## cr1801

## Source details

**Canonical URL:** [cr1801](https://www.imf.org/-/media/files/publications/cr/2018/cr1801.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/cr/2018/cr1801.pdf.md)
- [Structured JSON version](/-/media/files/publications/cr/2018/cr1801.pdf.json)

---

### Inclusive growth and poverty dynamics
- Growth over 2013–15 averaged 5.2 percent, closing the gap with the sub-Saharan Africa (SSA) average in per capita GDP growth, but did not translate into a meaningful reduction in poverty.
- Low and stagnant productivity in the agriculture sector identified as the primary cause of limited poverty reduction in rural areas.
- Real per capita annual expenditure: CFAF 226,440 in 2011 → CFAF 223,402 in 2015 (drop of, approximately, 1.3 percent).
- Non-monetary poverty indicators:
  - Poverty rate: 36.2 percent of population in 2011 → 40.1 percent in 2015.
  - Proportion of people who consider themselves poor:
    - Urban: 77 percent in 2011 → 66 percent in 2015.
    - Rural: 73 percent in 2011 → 67.2 percent in 2015.
- Human Development Index and rankings:
  - Benin ranked 167 out of 185 in 2016 (166 in 2015).
  - Regional rank: 35th (31st in 2015).
  - Human Development Index: 0.480 in 2015 → 0.485 in 2016.
  - Benchmarks: below the average of 0.497 for the low human development group and below the SSA average of 0.523.
- Gender and education:
  - Women experienced higher levels of (non-monetary) poverty than men.
  - Groups led by women are better off in monetary poverty measures than those led by men.
  - Households headed by persons with at least primary education are less affected by monetary or non-monetary poverty.
- Determinants of poverty persistence and increase:
  - Persistence of non-monetary poverty: lack of basic infrastructure.
  - Increase in monetary poverty due to: (i) fall in per capita incomes in rural areas linked to a fall in yields; (ii) structural weaknesses of the agricultural sector (climatic hazards, non-control of water, poor access to good seeds, lack of or weak extension services); and (iii) expansion of the informal sector.
- Selected table of real spending and non-monetary poverty (selected values):
  - Urban:
    - Spending per capita 2011 = 327,234; 2015 = 336,099; real spending 2015 (deflated) = 315,029; Evolution of standard of living -3,73; Non-monetary poverty 2011 = 26.4; 2015 = 20.5.
  - Rural:
    - Spending per capita 2011 = 154,070; 2015 = 158,351; real spending 2015 (deflated) = 148,424; Evolution of standard of living -3,66; Non-monetary poverty 2011 = 32.9; 2015 = 36.0.
  - Benin (aggregate):
    - Spending per capita 2011 = 226,440; 2015 = 238,343; real spending 2015 (deflated) = 223,402; Evolution of standard of living -1,34; Non-monetary poverty 2011 = 30.2; 2015 = 28.7.
- Source of poverty analysis: Note sur la pauvreté au Bénin en 2015, Institute of Statistics and Economic Analysis (INSAE).

### Recent macroeconomic developments relevant to poverty
- Growth and inflation:
  - Economic growth: 4.0 percent in 2016 (up from 2.1 percent in 2015).
  - Growth for 2017 expected to reach 5.6 percent with inflation turning positive at 0.6 percent.
  - Inflation: -0.8 percent in 2016.
- Drivers of 2016–17 activity:
  - 2016 growth driven mainly by favorable weather conditions and better access to agricultural inputs.
  - Secondary sector growth: 2.6 percent in 2016 vs. 10.1 percent in 2015.
  - Tertiary sector: 3.4 percent increase in value added in 2016 compared to an initial forecast of 2.7 percent.
- Fiscal outturn (end-June 2017):
  - Total revenues: CFAF 443.9 billion (target CFAF 386.1 billion).
  - Basic primary deficit: CFAF 33.1 billion (program floor CFAF 73.1 billion).
  - Expenditure commitments for priority social sectors: CFAF 55.6 billion (target CFAF 85.0 billion).
  - Investment spending lagging due to delays in validating sectoral ministries’ annual work plans.
  - Stronger domestic revenue performance expected to result in a lower-than-programmed fiscal deficit (including grants) of 6.1 percent of GDP in 2017 (program projection 7.9 percent).
- External sector:
  - Current account deficit (including grants) projected to reach 9.1 percent of GDP in 2017, reflecting investment scaling up and import growth of about 19 percent.
- Debt and financial sector (end-June 2017 banking indicators):
  - Updated debt sustainability analysis confirmed a moderate risk of debt distress.
  - Total public debt increased in 2016 due to domestic financing of capital investment projects.
  - Approximately 90 percent of public domestic liabilities consist of government securities issued on the regional financial market.
  - Staff recommendation: mobilize more concessional financing from donors.
  - Regulatory capital to risk-weighted assets: 10.0 percent.
  - Liquidity ratio (total loans/total deposits): 78 percent.
  - Non-performing loans to total loans: 20.3 percent.
  - Microfinance sector: growth in loans and deposits but limited progress in closing non-approved microfinance institutions.

### Medium-term outlook and scenarios (2017–22)
- Staff baseline projections (selected indicators):
  - Real GDP: 2017 = 5.6; 2018 = 6.0; 2019 = 6.3; 2020 = 6.7; 2021 = 7.1; 2022 = 7.2.
  - Consumer Price Index (average): 2017 = 0.6; 2018 = 2.5; 2019–2022 = 2.8 (annual).
  - Public Investment (percent of GDP): 2017 = 9.3; 2018 = 8.6; 2019 = 6.3; 2020 = 5.9; 2021 = 5.5; 2022 = 5.3.
  - Total Revenues (percent of GDP): 2017 = 16.8; 2018 = 17.5; 2019 = 17.3; 2020 = 17.9; 2021 = 18.4; 2022 = 18.8.
  - Fiscal Deficit (including grants, percent of GDP): 2017 = -6.1; 2018 = -4.5; 2019 = -1.8; 2020 = -0.6; 2021 = 0.0; 2022 = 0.8.
  - Basic Primary Balance (percent of GDP): 2017 = -2.6; 2018 = 0.1; 2019 = 2.4; 2020 = 3.1; 2021 = 3.5; 2022 = 4.2.
  - Non-Financial Public Sector Debt (percent of GDP): 2017 = 55.6; 2018 = 56.4; 2019 = 53.8; 2020 = 49.3; 2021 = 45.0; 2022 = 40.7.
  - Current Account (percent of GDP): 2017 = -9.1; 2018 = -8.4; 2019 = -7.1; 2020 = -6.6; 2021 = -6.4; 2022 = -5.8.
- Alternative (lower-growth) scenario (selected indicators):
  - Real GDP (percent): 2017 = 5.6; 2018 = 4.0; 2019 = 4.7; 2020 = 5.2; 2021 = 5.5; 2022 = 6.2.
  - Consumer Price Index (average): 2017 = 0.6; 2018 = 2.6; 2019–2022 = 2.9 (annual).
  - Fiscal Deficit (including grants, percent of GDP): 2017 = -6.1; 2018 = -5.6; 2019 = -2.7; 2020 = -1.6; 2021 = -0.8; 2022 = 0.2.
  - Basic Primary Balance (percent of GDP): 2017 = -2.6; 2018 = -0.7; 2019 = 2.1; 2020 = 2.7; 2021 = 3.3; 2022 = 4.1.
  - Non-Financial Public Sector Debt (percent of GDP): 2017 = 55.6; 2018 = 58.3; 2019 = 56.8; 2020 = 53.2; 2021 = 49.6; 2022 = 45.9.
  - Current Account (percent of GDP): 2017 = -9.1; 2018 = -8.0; 2019 = -6.3; 2020 = -5.9; 2021 = -5.6; 2022 = -5.2.
- Other medium-term expectations:
  - Growth would reach 6.0 percent in 2018 and average 6.6 percent over 2019–22 under the baseline.
  - Inflation projected to average 2.8 percent on average in 2018–22.
  - Budget deficit (including grants) expected to fall to 4.5 percent in 2018 and to 1.8 percent of GDP in 2019.
  - NFPS debt projected to reach 56.2 percent of GDP in 2018 with a present value (PV) of 48.3 percent of GDP.
  - External current account deficit (including grants) projected to decline to 8.2 percent of GDP in 2018 and average 6.4 percent of GDP for 2019–22 after peaking in 2017.

### Risks and external assessment
- External sector assessment: real effective exchange rate broadly consistent with fundamentals but competitiveness remains weak; authorities committed to structural reforms to enhance competitiveness.
- Main risks to the outlook:
  - (i) Delayed recovery in Nigeria and attendant shocks.
  - (ii) Resistance from the National Assembly to support the reform agenda.
  - (iii) Unforeseen contingent liabilities associated with SOEs and other government contracts.
  - (iv) Volatility of cotton export prices.
  - (v) Potential non-materialization of efficiency gains expected from public investment and a limited private sector response.
- Alternative lower-growth scenario shows deterioration of key macroeconomic indicators and calls for stronger domestic adjustment.

