
28.5 |
27.7 |
27.8 |
27.9 |
27.8 |
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Government investment |
6.1 |
5.2 |
6.4 |
5.3 |
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7.8 |
7.1 |
6.6 |
6.4 |
6.4 |
6.4 |
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Nongovernment investment 1 |
18.0 |
17.4 |
22.1 |
19.7 |
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19.7 |
21.3 |
21.1 |
21.4 |
21.5 |
21.4 |
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Gross domestic saving |
14.0 |
9.2 |
14.3 |
10.4 |
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11.6 |
11.4 |
11.0 |
10.3 |
10.6 |
10.1 |
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Government saving |
2.4 |
3.1 |
3.6 |
2.1 |
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1.4 |
1.3 |
1.1 |
1.2 |
1.3 |
1.5 |
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Non-government saving |
11.6 |
6.1 |
10.7 |
8.3 |
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10.3 |
10.1 |
9.9 |
9.1 |
9.3 |
8.6 |
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Gross national saving |
16.8 |
13.2 |
19.0 |
15.6 |
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16.5 |
17.0 |
16.8 |
16.9 |
17.4 |
17.4 |
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Consumption |
86.0 |
90.8 |
85.7 |
89.6 |
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88.4 |
88.6 |
89.0 |
89.7 |
89.4 |
89.9 |
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Government consumption |
12.3 |
12.4 |
12.3 |
12.6 |
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13.0 |
12.7 |
12.9 |
12.9 |
12.9 |
12.9 |
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Non-government consumption |
73.7 |
78.4 |
73.4 |
77.0 |
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75.3 |
75.9 |
76.1 |
76.8 |
76.5 |
77.0 |
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Central government finance |
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Total revenue |
16.4 |
17.4 |
17.7 |
16.5 |
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16.7 |
16.7 |
16.7 |
16.8 |
16.9 |
17.0 |
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Expenditure and net lending |
20.5 |
19.7 |
21.1 |
19.4 |
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23.1 |
22.5 |
22.2 |
21.9 |
22.0 |
21.9 |
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Primary balance 2 |
-3.6 |
-1.7 |
-3.0 |
-2.5 |
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-5.6 |
-4.7 |
-4.4 |
-4.0 |
-3.9 |
-3.6 |
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Basic primary balance 3 |
-0.1 |
0.6 |
1.1 |
0.0 |
|
-2.7 |
-1.5 |
-1.7 |
-1.4 |
-1.2 |
-1.0 |
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Overall fiscal deficit (payment order basis, excl. grants) |
-4.0 |
-2.2 |
-3.5 |
-2.9 |
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-6.4 |
-5.9 |
-5.5 |
-5.2 |
-5.1 |
-4.9 |
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Overall fiscal deficit (cash basis, excl. grants) |
-4.6 |
-2.4 |
-3.3 |
-3.5 |
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-6.7 |
-6.0 |
-5.5 |
-5.2 |
-5.1 |
-4.9 |
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Debt service (percent of revenue) |
5.4 |
6.7 |
6.1 |
6.0 |
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10.2 |
10.4 |
10.7 |
11.2 |
11.4 |
11.5 |
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Total government debt |
29.9 |
26.8 |
25.4 |