### Policy discussions and recommendations relevant to poverty reduction
- High-level policy focus:
  - (i) accelerate reforms to create fiscal space;
  - (ii) preserve debt sustainability;
  - (iii) diversify the economy and promote inclusive growth;
  - (iv) promote good governance and transparency.
- Revenue mobilization and tax administration:
  - Total revenue expected to increase by 21.7 percent in 2017 to reach CFAF 907.5 billion.
  - Tax revenues remained at 13.5 percent of GDP in 2017, below the WAEMU threshold of 20 percent.
  - Priority reforms: modernize tax and customs administrations, improve efficiency, strengthen coordination, integrate electronic systems of tax and customs administrations.
  - Specific measures: (i) improving human resources management within the tax administration; (ii) implementing a plan to improve tax compliance; (iii) strengthening the implementation of transactional values within customs.
- Public spending:
  - Improve fiscal policy management to broaden fiscal space, preserve debt sustainability, and reduce macro-financial risks.
  - Investment spending constrained by delays in validating sectoral ministries’ annual work plans consistent with the Government’s Action Program (GAP) and the ECF-supported program.
- Private sector and external financing:
  - Benin became a full participant in the G20 Compact with Africa (CWA) Initiative to bolster private sector financing of the GAP.
  - GAP expects 61 percent of total financing to come from the private sector (about $9.3 billion over 5 years).
  - Staff recommended continued engagement with potential donors to mobilize more concessional financing.
- Governance and reforms:
  - Authorities committed to improving governance and transparency and strengthening accountability for public office holders.
  - Private sector involvement critical to consolidate the reform program and support inclusive growth.
- Targeting redistributive policies and social spending:
  - VAT can raise significant revenue and reduce inequality but can adversely impact the very poor; health and education spending are more efficient at reducing inequality but require significant financing.
  - Staff recommendation: strengthen the VAT and use ensuing resources to finance health and education spending targeted to rural low-income households.
  - Promote cost-effective safety net programs such as e-vouchers and mobile transfers to protect the most vulnerable.

### Box 2 — Economic Development Document (EDD), 2017–21 (summary)
- Objective: enhance the macroeconomic environment to achieve inclusive growth through accelerated and sustained growth, improving incomes and job creation, and strengthening foundations for sustainable development.
- Major development challenges:
  - (i) increase economic competitiveness;
  - (ii) reduce inequalities of access to basic services;
  - (iii) address disparities among economic zones;
  - (iv) improve the business environment.
- Sectoral and reform priorities:
  - Strengthen the state of law; improve governance; maintain macroeconomic stability; improve economic growth; strengthen education performance; reinforce social protection; promote sustainable economic development.
- Investment efficiency and PIM:
  - Public investment efficiency relatively low; issues: poor project selection, non-transparent procurement.
  - Findings: Benin could increase investment efficiency by 55 percent on average with the same amount of investment.
  - Staff recommendations: robust planning system coordinated with budget preparation; comprehensive procurement framework; improve project selection, execution, monitoring, and ex-post evaluation; strengthen human capital for PIM.
- Debt dynamics:
  - Domestic public debt increased from about 8.6 percent of GDP to 33.6 percent of GDP between 2013 and 2017 (60 percent of total debt in 2017).
  - PV of public debt increased to 48.4 percent of GDP in 2017.
  - Policy anchor: limit PV of NFPS debt to no more than 50 percent of GDP; staff urged strict adherence to fiscal consolidation.
  - Staff recommendations: strengthen public debt management, favor concessional external borrowing, accelerate transition to treasury single account, seek longer maturity obligations on the regional market.
- Diversification and inclusion:
  - Recommendations: improve infrastructure and trade networks; deepen financial markets; invest in human capital; promote high value added agro-commodities and agro-processing; boost tourism; support urbanization policies; improve agricultural productivity (land tenure security, irrigation, extension services); pro-poor fiscal transfers to enable local governments to invest in health and education.
- Social protection:
  - ARCH (Assurance pour le Renforcement du Capital Humain) to become operational in late 2017/early 2018, including universal medical coverage for the poorest, food care, clean water and sanitation, and health care during early childhood.
- Financial sector:
  - Sector remains under-developed and vulnerable; large number of unauthorized MFIs raises stability risks; recommended regularization and stronger supervision.

### Program performance, monitoring, and safeguards
- Program implementation:
  - All performance criteria at end-June 2017 were met.
  - All structural benchmarks for end-June were met; good progress on end-September and end-December ones.
- Social priority spending under-execution:
  - CFAF 55.6 billion versus target CFAF 85.0 billion at end-June 2017.
  - Authorities indicated that by September 21, spending on these sectors represented 88 percent of the target for end-September.
- Financing and capacity to repay:
  - Program fully financed with firm commitments for next 12 months and good prospects for remainder of program.
  - Support from development partners (AfDB, European Union, World Bank) renewed; support from China CFAF 26 billion.
  - Credit outstanding from the Fund, once all disbursements under the ECF arrangement are made, will be 109.7 percent of quota (SDR 135.82 million).
  - Completion of the review will release a disbursement equivalent to SDR 15.917 million.
- Safeguards:
  - 2013 assessment of BCEAO found a continuing strong control environment; all recommendations implemented.
  - An update safeguards assessment planned for 2017.
- Data and capacity development:
  - Data shortcomings due to lack of capacity, but broadly adequate for surveillance.
  - Plans to improve balance of payments, international investment position, employment, and social indicators; participation in e-GDDS.
  - IMF TA emphasis on revenue (tax and customs) administration and PFM, including management of public investment.

_International Monetary Fund staff report based on Benin authorities’ submissions and IMF staff assessments (CR1801, chapter "1. Poverty")._

### 1. Poverty _________________________________________________________________________________________ 6

### 1. Poverty

### Inclusive growth and poverty dynamics
- Growth over 2013–15 averaged 5.2 percent, closing the gap with the sub-Saharan Africa (SSA) average in per capita GDP growth, but did not translate into a meaningful reduction in poverty.
- Low and stagnant productivity in the agriculture sector is identified as the primary cause of limited poverty reduction in rural areas.
- Real per capita annual expenditure decreased from CFAF 226,440 in 2011 to CFAF 223,402 in 2015, a drop of, approximately, 1.3 percent.
- Overall non-monetary poverty indicators:
  - Poverty rate increased from 36.2 percent of population in 2011 to 40.1 percent in 2015.
  - Proportion of people who consider themselves poor decreased: urban areas from 77 percent in 2011 to 66 percent in 2015; rural areas from 73 percent in 2011 to 67.2 percent in 2015.
- Human Development Index and rankings:
  - Benin ranked 167 out of 185 in 2016 against 166 in 2015.
  - At the regional level, Benin ranked 35th against 31st in 2015.
  - Benin’s Human Development Index rose from 0.480 in 2015 to 0.485 in 2016.
  - These values are below the average of 0.497 for countries in the low human development group and below the average of 0.523 for countries in SSA.
- Gender and education:
  - Women experienced higher levels of (non-monetary) poverty than men.
  - Groups led by women are found to be better off in monetary poverty measures than those led by men.
  - Households headed by persons with at least primary education are less affected by monetary or non-monetary poverty.
- Determinants of poverty persistence and increase:
  - Persistence of non-monetary poverty: lack of basic infrastructure.
  - Increase in monetary poverty: (i) fall in per capita incomes in rural areas linked to a fall in yields; (ii) structural weaknesses of the agricultural sector (climatic hazards, non-control of water, poor access to good seeds, lack of or weak extension services); and (iii) expansion of the informal sector.
- Table of real spending and non-monetary poverty (selected values):
  - Urban: Spending per capita 2011 = 327,234; 2015 = 336,099; real spending 2015 (deflated) = 315,029; Evolution of standard of living -3,73; Non-monetary poverty 2011 = 26.4; 2015 = 20.5.
  - Rural: Spending per capita 2011 = 154,070; 2015 = 158,351; real spending 2015 (deflated) = 148,424; Evolution of standard of living -3,66; Non-monetary poverty 2011 = 32.9; 2015 = 36.0.
  - Benin (aggregate): Spending per capita 2011 = 226,440; 2015 = 238,343; real spending 2015 (deflated) = 223,402; Evolution of standard of living -1,34; Non-monetary poverty 2011 = 30.2; 2015 = 28.7.
- Source of poverty analysis: Note sur la pauvreté au Bénin en 2015, Institute of Statistics and Economic Analysis (INSAE).

### Recent macroeconomic developments relevant to poverty
- GDP growth and inflation:
  - Benin achieved economic growth of 4.0 percent in 2016, up from 2.1 percent in 2015.
  - Growth for 2017 was expected to reach 5.6 percent with inflation turning positive at 0.6 percent.
  - Inflation turned negative in 2016 at -0.8 percent.
- Drivers of 2016–17 activity:
  - 2016 growth driven mainly by favorable weather conditions and better access to agricultural inputs.
  - Secondary sector growth: 2.6 percent in 2016 vs. 10.1 percent in 2015.
  - Tertiary sector: 3.4 percent increase in value added in 2016 compared to an initial forecast of 2.7 percent.
- Fiscal outturn (end-June 2017):
  - Total revenues amounted to CFAF 443.9 billion at end-June 2017, slightly above the target of CFAF 386.1 billion.
  - Basic primary deficit was CFAF 33.1 billion, below the program floor of CFAF 73.1 billion.
  - Expenditure commitments for priority social sectors estimated at CFAF 55.6 billion, below the target of CFAF 85.0 billion.
  - Investment spending was lagging due to delays in validating sectoral ministries’ annual work plans.
  - Stronger domestic revenue performance expected to result in a lower-than-programmed fiscal deficit (including grants) of 6.1 percent of GDP in 2017 against the program projection of 7.9 percent.
- External sector:
  - Current account deficit (including grants) projected to reach 9.1 percent of GDP in 2017, reflecting investment scaling up and import growth of about 19 percent.
- Debt and financial sector:
  - Updated debt sustainability analysis confirmed a moderate risk of debt distress.
  - Total public debt increased in 2016 due to domestic financing of capital investment projects.
  - Approximately 90 percent of public domestic liabilities consist of government securities issued on the regional financial market.
  - Staff recommended mobilizing more concessional financing from donors.
  - Banking sector indicators (end-June 2017):
    - Regulatory capital to risk-weighted assets: 10.0 percent.
    - Liquidity ratio (total loans/total deposits): 78 percent.
    - Non-performing loans to total loans: 20.3 percent.
  - Microfinance sector: growth in loans and deposits but limited progress in closing non-approved microfinance institutions.

### Medium-term outlook and scenarios (2017–22)
- Staff baseline projections (selected indicators):
  - Real GDP: 2017 = 5.6; 2018 = 6.0; 2019 = 6.3; 2020 = 6.7; 2021 = 7.1; 2022 = 7.2.
  - Consumer Price Index (average): 2017 = 0.6; 2018 = 2.5; 2019–2022 = 2.8 (annual).
  - Public Investment (percent of GDP): 2017 = 9.3; 2018 = 8.6; 2019 = 6.3; 2020 = 5.9; 2021 = 5.5; 2022 = 5.3.
  - Total Revenues (percent of GDP): 2017 = 16.8; 2018 = 17.5; 2019 = 17.3; 2020 = 17.9; 2021 = 18.4; 2022 = 18.8.
  - Fiscal Deficit (including grants, percent of GDP): 2017 = -6.1; 2018 = -4.5; 2019 = -1.8; 2020 = -0.6; 2021 = 0.0; 2022 = 0.8.
  - Basic Primary Balance (percent of GDP): 2017 = -2.6; 2018 = 0.1; 2019 = 2.4; 2020 = 3.1; 2021 = 3.5; 2022 = 4.2.
  - Non-Financial Public Sector Debt (percent of GDP): 2017 = 55.6; 2018 = 56.4; 2019 = 53.8; 2020 = 49.3; 2021 = 45.0; 2022 = 40.7.
  - Current Account (percent of GDP): 2017 = -9.1; 2018 = -8.4; 2019 = -7.1; 2020 = -6.6; 2021 = -6.4; 2022 = -5.8.
- Alternative (lower-growth) scenario (selected indicators):
  - Real GDP (percent): 2017 = 5.6; 2018 = 4.0; 2019 = 4.7; 2020 = 5.2; 2021 = 5.5; 2022 = 6.2.
  - Consumer Price Index (average): 2017 = 0.6; 2018 = 2.6; 2019–2022 = 2.9 (annual).
  - Fiscal Deficit (including grants, percent of GDP): 2017 = -6.1; 2018 = -5.6; 2019 = -2.7; 2020 = -1.6; 2021 = -0.8; 2022 = 0.2.
  - Basic Primary Balance (percent of GDP): 2017 = -2.6; 2018 = -0.7; 2019 = 2.1; 2020 = 2.7; 2021 = 3.3; 2022 = 4.1.
  - Non-Financial Public Sector Debt (percent of GDP): 2017 = 55.6; 2018 = 58.3; 2019 = 56.8; 2020 = 53.2; 2021 = 49.6; 2022 = 45.9.
  - Current Account (percent of GDP): 2017 = -9.1; 2018 = -8.0; 2019 = -6.3; 2020 = -5.9; 2021 = -5.6; 2022 = -5.2.
- Other medium-term projections and expectations:
  - Growth would reach 6.0 percent in 2018 and average 6.6 percent over 2019–22 under the baseline.
  - Inflation is projected to average 2.8 percent on average in 2018–22.
  - Budget deficit (including grants) expected to fall to 4.5 percent in 2018 and to 1.8 percent of GDP in 2019.
  - Monetary policy by the regional central bank (BCEAO) expected to remain supportive, buttressing programmed increase in credit to the private sector.
  - NFPS debt projected to reach 56.2 percent of GDP in 2018 with a present value (PV) of 48.3 percent of GDP.
  - External current account deficit (including grants) projected to decline to 8.2 percent of GDP in 2018 and average 6.4 percent of GDP for 2019–22 after peaking in 2017.

### Risks and external assessment
- External sector assessment: real effective exchange rate broadly consistent with fundamentals but competitiveness remains weak; authorities committed to structural reforms to enhance competitiveness.
- Main risks to the outlook:
  - (i) Delayed recovery in Nigeria and attendant shocks.
  - (ii) Resistance from the National Assembly to support the reform agenda.
  - (iii) Unforeseen contingent liabilities associated with SOEs and other government contracts.
  - (iv) Volatility of cotton export prices.
  - (v) Potential non-materialization of efficiency gains expected from public investment and a limited private sector response.
- Alternative scenario based on lower growth due to non-materialization of efficiency gains from public investment shows deterioration of key macroeconomic indicators and calls for stronger domestic adjustment.

### Policy discussions and recommendations relevant to poverty reduction
- High-level policy focus: (i) accelerate reforms to create fiscal space; (ii) preserve debt sustainability; (iii) diversify the economy and promote inclusive growth; and (iv) promote good governance and transparency.
- Revenue mobilization and tax administration:
  - Total revenue expected to increase by 21.7 percent in 2017 to reach CFAF 907.5 billion.
  - Tax revenues remained at 13.5 percent of GDP in 2017, well below the WAEMU threshold of 20 percent.
  - Priority reforms to strengthen domestic revenue mobilization: modernize tax and customs administrations, improve efficiency, strengthen coordination, integrate electronic systems of tax and customs administrations.
  - Specific measures to boost tax revenue collection: (i) improving human resources management within the tax administration; (ii) implementing a plan to improve tax compliance; and (iii) strengthening the implementation of transactional values within customs.
- Public spending:
  - Need to improve fiscal policy management to broaden fiscal space, preserve debt sustainability, and reduce macro-financial risks.
  - Investment spending constraints linked to delays in validating sectoral ministries’ annual work plans consistent with the Government’s Action Program (GAP) and the ECF-supported program.
- Private sector and external financing:
  - Benin became a full participant in the G20 Compact with Africa (CWA) Initiative to bolster private sector financing of the GAP.
  - GAP expects 61 percent of total financing to come from the private sector (about $9.3 billion over 5 years).
  - Staff recommended continued engagement with potential donors to mobilize more concessional financing.
- Governance and reforms:
  - Authorities committed to improving governance and transparency and strengthening accountability for public office holders, despite setbacks in constitutional revision and audit institution reforms.
  - Private sector involvement is considered critical to consolidate the reform program and support inclusive growth.

*Source: Benin — Background and Outlook: Strengthening the Pillars for a Structural Transformation of the Economy (CR1801, chapter "1. Poverty").*

### Box 2. Economic Development Document (EDD), 2017–21

### Box 2. Economic Development Document (EDD), 2017–21

### Overview
- The EDD for 2017-21 builds on Benin’s long-term programs (Etudes Nationales de Perspectives a Long Terme—Benin Alafia 2025) and on achievements and implementation challenges of previous poverty reduction strategic documents (SCRP) and the Economic and Social Development Plan (PDES), 2012-15.
- The EDD’s primary aim is to enhance the macroeconomic environment to achieve inclusive growth through accelerated and sustained growth, improving incomes and job creation, and strengthening foundations for sustainable development.
- The EDD recognizes that the average rate of growth during the SCRP, 2011-15 was 5.3 percent (against a target of 7.5 percent for 2015 percent) and that this was insufficient to contribute to significant poverty and unemployment reduction given demographic growth of 3.5 percent during the period.

### Major development challenges and sectoral priorities
- The EDD identifies four major development challenges:
  - (i) increase economic competitiveness;
  - (ii) reduce inequalities of access to basic services by the population;
  - (iii) address and correct disparities among different economic zones;
  - (iv) improve the business environment.
- To support macroeconomic objectives, the EDD sets the following sectoral and key reform priorities:
  - (i) strengthen the state of law;
  - (ii) improve governance;
  - (iii) maintain macroeconomic stability;
  - (iv) improve economic growth;
  - (v) strengthen the performance of education;
  - (vi) reinforce social protection;
  - (vii) promote sustainable and durable economic development.
- Additional strategic emphases suggested in the text:
  - improve public financial management and domestic resource mobilization;
  - accelerate implementation of domestic food security;
  - focus on agribusiness to promote export diversification;
  - enhance public investment in priority infrastructures and social sectors;
  - attract foreign direct investment to boost exports.