30.9 |
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35.1 |
37.0 |
38.0 |
39.4 |
40.7 |
41.5 |
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External sector |
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Balance of goods and services |
-10.1 |
-13.4 |
-14.2 |
-14.6 |
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-15.9 |
-17.1 |
-16.8 |
-17.5 |
-17.3 |
-17.7 |
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Current account balance (incl. grants) |
-7.3 |
-9.5 |
-9.5 |
-9.3 |
|
-11.0 |
-11.4 |
-10.9 |
-10.8 |
-10.5 |
-10.4 |
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Current account balance (excl. grants) |
-7.6 |
-10.3 |
-9.8 |
-9.5 |
|
-11.0 |
-11.4 |
-11.1 |
-11.0 |
-10.7 |
-10.5 |
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Overall balance of payments |
-4.1 |
-2.6 |
-0.7 |
1.0 |
|
-1.7 |
-0.6 |
-0.3 |
0.1 |
0.5 |
0.8 |
|
Debt service-to-exports ratio |
4.4 |
6.3 |
5.2 |
5.0 |
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6.6 |
5.7 |
5.0 |
5.0 |
4.6 |
4.3 |
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Debt-to-GDP ratio (post-MDRI) |
16.6 |
15.4 |
16.8 |
20.1 |
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20.4 |
20.4 |
20.4 |
20.2 |
20.1 |
20.0 |
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Nominal GDP (billions of CFA francs) |
3,687 |
4,144 |
4,501 |
4,734 |
|
5,018 |
5,394 |
5,808 |
6,278 |
6,776 |
7,334 |
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CFA francs per U.S. dollar (period average) |
471.4 |
510.2 |
493.9 |
493.6 |
|
589.6 |
586.8 |
… |
… |
… |
… |
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Total non-financial public sector debt 4 |
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… |
37.6 |
39.2 |
41.1 |
42.8 |
44.1 |
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Total non-financial public sector investment 5 |
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… |
8.9 |
8.0 |
7.7 |
7.6 |
7.3 |
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Population (millions) |
9.8 |
10.1 |
10.3 |
10.6 |
|
10.9 |
11.1 |
11.4 |
11.7 |
11.9 |
12.2 |
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Nominal GDP per capita (U.S. dollars) |
800 |
808 |
883 |
905 |
|
784 |
826 |
878 |
937 |
997 |
1,055 |
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Sources: Beninese authorities; IMF staff estimates and projections.
1 Including off-budget investment implemented by non-financial public enterprises.
2 Total revenue minus current primary expenditure, capital expenditure, and net lending.
3 Total revenue minus current primary expenditure and capital expenditure financed by domestic resources.
4 Data include projected central government debt and new non-financial public sector borrowing for infrastructure from 2016 onward.
5 Data include central government investments and non-financial public sector investments that are not in the central government budget. |
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| Benin: Selected Economic and Financial Indicators, 2011–20 |
| |
| |
2011 |
2012 |
2013 |
2014 |
|
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
| |
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|
Prel. |
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Projections |
| |
| |
(Annual percentage change) |
|
National income |
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|