### Investment efficiency and public investment management (PIM)
- A preliminary analysis indicates that public investment efficiency in Benin is relatively low compared with benchmark countries.
- Identified issues contributing to low PIM efficiency:
  - poor selection criteria for public projects;
  - non-transparent procurement processes.
- Staff recommendations to address inefficiencies include:
  - implement a robust planning system coordinated with budget preparation;
  - strengthen effective state and local government coordination;
  - establish a comprehensive normative and institutional framework for public procurement;
  - improve project selection, procurement, execution processes, monitoring of commitments, and ex-post project evaluation; and
  - strengthen human capital for PIM.
- Findings from the efficiency frontier approach (Selected Issues paper):
  - Benin’s infrastructure quantity and quality remain relatively low; perception of infrastructure quality (electricity supply, railroads, roads) scores below SSA benchmark countries’ average.
  - At comparable levels of real public capital stock, Benin’s overall infrastructure quality is perceived lower than regional peers.
  - Under three efficiency scores indexes, results indicate that Benin could increase investment efficiency by 55 percent in average with the same amount of investment.
  - Regression analysis suggests stronger institutions could reduce the public investment efficiency gap.

### Authorities’ commitments on PIM
- Authorities confirmed commitment to improve public investment efficiency, welcomed October 2017 IMF TA PIMA findings, and committed to:
  - strengthen planning and execution of public infrastructure projects;
  - improve monitoring of commitments and conduct ex-post project evaluation;
  - improve inter-ministerial coordination and strengthen human capital;
  - enhance procurement and execution processes to ensure value for money.

### Debt dynamics and preserving long-term debt sustainability
- Domestic public debt increased from about 8.6 percent of GDP to 33.6 percent of GDP between 2013 and 2017 and accounted for 60 percent of total debt.
- The September 2017 DSA confirms a moderate risk of debt distress for Benin.
- Present value (PV) of public debt increased to 48.4 percent of GDP in 2017 due to increased reliance on the regional financial market for public investment financing.
- Staff urged strict adherence to the programmed fiscal consolidation path to preserve long-term debt sustainability and support the public debt anchor.
- The anchor is defined as limiting the PV of NFPS debt to no more than 50 percent of GDP, consistent with a total NFPS debt ratio peaking at 56.2 percent of GDP in 2018. This ratio is below the estimated PV threshold of 56 percent of GDP, beyond which the risk of public debt distress is heightened for countries with moderate capacity like Benin.
- Staff recommendations on debt management:
  - sustain efforts to strengthen public debt management and the medium-term debt management strategy;
  - optimize recourse to the regional debt market;
  - favor concessional external borrowing given the importance of domestic debt and regional borrowing characteristics (shorter maturities, higher interest rates, lower grace periods);
  - accelerate transition to the treasury single account, improve cash flow quality, and match short-term debt instruments with liquidity needs;
  - seek longer maturity obligations when tapping the regional financial market to mitigate roll-over risks.

### Fiscal risks related to SOEs and PPPs
- Authorities are collecting and analyzing financial statements and questionnaire responses of all 22 SOEs and 140 autonomous agencies to assess indebtedness.
- Assessment of fiscal risks related to PPP projects remains an outstanding issue despite creation of a PPP unit at the Ministry of Finance.

### Promoting diversification, inclusive growth, and financial deepening
- Economic diversification and financial sector development are essential to enhance inclusiveness of growth.
- Key reform directions from the Selected Issue Paper (Growth, Structural Transformation, and Export Diversification):
  - improve infrastructure and trade networks, reduce barriers to entry for new products;
  - deepen financial markets, foster more efficient financial intermediation and access to markets;
  - invest in human capital;
  - reinforce Benin’s relative good standing regarding the extent of foreign value added in its exports (backward integration);
  - focus on sectoral policies: develop high value added agro-commodity crops, promote agro-processing, and develop the tourism sector;
  - complement sectoral policies with improvements in education outcomes, governance, and transparency in regulation.
- Recommendations to make growth more inclusive:
  - support urbanization policies to leverage economies of scale;
  - improve agricultural productivity via land tenure security, irrigation, and enhanced extension services to foster food security in rural areas;
  - implement pro-poor fiscal transfers via inter-region transfers enabling local governments in disadvantaged areas to invest in health and education;
  - adopt cost-effective safety net programs such as e-vouchers and mobile transfers to protect the most vulnerable.

### Financial sector weaknesses and inclusion
- Benin’s financial sector remains under-developed and vulnerable, limiting its ability to support credit to the private sector.
- A large number of unauthorized microfinance institutions (MFIs) raises stability risks.
- A SIP reviewed financial sector contributions to sustainable growth, outlined stability concerns, and explored ways to improve financial inclusion.

### Structural transformation and sectoral specifics
- Manufacturing output share fell from 22 percent in 2000 to 12 percent in 2012, indicating some de-industrialization.
- Agriculture employs around 70 percent of Benin’s workforce and contributes approximately to 22 percent to GDP.
- GAP pillars and sectoral initiatives include:
  - cross-cutting policies to achieve efficiency gains in public investment, boost private investment in energy and transport, and strengthen education, skills, and human capital;
  - agricultural policies to create seven regional poles for agricultural development and promote high value added sectors (pineapples, cashew nuts, cotton, maize, cassava, rice), evolve the processing industry through technological innovations, and boost continental aquaculture;
  - tourism investments to build a tourist pole around Voodoo art and recreate the historic city of Ouidah as a flagship destination of memorial tourism in Africa.

### Social protection, redistributive effects, and policy simulations
- Authorities adopted a flagship social protection reform: Insurance for Strengthening Human Capital (Assurance pour le Renforcement du Capital Humain—ARCH), to become operational in late 2017/early 2018, including universal medical coverage for the poorest, food care, clean water and sanitation, and health care during early childhood.
- Fiscal incidence analysis (Selected Issues Paper) findings:
  - Analysis focuses on VAT on revenue side and health and education spending on expenditure side.
  - Fiscal policy has had a redistributive effect in Benin.
  - VAT reduces inequality but contributes to an increase in the poverty headcount rate.
  - The Gini coefficient for disposable income is 0.43, one Gini point higher than the coefficient for final incomes (consumption expenditures minus indirect taxes and in-kind benefits from public health and education).
  - Fiscal policy is equally effective in urban and rural areas in redistributive terms, though effects differ by sector.
- Macro-structural simulation results (based on Fabrizio et al, 2017 framework):
  - VAT reform is the least distortive alternative in terms of aggregate output among revenue mobilization options considered.
  - VAT reform results in higher income inequality in urban areas because poor urban households work in informal non-tradable sectors while richer households work in manufacturing; VAT lowers prices of non-tradables reducing urban poor incomes while investment-driven gains raise manufacturing wages benefiting the urban rich.
  - VAT reform leads to lower income inequality in rural areas because reductions in agricultural prices affect richer rural households more (they sell a larger share of production), lowering income inequality in the rural sector.

*Source: Box 2. Economic Development Document (EDD), 2017–21.*

### 27.      The authorities also acknowledged the need to foster inclusive growth. Drawing on the

### cr1801 - 27.      The authorities also acknowledged the need to foster inclusive growth. Drawing on the

### Inclusive growth, poverty, and fiscal policy
- Findings from two poverty assessments and the SIP:
  - (i) VAT can help raise significant revenue while reducing inequality, but can also adversely impact the very poor.
  - (ii) Health and education standings are more efficient than VAT at reducing inequality and positively impact the very poor, but need significant financing to achieve this goal.
  - (iii) The marginal effect of redistributive policies are larger in rural areas, given greater needs and similar impact.
- Staff recommendation:
  - Strengthen the VAT and use ensuing resources to finance health and education spending targeted to rural low-income households.
- Authorities’ acknowledgement:
  - The authorities also acknowledged the need to foster inclusive growth.

### Financial deepening and microfinance
- Agreed actions to improve financial deepening:
  - Undertake electronic title registration and extend it to the whole country.
  - Improve the judicial system’s capacity by extending training on commercial regulation and creating commercial courts and arbitration mechanisms.
  - Implement risk-based supervision by the BCEAO and the regional banking commission (Commission Bancaire).
  - Speed up implementation of the new harmonized regional resolution framework.
  - Strengthen supervisory body for microfinance by increasing the number of supervisors, especially in rural areas.
  - Clean the microfinance sector by regularizing unauthorized MFIs.

### Business environment, governance, and anti-corruption
- Ongoing reform gaps:
  - Little progress in (i) strengthening audit institutions; (ii) addressing weaknesses in the doing business indicators; and (iii) addressing corruption and improving governance and transparency.
- Authorities’ planned actions:
  - Accelerate reform of audit institutions and strengthen procurement system, including reducing direct tendering and practicing best practice disclosure on procurement outcomes.
  - Continue efforts to establish an effective AML/CFT regime and implement a meaningful and enforceable asset declaration regime.
  - Approved (on November 2, 2017) a bill on AML/CFT for submission to the National Assembly to coalesce existing legislation on money laundering and financing of terrorism.
- External indicators and challenges:
  - Benin’s Doing Business ranking: 155 in 2017 (declined two positions in 2017).
  - Identified problematic areas: access to electricity, paying taxes, enforcing contracts, and corruption (2017–2018 Global Competitiveness Index).

### Program performance and fiscal execution
- Program implementation:
  - All performance criteria at end-June 2017 were met.
  - All structural benchmarks for end-June were met with good progress on end-September and end-December ones.
- Social priority spending under-execution:
  - CFAF 55.6 billion versus a target of CFAF 85.0 billion at end-June 2017.
  - Authorities indicated that, as of September 21, spending on these sectors represented 88 percent of the target for end-September.
- Draft 2018 budget and fiscal stance:
  - Real GDP growth expected to accelerate to 6 percent in 2018, reaching 6.6 percent on average in 2019–22.
  - Inflation expected to average 2 percent in 2018 and 2.2 percent in 2019–22.
  - Current account balance expected to improve to average 8.3 percent of GDP and 6.6 percent in 2018–22.
  - Overall fiscal deficit (including grants) will decline to 4.5 percent of GDP compared to 6.4 percent of GDP.
  - Better-than-programmed revenue performance in 2017: 1.2 percentage points of GDP higher.
- Revenue measures (Text Table 2: Impact of Revenue Measures, 2018 — Billions of CFAF / Percent of GDP):
  - Modernization of tax collection procedures: 25.2 / 0.4
  - Strenghtening audit procedures: 10.0 / 0.2
  - Reorganization of the tax administration: 0.5 / 0.0
  - Collected by Treasury (Non-tax revenue): 36.1 / 0.6
  - Collected by Debt Agency (CAA) (Non-tax revenue): 16.6 / 0.3
  - Total: 88 / 1.5
  - Note: 1/Revenue gains compared to the original program for 2018.

### Financing, capacity to repay, and safeguards
- Program financing:
  - Program fully financed with firm commitments for next 12 months and good prospects for remainder of program.
  - Development partners (AfDB, European Union, World Bank) renewed commitments; support from China CFAF 26 billion.
- Proposed modifications:
  - Modification of three end-December 2017 performance criteria proposed: (i) ceiling on net domestic financing of the government, (ii) floor on the basic primary balance (excluding grants), and (iii) floor on total revenue.
- Capacity to repay:
  - Credit outstanding from the Fund, once all disbursements under the ECF arrangement are made, will be 109.7 percent of quota (SDR 135.82 million).
  - Completion of this review will release a disbursement equivalent to SDR 15.917 million.
- Safeguards assessment:
  - 2013 assessment of BCEAO found a continuing strong control environment; all recommendations implemented (including appointment of an international firm with ISA experience for audits of FY 2015–17, reinforcing audit committee, adoption of IFRS starting with financial year 2015).
  - An update safeguards assessment is planned for 2017.

### Data, capacity development, and structural priorities
- Data provision:
  - Some shortcomings due to lack of capacity, but broadly adequate for surveillance.
  - Plans to improve balance of payments, international investment position, employment, and social indicators; participation in e-GDDS.
  - Weaknesses in public finance to be addressed to implement GFSM 2001/2014.
- Capacity development priorities:
  - IMF TA emphasis on revenue (tax and customs) administration and PFM, including management of public investment.
  - Strengthen capacity to address data weaknesses and gaps; expand support to improve real sector statistics and national accounts.
- Structural priorities and risks:
  - Accelerate domestic revenue mobilization, improve quality of spending, strengthen debt management, and improve business environment.
  - Staff urged acceleration of reforms of key SOEs and close monitoring of SOE debt and fiscal risks associated with PPPs.
  - Continue efforts to regularize unauthorized MFIs and address non-performing loans.

### Staff appraisal — key assessments and recommendations
- Macro and growth:
  - The economy has been resilient; authorities’ 2016 actions cut recurrent spending and stabilized the macroeconomic situation.
  - Prudent policies and the Economic Development Document 2017-21 support continued high growth with low inflation.
- Inclusiveness and poverty:
  - Strong macroeconomic performance did not reduce poverty; increase in poverty points to non-inclusiveness of growth and limited efficiency of public spending.
  - Authorities encouraged to pursue well-targeted measures to protect the most vulnerable and prioritize social sector spending.
- Revenue mobilization:
  - Bolstering domestic revenue mobilization is paramount to increase public investment and poverty-reducing spending.
  - Ongoing tax and customs reforms should be implemented steadfastly to broaden the tax base and improve compliance.
- Debt sustainability and fiscal consolidation:
  - Adherence to the fiscal consolidation path is essential to ensure debt sustainability and meet WAEMU’s fiscal convergence criterion.
  - Seek long maturity obligations in regional financial market and closely monitor SOE debt and PPP contingent liabilities.
- Business environment and governance:
  - Improving the business environment and decisively tackling corruption are essential to support inclusive growth and private investment.
- Financial sector vulnerabilities:
  - Continue measures to remove barriers to efficient financial intermediation and consolidate information on microfinance institutions; address unauthorized MFIs and non-performing loans.
- Data gaps:
  - Address gaps in the quality and timeliness of economic statistics; publish recently revised national accounts and upgrade data collection and dissemination methodologies.

*International Monetary Fund staff report based on Benin authorities’ submissions and IMF staff assessments.*

### 52.      It is expected that the next Article IV consultation with Benin will be held in

### cr1801 - 52.      It is expected that the next Article IV consultation with Benin will be held in

### Recent economic developments (2010–17)
- Growth has increased since 2015, pulled by agriculture and the tertiary sector.
- Inflation (CPI, annual percentage change) series shown for Overall, Food, Non-food (time series graphic, Jan-13 to Jul-17).
- International Trade (Goods, in percent of GDP), Exports and Imports, series for 2010–2017.
- Overall Fiscal Balance (In percent of GDP, excluding grants), series for 2010–2017.
- Current Account Balance (In percent of GDP), series for 2010–2017.
- Public Sector Debt (In percent of GDP), series for 2010–2017.
- Contribution to GDP Growth by Primary, Secondary, Tertiary, and GDP, series for 2010–2017.
- Large structural trade gap exacerbated by recent spillovers from Nigeria; current account deficit deteriorated.

### Fiscal developments and projections (2012–19)
- Source: authorities data and staff estimates.
- Total Revenue and Grants: series by year 2010–2019 (graphic).
- Current Expenditure: series by year 2010–2019; breakdown Wages and salaries; Other current expenditure (graphic).
- Capital Expenditure: Domestic financed and Foreign financed, series 2010–2019 (graphic).
- Total Expenditure: series 2010–2019 (graphic).
- Overall Fiscal Deficit (incl. Grants): series 2010–2019 (graphic).
- Financing Mix: Domestic borrowing and Foreign borrowing, series 2010–2019 (graphic).

### Status of quantitative performance criteria and indicative targets (2017) — Table 1 (Billions of CFA francs)
- Net domestic financing of the government (ceiling) — Prog./Prel./Status snapshots:
  - 70.1 / 38.1 / Met (March 31, 2017)
  - 116.1 / 131.1 / 113.7 Met (June 30, 2017)
  - 183.9 / 177.7 / 183.7 (December 31, 2017)
- Basic primary balance (excluding grants) (floor):
  - -64.7 / 8.8 / Met
  - -73.1 / -33.1 / Met
  - -139.0 / -171.3 / -142.6
- Total revenue (floor):
  - 182.9 / 189.6 / Met
  - 386.1 / 443.9 / Met
  - 602.9 / 843.9 / 907.5
- Continuous quantitative performance criteria (ceilings):
  - Accumulation of external payments arrears: 0.0 / 0.0 / Met across reported dates.
  - Ceiling on present value of new external debt contracted or guaranteed: 402.8 / _ / Met and 402.8 / 48.5 / Met reported; series shows 402.8 repeated.
  - Accumulation of domestic payments arrears: 0.0 / 0.0 / Met.
  - Contracts by government for prefinancing of public investment projects: 0.0 / 0.0 / Met.
- Memorandum items:
  - Priority social expenditure (floor): 36.3 / 3.6 / Not Met; 85.0 / 55.6 / Not Met; 125.0 / 160.0 / 160.0.
  - Budgetary assistance (gross disbursements, not adjusted for debt service obligations): 16.2 / 0.0 / Not Met; 16.2 / 0.0 / Not Met; 39.2 / 55.0 / 55.0.

### Status of structural benchmarks for 2017 — Table 2 (selected measures and status)
- Revenue administration:
  - Strategic Plan for the Tax Administration (POSAF) approved by Ministry of Finance — Prior action — Met.
  - Integrate Customs and Tax Administrations’ computer systems — Prior action — Met.
  - Agree upon a 2017 budget consistent with the ECF-supported program — Prior action — Met.
  - Review and quantify all tax expenditures and agree on time-bound strategy to suppress those not in line with WAEMU directives — End-September 2017 — Met.
- Public financial management:
  - Framework for preparation and monitoring of government cash flow plan — End-June 2017 — Met.
  - Prepare monthly plans for cash flow forecasts and quarterly comprehensive assessments of budget execution — End-June 2017 (ongoing) — Met.
  - Publish basic information about procurement on the internet — End-June 2017 — Met.
  - Conduct public expenditure review with World Bank assistance — End-September 2017 — Met.
- Public investment:
  - Establish Unit responsible for implementation of GAP, notably Flagship projects — Prior action — Met.
  - Launch Strategic Support Unit under Ministry of Finance to evaluate fiscal risks associated with PPPs — End-June 2017 — Met.
  - Develop multi-year commitment framework for investment projects — End-September 2017 — Met.
- Debt management and SOEs:
  - Extend coverage under medium-term debt strategy to SOE debt and contingent liabilities — End-December 2017 — Ongoing.
  - Collect data on debt of SOEs and adopt monitoring mechanism — End-September 2017 — Ongoing.
- Business climate and financial inclusion:
  - Adopt implementing decrees for Laws No. 2001-37 and 2008-07 on commercial courts — Prior action — Met.
  - Establish a credit bureau and make it operational — End-December 2017 — Ongoing.