GDP at current prices |
6.8 |
12.4 |
8.6 |
5.2 |
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6.0 |
7.5 |
7.7 |
8.1 |
7.9 |
8.2 |
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GDP at constant prices |
3.0 |
4.6 |
6.9 |
6.5 |
|
5.2 |
5.5 |
5.5 |
5.7 |
5.8 |
6.0 |
|
GDP deflator |
3.7 |
7.4 |
1.6 |
-1.3 |
|
0.8 |
1.9 |
2.1 |
2.2 |
2.0 |
2.1 |
|
Consumer price index (average) |
2.7 |
6.7 |
1.0 |
-1.1 |
|
0.5 |
2.2 |
2.4 |
2.6 |
2.7 |
2.7 |
|
Consumer price index (end of period) |
1.8 |
6.8 |
-1.8 |
-0.8 |
|
2.3 |
2.3 |
2.5 |
2.7 |
2.7 |
2.7 |
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Central government finance |
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Total revenue |
0.4 |
19.3 |
10.1 |
-1.9 |
|
7.1 |
7.5 |
7.7 |
8.7 |
8.6 |
8.9 |
|
Expenditure and net lending |
7.5 |
8.1 |
16.7 |
-3.7 |
|
26.5 |
4.8 |
5.9 |
7.0 |
8.2 |
7.7 |
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External sector |
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Exports of goods and services |
-4.6 |
-3.0 |
27.9 |
6.3 |
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15.2 |
5.2 |
14.7 |
14.8 |
12.5 |
9.6 |
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Imports of goods and services |
-4.5 |
17.1 |
21.4 |
7.2 |
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15.4 |
10.0 |
10.3 |
13.8 |
9.9 |
10.0 |
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Terms of trade (minus = deterioration) |
-0.1 |
0.7 |
0.7 |
2.1 |
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6.2 |
-2.2 |
-1.9 |
-1.8 |
-3.1 |
-2.1 |
|
Nominal effective exchange rate (minus = depreciation) |
1.2 |
-5.0 |
3.6 |
2.7 |
|
… |
… |
… |
… |
… |
… |
|
Real effective exchange rate (minus = depreciation) |
-0.6 |
-1.8 |
1.5 |
-1.1 |
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… |
… |
… |
… |
… |
… |
| |
(Change in percent of beginning-of-period broad money) |
|
Money and credit |
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Net domestic assets |
10.0 |
4.7 |
10.6 |
8.4 |
|
9.3 |
8.5 |
… |
… |
… |
… |
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Domestic credit |
12.8 |
4.4 |
16.5 |
0.4 |
|
8.6 |
8.5 |
… |
… |
… |
… |
|
Net claims on central government |
6.5 |
-0.9 |
0.9 |
1.7 |
|
5.0 |
3.7 |
… |
… |
… |
… |
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Credit to the nongovernment sector |
6.0 |
5.0 |
15.6 |
-1.2 |
|
3.6 |
4.8 |
… |
… |
… |
… |
|
Broad money (M2) |
9.1 |
9.0 |
17.3 |
16.7 |
|
12.5 |
14.6 |
… |
… |
… |
… |
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(Percent of GDP, unless otherwise indicated) |
|
National accounts |
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Gross investment |
24.1 |
22.7 |
28.5 |
25.0 |
|
27.5 |
28.5 |
27.7 |
27.8 |
27.9 |
27.8 |
|
Government investment |
6.1 |
5.2 |
6.4 |
5.3 |
|
7.8 |
7.1 |
6.6 |
6.4 |
6.4 |
6.4 |
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Nongovernment investment 1 |
18.0 |
17.4 |
22.1 |
19.7 |
|
19.7 |
21.3 |
21.1 |
21.4 |
21.5 |
21.4 |
|
Gross domestic saving |
14.0 |
9.2 |
14.3 |
10.4 |
|
11.6 |
11.4 |
11.0 |
10.3 |
10.6 |
10.1 |
|
Government saving |
2.4 |
3.1 |
3.6 |
2.1 |
|
1.4 |
1.3 |
1.1 |
1.2 |
1.3 |
1.5 |
|
Non-government saving |
11.6 |
6.1 |
10.7 |
8.3 |
|
10.3 |
10.1 |
9.9 |
9.1 |
9.3 |
8.6 |
|
Gross national saving |
16.8 |
13.2 |
19.0 |
15.6 |
|
16.5 |
17.0 |
16.8 |
16.9 |
17.4 |
17.4 |
|
Consumption |
86.0 |
90.8 |
85.7 |