### Selected economic and financial indicators, 2014–22 — Table 3 (key figures)
- GDP at current prices (annual percent change): 2014: 6.1; 2015: 2.2; 2016: 3.7; 2017: 6.0; 2018: 8.4; 2019: 9.1; 2020: 9.6; 2021: 10.0; 2022: 8.9.
- GDP at constant prices (annual percent change): 2014: 6.4; 2015: 2.1; 2016: 4.0; 2017: 5.6; 2018: 6.0; 2019: 6.3; 2020: 6.7; 2021: 7.1; 2022: 6.2.
- Consumer price index (average): 2014: -1.1; 2015: 0.3; 2016: -0.8; 2017: 0.6; 2018: 2.5; 2019: 2.8; 2020–2022: 2.8 each year.
- Total revenue (percent change): 2014: -1.9; 2015: 5.0; 2016: -9.0; 2017: 21.7; 2018: 12.6; 2019: 8.3; 2020: 13.4; 2021: 13.1; 2022: 11.2.
- Exports of goods and services (percent change): 2014: 8.3; 2015: 15.9; 2016: -8.5; 2017: 16.0; 2018: 14.4; 2019: 13.0.
- Imports of goods and services (percent change): 2014: 16.4; 2015: -0.8; 2016: -5.0; 2017: 18.7; 2018: 8.4; 2019: 8.3.
- Broad money (M2) growth: 2014: 16.7; 2015: -10.4; 2016: 0.3; 2017: 7.8.
- Gross investment (percent of GDP): 2014: 28.6; 2015: 25.6; 2016: 24.6; 2017: 28.6; 2018: 28.3; 2019: 26.3; 2020: 26.9; 2021: 27.5; 2022: 24.2.
- Government investment (percent of GDP): 2014: 5.2; 2015: 7.7; 2016: 5.9; 2017: 9.3; 2018: 8.6; 2019: 6.3; 2020: 5.9; 2021: 5.5; 2022: 5.3.
- Gross domestic saving (percent of GDP): 2014: 13.4; 2015: 13.4; 2016: 12.8; 2017: 15.0; 2018: 15.7; 2019: 14.6; 2020: 15.5; 2021: 16.6; 2022: 13.9.
- Primary balance (percent of GDP): 2014: -2.4; 2015: -7.9; 2016: -5.5; 2017: -5.5; 2018: -3.8; 2019: -1.3; 2020: -0.1; 2021: 0.9; 2022: 1.5.
- Basic primary balance (percent of GDP): 2014: 0.0; 2015: -4.2; 2016: -3.0; 2017: -2.4; 2018: 0.1; 2019: 2.4; 2020: 3.1; 2021: 3.5; 2022: 4.3.
- Overall fiscal deficit (commitment basis, excl. grants) (percent of GDP): 2014: -2.8; 2015: -8.6; 2016: -6.7; 2017: -7.5; 2018: -6.1; 2019: -3.6; 2020: -2.3; 2021: -1.0; 2022: -0.2.
- Total government debt (percent of GDP): 2014: 30.5; 2015: 42.4; 2016: 49.5; 2017: 55.5; 2018: 56.0; 2019: 53.3; 2020: 48.7; 2021: 44.4; 2022: 40.5.
- Current account balance (incl. grants) (percent of GDP): 2014: -8.6; 2015: -8.2; 2016: -7.4; 2017: -9.1; 2018: -8.2; 2019: -6.9; 2020: -6.5; 2021: -6.3; 2022: -5.7.
- Nominal GDP (billions of CFA francs): 2014: 4,800; 2015: 4,904; 2016: 5,084; 2017: 5,390; 2018: 5,844; 2019: 6,378; 2020: 6,992; 2021: 7,693; 2022: 8,375.
- Nominal GDP (millions of US$): 2014: 9,722.9; 2015: 8,295.3; 2016: 8,577.1; 2017: 9,268.7; 2018: 10,481.3; 2019: 11,490.6; 2020: 12,595.9; 2021: 13,859.1; 2022: 15,087.6.
- Population (millions): 2014: 10.3; 2015: 10.6; 2016: 10.8; 2017: 11.1; 2018: 11.4; 2019: 11.7; 2020: 12.0; 2021: 12.3; 2022: 12.6.
- Nominal GDP per capita (U.S. dollars): 2014: 946; 2015: 786; 2016: 792; 2017: 833; 2018: 918; 2019: 980; 2020: 1,047; 2021: 1,124; 2022: 1,193.

### Consolidated central government operations (2014–22) — Table 4 (Billions of CFA francs, selected lines)
- Total revenue (2017 Act.): 780.8; 2018 Budget Rev.: 819.5; 2019 Budget: 896.3; 2017 Est.: 845.9; 2018 Est.: 745.7; 2019 Est.: 843.9; Projections: 907.5, 1,021.6, 1,106.6, 1,255.1, 1,422.1, 1,576.4.
- Tax revenue (2017 Act.): 701.2; 2018 Budget Rev.: 713.1; 2019 Budget: 792.4; projections include 735.9, 855.2, 957.3, 1,091.4, 1,242.0, 1,380.4.
- Nontax revenue (2017 Act.): 79.5; projections include 171.6, 166.4, 149.3, 163.7, 180.1, 196.0.
- Total expenditure and net lending (2017 Act.): 916.5; 2018 Budget Rev.: 1,242.3; 2019 Budget: 1,196.5; 2017 Est.: 1,105.9; projections include 1,309.7, 1,314.1, 1,377.6, 1,339.4, 1,412.5, 1,497.2, 1,589.7.
- Current expenditure (2017 Act.): 683.4; Current primary expenditure (2017 Act.): 665.1.
- Wage bill (2017 Act.): 317.4.
- Interest (2017 Act.): 18.3; Interest projections include 132.9, 151.7, 148.2, 143.2, 134.6.
- Capital expenditure (2017 Act.): 249.6; projections include 376.9, 396.0, 331.9, 299.6, 550.0, 449.9, 400.0, 412.1, 421.4, 443.9.
- Overall balance (commitment basis, incl. grants) (2017 Act.): -91.8; 2018 Budget Rev.: -394.0; 2019 Budget: -209.2; projections show large deficits and narrowing over time to positive by later years (e.g., 2.4, 70.4).
- Financing (2017 Act.): 166.2; Domestic financing (2017 Act.): 39.8; External financing (2017 Act.): 126.5.
- Nominal GDP (various years) included (e.g., 4,800; 4,904; 5,084; 5,390; 5,844; 6,378; 6,992; 7,693; 8,375).
- Central government debt (various): e.g., 2014: 1,462; 2015: 2,080; projections up to 3,378 and beyond in tables.

### Consolidated central government operations (percent of GDP) — Table 5 (selected ratios)
- Total revenue (percent of GDP): 2014: 16.3; 2015: 16.7; 2016: 17.6; 2017 Est.: 16.6; 2018: 14.7; 2019: 15.4; projections 16.0, 16.8, 16.8, 17.5, 17.4, 18.0, 18.5, 18.9.
- Total expenditure and net lending (percent of GDP): 2014: 19.1; 2015: 25.3; 2016: 23.5; 2017 Est.: 21.8; 2018: 21.4; 2019: 24.7; projections down to 19.5, 19.0.
- Overall balance (commitment basis, incl. grants) (percent of GDP): 2014: -1.9; 2015: -8.0; 2016: -4.1; 2017 Est.: -4.0; 2018: -6.0; 2019: -7.9; projections to -4.0, -1.9, -6.1, -4.5, -1.8, -0.6, 0.0, 0.8.

### Quarterly consolidated central government operations highlights (2016–18) — Table 6 (selected lines, Billions of CFA francs)
- Total revenue (2016 Year): 745.7; Q1: 182.9; Q2: 189.6; Q3: 386.1; 2017 Year EBS/17/25 New target and projections included.
- Total expenditure and net lending (2016 Year): 1,086.3; Q1: 311.9; Q2: 239.4; Q3: 616.0; 2017 Year estimates show large deficits, e.g., Overall balance (commitment basis, incl. grants) -306.0 for 2016 Year; -329.7 and -432.0 shown in subsequent rows.
- Capital expenditure (2016 Year): 299.6; financed by domestic resources 178.5 and external resources 121.1 (2016).

### Balance of Payments (2012–22) — Table 7 (selected lines, Billions of CFA francs and percent of GDP)
- Current account balance (billions of CFA francs): 2012: -308.2; 2013: -335.6; 2014: -412.3; 2015: -399.8; 2016: -375.0; 2017 Est.: -492.5; 2018 Prog.: -479.5; 2019 Prog.: -441.2; 2020–22 projections provided.
- Current account balance (percent of GDP, incl. budgetary assistance grants): 2012: -7.4; 2013: -7.4; 2014: -8.6; 2015: -8.2; 2016: -7.4; 2017: -9.1; 2018: -8.2; 2019: -6.9; 2020: -6.5; 2021: -6.3; 2022: -5.7.
- Balance of goods and services (billions): 2012: -497.4; 2013: -577.4; 2014: -728.9; 2015: -596.4; 2016: -597.3; 2017: -730.5; 2018: -735.5.
- Trade balance (billions, excludes re-exports and imports for re-export): -460.1 (2012) through -366.2 (2022) with exports and imports series.
- Exports, f.o.b. (billions): 2012: 289.5; 2013: 447.6; 2014: 523.6; 2015: 719.5; 2016: 632.1; 2017: 748.1; projections up to 1,391.6 (2022).
- Imports, f.o.b. (billions): -749.6 (2012) to -1,757.8 (2022); includes petroleum products and other components.
- Current transfers (net) (billions): 2012: 204.6; 2013: 239.1; 2014: 309.4; 2015: 196.7; 2016: 220.4; 2017: 245.5; 2018: 273.4; 2019: 325.5.
- Capital and financial account balance (billions): 125.9 (2012) through projections up to 1,045.7 (2022).
- Gross official reserves (percent of broad money) and WAEMU months of imports series provided (e.g., WAEMU gross official reserves: 5.1 months in 2012; 6.1 months in 2022).
- International price indicators: Cotton (Cotlook "A" Index, U.S. cents a lb.) series (e.g., 2012: 89.2; 2017: 79.2; 2022: 78.1). Oil (U.S. dollars a barrel) series (e.g., 2012: 105.0; 2017: 50.3; 2022: 53.0).

### Monetary survey (2013–18) — Table 8 (Billions of CFA francs, selected items)
- Net foreign assets (2017 Act.): 1,282.2 (2016 Est.); 1,047.0 (2017 Act.); projections 1,183.4; 1,442.3.
  - BCEAO component (2017 Act.): 257.8; Banks component: 694.5.
- Net domestic assets (2017 Act.): 1,239.3 (2016 Est.); 826.6 (2017 Act.); projections 1,067.3; 1,095.9; 1,259.3.
- Domestic credit (2017 Act.): 1,316.5 (2016 Est.); 869.6 (2017 Act.); projections 1,157.9; 1,186.5; 1,349.9.
  - Net claims on central government (2017 Act.): 84.2 (2013) to 509.8 projected.
  - Credit to nongovernment sector (2017 Act.): 1,218.3 (2013) to 840.1 projected.
- Broad money (M2) (2017 Act.): 2,011.7 (2013) to 2,279.2 (2017 Act.); projections 2,701.6.
- Broad money growth (percent): 2014: 17.3; 2015: 16.7; 2016: -10.4; 2017 Act.: 0.3; projections 7.8; 18.5.
- Velocity of broad money and other memorandum items provided.

### Schedule of disbursements under the ECF arrangement — Table 9
- April 7, 2017 — SDR 15.917 million — Condition: Executive Board approval of the ECF arrangement.
- October 31, 2017 — SDR 15.917 million — Condition: Observance of end-June 2017 performance criteria, and completion of the first review under the arrangement.
- April 30, 2018 — SDR 15.917 million — Condition: Observance of end-December 2017 performance criteria, and completion of the second review.
- October 31, 2018 — SDR 15.917 million — Condition: Observance of end-June 2018 performance criteria, and completion of the third review.
- April 30, 2019 — SDR 15.917 million — Condition: Observance of end-December 2018 performance criteria, and completion of the fourth review.
- October 31, 2019 — SDR 15.917 million — Condition: Observance of end-June, 2019 performance criteria, and completion of the fifth review.
- March 23, 2020 — SDR 15.918 million — Condition: Observance of end-December 2019 performance criteria, and completion of the sixth review.
- Total: SDR 111.42 million.

### Indicators of capacity to repay the Fund (2017–31) — Table 10 (selected lines)
- Scheduled principal repayments (millions of SDRs): 2017: 2.2; 2018: 15.0; 2019: 14.8; 2020: 13.8; 2021: 11.7; 2022: 9.0; 2023: 7.4; 2024: 4.2; 2025: 3.2; 2026: 3.2; 2027: 1.6; 2028–2031: 0.0.
- Charges and interest (millions of SDRs) by year: 2017: 0.04; 2018: 0.17; subsequent years mostly 0.17–0.20 per year in projections.
- Outstanding IMF credit (millions of SDRs): 2017: 99.8; 2018: 116.7; 2019: 133.7; 2020: 135.8; 2021: 124.2; 2022: 113.5; 2023: 102.9; 2024: 87.5; 2025: 66.9; 2026: 44.6; 2027: 23.9; 2028: 9.6; 2029: 1.6; 2030–2031: 0.0.
- Net use of IMF credit (millions of SDRs) series: 29.7; 16.9; 17.0; 2.1; -11.7; -9.0; -12.2; -17.0; -22.3; -22.3; -20.7; -14.3; -6.4; 0.0; 0.0.
- Memorandum items include Nominal GDP, Exports of goods and services, Government revenue, Debt service, Net Foreign Assets of Central Bank, and CFA francs/SDR period average series.

### Financial soundness indicators (2011–17) — Table 11 (selected indicators)
- Regulatory capital to risk-weighted assets: 2011: 12.5; 2012: 12.8; 2013: 12.9; 2014: 12.7; 2015: 12.6; 2016: 9.5; 2017 SJune: 10.0.
- Core capital to risk-weighted assets (Tier 1 Capital): 2011: 11.7; 2012: 11.9; 2013: 11.8; 2014: 11.2; 2015: 10.5; 2016: 7.6; 2017 SJune: 8.6.
- Gross NPLs to Total loans: 2011: 15.9; 2012: 16.0; 2013: 15.5; 2014: 14.4; 2015: 14.4; 2016: 21.4; 2017 SJune: 20.3.
- Provisioning rate: 2011: 64.2; 2012: 63.4; 2013: 61.0; 2014: 62.8; 2015: 62.8; 2016: 63.2; 2017 SJune: 66.3.
- Net NPLs to total loans: 2011: 6.4; 2012: 6.5; 2013: 6.6; 2014: 6.1; 2015: 5.9; 2016: 9.1; 2017 SJune: 7.9.
- Capital to total assets: 2011: 7.3; 2012: 7.3; 2013: 7.2; 2014: 6.7; 2015: 5.7; 2016: 3.8; 2017 SJune: 4.4.
- Total loans to total assets: 2011: 55.2; 2012: 55.0; 2013: 55.9; 2014: 54.6; 2015: 53.1; 2016: 39.3; 2017 SJune: 56.1.
- Selected earnings and liquidity indicators series provided (e.g., After-tax ROA: 2011: 1.2; 2012: 0.9; 2013: 0.9; 2014: 1.1; 2015: 1.2).

*Source: International Monetary Fund staff report and Beninese authorities data as presented in the cited tables and figures.*

### Annex I. Implementation of Past IMF Recommendations

### Annex I. Implementation of Past IMF Recommendations

### Overall assessment of implementation
- Implementation of past policy recommendations was broadly satisfactory.
- At the conclusion of the 2015 Article IV Consultation, Directors:
  - welcomed the authorities’ plan to scale up infrastructure investment and stressed the need for a gradual and prioritized approach;
  - emphasized improved fiscal policy management to broaden the fiscal space, preserve debt sustainability, and reduce macro-financial risks;
  - underscored the urgency to bolster the business environment and improve financial inclusion to foster inclusive growth.

### Summary of past Fund advice (by area) — status items preserved from source
- Overall macroeconomic situation
  - Specific recommendations:
    - Accelerate structural reforms to enhance the business environment and foster greater diversification.
    - Pursue prudent policies to preserve macroeconomic stability and make growth more inclusive.
  - Status: Good / Moderate
- Fiscal sector
  - Specific recommendations:
    - Deepen customs and tax administration reforms to broaden the tax base and improve PFM.
    - Raise investments gradually to ensure their quality, preserve comfortable buffers against risks of debt distress and minimize financing risks.
  - Status: Moderate / In progress
- Financial sector
  - Specific recommendations:
    - Accelerate the establishment of a credit bureau and reforming property titles to improve financial inclusion and support private investment.
    - Faster progress in reducing the large number of unauthorized MFIs, as well as improving supervision to ensure that achievements in financial inclusion are not jeopardized.
  - Status: In progress / In progress
- Debt management
  - Specific recommendations:
    - Broaden the coverage of debt to include the debt of SOEs.
    - Reduce macro-financial risks associated with sovereign-bank linkages.
  - Status: In progress / Not implemented
- Foster private sector development
  - Specific recommendation:
    - Implement judicial reforms to facilitate contract enforcement.
  - Status: In progress
- Data
  - Specific recommendation:
    - Improve quality and timeliness of national accounts and fiscal data to better inform policy decisions.
  - Status: In progress