89.6 |
|
88.4 |
88.6 |
89.0 |
89.7 |
89.4 |
89.9 |
|
Government consumption |
12.3 |
12.4 |
12.3 |
12.6 |
|
13.0 |
12.7 |
12.9 |
12.9 |
12.9 |
12.9 |
|
Non-government consumption |
73.7 |
78.4 |
73.4 |
77.0 |
|
75.3 |
75.9 |
76.1 |
76.8 |
76.5 |
77.0 |
|
Central government finance |
|
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|
|
|
|
|
|
|
|
|
Total revenue |
16.4 |
17.4 |
17.7 |
16.5 |
|
16.7 |
16.7 |
16.7 |
16.8 |
16.9 |
17.0 |
|
Expenditure and net lending |
20.5 |
19.7 |
21.1 |
19.4 |
|
23.1 |
22.5 |
22.2 |
21.9 |
22.0 |
21.9 |
|
Primary balance 2 |
-3.6 |
-1.7 |
-3.0 |
-2.5 |
|
-5.6 |
-4.7 |
-4.4 |
-4.0 |
-3.9 |
-3.6 |
|
Basic primary balance 3 |
-0.1 |
0.6 |
1.1 |
0.0 |
|
-2.7 |
-1.5 |
-1.7 |
-1.4 |
-1.2 |
-1.0 |
|
Overall fiscal deficit (payment order basis, excl. grants) |
-4.0 |
-2.2 |
-3.5 |
-2.9 |
|
-6.4 |
-5.9 |
-5.5 |
-5.2 |
-5.1 |
-4.9 |
|
Overall fiscal deficit (cash basis, excl. grants) |
-4.6 |
-2.4 |
-3.3 |
-3.5 |
|
-6.7 |
-6.0 |
-5.5 |
-5.2 |
-5.1 |
-4.9 |
|
Debt service (percent of revenue) |
5.4 |
6.7 |
6.1 |
6.0 |
|
10.2 |
10.4 |
10.7 |
11.2 |
11.4 |
11.5 |
|
Total government debt |
29.9 |
26.8 |
25.4 |
30.9 |
|
35.1 |
37.0 |
38.0 |
39.4 |
40.7 |
41.5 |
| |
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|
|
|
|
|
|
|
|
|
External sector |
|
|
|
|
|
|
|
|
|
|
|
|
Balance of goods and services |
-10.1 |
-13.4 |
-14.2 |
-14.6 |
|
-15.9 |
-17.1 |
-16.8 |
-17.5 |
-17.3 |
-17.7 |
|
Current account balance (incl. grants) |
-7.3 |
-9.5 |
-9.5 |
-9.3 |
|
-11.0 |
-11.4 |
-10.9 |
-10.8 |
-10.5 |
-10.4 |
|
Current account balance (excl. grants) |
-7.6 |
-10.3 |
-9.8 |
-9.5 |
|
-11.0 |
-11.4 |
-11.1 |
-11.0 |
-10.7 |
-10.5 |
|
Overall balance of payments |
-4.1 |
-2.6 |
-0.7 |
1.0 |
|
-1.7 |
-0.6 |
-0.3 |
0.1 |
0.5 |
0.8 |
|
Debt service-to-exports ratio |
4.4 |
6.3 |
5.2 |
5.0 |
|
6.6 |
5.7 |
5.0 |
5.0 |
4.6 |
4.3 |
|
Debt-to-GDP ratio (post-MDRI) |
16.6 |
15.4 |
16.8 |
20.1 |
|
20.4 |
20.4 |
20.4 |
20.2 |
20.1 |
20.0 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
Nominal GDP (billions of CFA francs) |
3,687 |
4,144 |
4,501 |
4,734 |
|
5,018 |
5,394 |
5,808 |
6,278 |
6,776 |
7,334 |
|
CFA francs per U.S. dollar (period average) |
471.4 |
510.2 |
493.9 |
493.6 |
|
589.6 |
586.8 |
… |
… |
… |
… |
|
Total non-financial public sector debt 4 |
|
|
|
|
|
… |
37.6 |
39.2 |
41.1 |
42.8 |
44.1 |
|
Total non-financial public sector investment 5 |
|
|
|
|
|
… |
8.9 |
8.0 |
7.7 |
7.6 |
7.3 |
|
Population (millions) |
9.8 |
10.1 |
10.3 |
10.6 |
|
10.9 |
11.1 |
11.4 |
11.7 |
11.9 |
12.2 |
|
Nominal GDP per capita (U.S. dollars) |
800 |
808 |
883 |
905 |
|
784 |
826 |
878 |
937 |
997 |
1,055 |
| |
|
Sources: Beninese authorities; IMF staff estimates and projections.
1 Including off-budget investment implemented by non-financial public enterprises.
2 Total revenue minus current primary expenditure, capital expenditure, and net lending.
3 Total revenue minus current primary expenditure and capital expenditure financed by domestic resources.
4 Data include projected central government debt and new non-financial public sector borrowing for infrastructure from 2016 onward.
5 Data include central government investments and non-financial public sector investments that are not in the central government budget. |
|
|
|
|
|
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
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