*italicized summary line: Source: Annex I text*

### Risk Assessment Matrix — key risks, likelihood, impact, and recommended policy responses
- External Risks
  - Tighter global financial conditions
    - Relative Likelihood: Medium
    - Impact if Realized: Medium
    - Recommended Policy Response:
      - Improve business environment to support diversification.
      - Diversify export output with more private sector involvement.
      - Note: Tighter (or more volatile) global financial conditions could spur funding costs for the 2016–21 Government Action Plan.
  - Weaker-than-expected global growth
    - Relative Likelihood: Medium
    - Impact if Realized: Medium
    - Recommended Policy Response:
      - Consolidate fiscal buffers through domestic revenue mobilization and implement prudent public investment plans.
      - Note: Adverse impact on growth through less foreign direct investment inflows.
  - Adverse developments in Nigeria
    - Relative Likelihood: Medium
    - Impact if Realized: High
    - Recommended Policy Response:
      - Accelerate the structural transformation of the economy to lessen its dependency on Nigeria; improve the business environment to support private sector growth and diversification.
      - Note: Trade liberalization or adverse security situation reduces trade revenues and growth; cutting subsidy can cause fuel price spikes.
- Domestic Risks
  - Non-materialization of the efficiency gains expected from public investment
    - Relative Likelihood: Medium
    - Impact if Realized: High
    - Recommended Policy Response:
      - Strengthen PIMA and improve the business environment, including by intensifying financial sector reforms.
      - Note: Growth will be affected and debt ratio might deteriorate.
  - Intensification of financial sector risks
    - Relative Likelihood: Low
    - Impact if Realized: Medium
    - Recommended Policy Response:
      - Strengthen bank resolution and step up supervision and regulation of MFIs.
      - Note: A surge in non-performing loans could affect banking sector stability.
  - Rise in risk premia and the cost of debt at regional financial markets
    - Relative Likelihood: Low
    - Impact if Realized: High
    - Recommended Policy Response:
      - Rely predominantly on concessional financing; optimize debt portfolio, and reduce borrowing needs.
      - Adjust investment level, if necessary.
      - Note: Higher costs of borrowing for government and business reduce economic activities.
  - Protracted uncertainty regarding institutional reforms
    - Relative Likelihood: Medium
    - Impact if Realized: High
    - Recommended Policy Response:
      - Build coalition of stakeholders to reinforce transparency, governance, and accountability, aligning them with international best practices.
      - Strengthen the anti-corruption framework.
      - Note: Interruptions in the reform agenda, particularly on reforms related to corruption, transparency, governance and accountability.

*italicized note: The relative likelihood classifications reflect staff’s subjective assessment as of the time of discussions with the authorities.*

### External sector assessment — findings and projections
- Overall conclusion: The external sector assessment does not raise immediate concerns, but highlights the need to boost competitiveness. The real effective exchange rate (REER) is broadly consistent with fundamentals although competitiveness remains weak.
- Current account developments and projections
  - The current account deficit excluding grants:
    - narrowed from 8.2 percent of GDP in 2015 to 7.5 percent of GDP in 2016.
    - is expected to widen to 9.4 percent of GDP in 2017 due to the scaling up of investment (higher imports of capital goods).
    - is expected to gradually improve from 2018 as investment and import growth stabilize.
    - by 2021, when the scaling-up of investment comes to an end, the current account deficit would narrow to 6.9 percent of GDP.
- External financing composition and projections
  - Short-term capital flows and medium- and long-term private loans: equivalent to 1 percent of GDP (recent years).
  - Foreign direct investment (FDI) inflows: equivalent to 1.5 of GDP in 2016 and expected to reach 1.9 percent of GDP during 2017–21.
  - Other capital flows (project loans): remained on average at 2.3 percent of GDP over 2014-2016 and are expected at 3 percent, on average during 2017–21.
- Gross international reserves and public debt
  - WAEMU gross international reserves:
    - declined from 6.6 month of imports in 2010 to around 4 ½ months of imports in 2013–14.
    - declined significantly by CFAF 1000 billion (about $2 billion) in 2016 to stabilize at 3.7 months of imports.
    - at end-2016, gross reserves covered about 55 percent of narrow money and 74 percent of short-term debt.
    - increased by $2.7 billion in 2017, reaching 4.2 months of imports at end-September.
  - Benin’s gross external debt: 22.5 percent of GDP in 2016 (below the average WAEMU countries).

### Exchange rate assessment (EBA-lite) — results and interpretation
- Methodology: EBA-lite includes three approaches: the current account (CA) model, the index of the real exchange rate (IRER), and external sustainability (ES).
- Key quantitative results and diagnostics:
  - Benin’s policy gap is reported as positive, driven mainly by its tight fiscal stance over the past years.
  - Current account norm: -7.4 percent of GDP.
  - Current account gap: 0.2 percent of GDP (comprised within the interval of [-1 percent, 1 percent]).
  - REER gap: -0.5 percent (comprised within the interval of [-2 percent, 2 percent]); the REER is described as broadly consistent with fundamentals and desirable policy settings.
  - IRER approach shows an overvaluation at 12 percent.
  - ES approach indicates an undervaluation of 4.8 percent.
  - Trade elasticity used/estimated: -0.483.
- Bottom-line assessment: The external position is broadly consistent with fundamentals and desirable policy settings; the CA model is the most reliable among the three and is broadly consistent with regional External Sector Assessment findings.

### Structural competitiveness and business environment — findings
- Competitiveness indicators
  - Survey-based competitiveness indicators deteriorated, highlighting challenges on external competitiveness.
  - World Economic Forum’s Global Competitiveness Report 2015–16: Benin ranked 122 out of 140 countries.
  - Benin lags other WAEMU countries such as Senegal and Ivory Coast.
  - Weaknesses identified across subcategories, most notably macroeconomic environment, labor market efficiency, and financial sector development.
  - In most categories, Benin scored below the sub-Saharan African average (exceptions: health and primary education, higher education and training, and the composite “basic requirements”).
- Enabling Trade and Doing Business developments
  - WEF Enabling Trade Index ranking deteriorated by 12 places compared to the previous assessment.
  - Most problematic factors for exporting (survey responses): access to trade finance; difficulties meeting buyers’ requirements; identifying markets/buyers.
  - Most problematic factors for importing: burdensome procedures; tariff and non-tariff barriers; corruption at the border.
  - Doing Business indicators 2018: Benin’s ranking increased by 4 places to the 151th position.
    - Improvements reflected: dematerialization of all pre-clearance documents at the port of Cotonou; introduction of a one-stop shop for starting a business; progress in issuing construction permits.
    - Remaining bottlenecks: Paying taxes, inefficient bureaucracy, corruption, resolving disputes.

### Capacity development strategy and TA implementation — assessment and priorities
- Context: The March 2016 election of a new president presents an opportunity for an enhanced technical assistance (TA) program aligned with an ECF-supported program.
- Overall assessment of capacity development needs
  - As a low income country, Benin faces capacity and institution building challenges requiring tailored TA.
  - Priority areas for TA: enhancing domestic revenue mobilization (revenue administration and tax policy); improving budget preparation and execution; strengthening economic governance (public finance management systems); improving real sector, government, and external sector statistics; oversight of public enterprises and other public entities.
- Past program engagement and key achievements (2015–16)
  - Created a unique account for the treasury (2015), not yet fully implemented and operational.
  - Increased capacity to formulate economic and financial policies under the ECF program, including macroeconomic forecasts (2015—16).
  - Enhanced production of budget execution data and reports (2015-16).
  - Started reforms on customs administration, including risk management (2015-16).
- Implementation challenges
  - Current economic developments, including spillovers from Nigeria, are hampering TA implementation.
  - TA implementation compromised by data gaps: lack of relevant and timely indicators, poor data management, and data analysis.

_italicized source attribution: Annex I. Implementation of Past IMF Recommendations — cr1801 PDF content provided above._

### 4.      The TA strategy for Benin should focus on revenue and customs administration, PFM—

### cr1801 - 4.      The TA strategy for Benin should focus on revenue and customs administration, PFM—

### TA strategy priorities and recommended focus areas
- The TA strategy should focus on:
  - revenue and customs administration,
  - public financial management (PFM)—focusing on budget execution—debt management,
  - national accounts,
  - tax policy,
  - enhancing the quality of macroeconomic data.
- Specific institutional and functional priorities:
  - Public Investment Management (PIM) is currently split into separate administrative units and needs to be streamlined to ensure capacity building and efficiency/transparency in investment project selections and monitoring.
  - State-Owned Enterprises (SOEs) unit was recently created but oversight remains weak and still need to be strengthened and consolidated.
  - Internal audit and control methods need to be strengthened by using professional standards and a systematic risk-based approach; related to budget execution control and external audit including full implementation of the Court of Accounts.

### Capacity constraints, risks, and implementation considerations
- Turnover and infrastructure:
  - The turnover of senior officials and technical-level staff has compromised absorption capacity and TA delivery.
  - Lack of appropriate infrastructure and institutional coordination—in particular, at customs and tax administrations—has impeded effective technical delivery.
- Main risk and mitigation:
  - The main risk to capacity development is weak absorptive capacity.
  - Mitigation: carefully selecting and designing TA programs tailored to the local audience’s needs.
- Authorities’ views:
  - The authorities agree with the thrust of the capacity development strategy and consider the strategy and objectives appropriately formulated and aligned with the 2016-21 Government’s Action Plan.
  - Given current absorption capacity, the authorities recommended adjusting TA volume and mid-term priorities to attain efficient delivery.

### FY 2017 key priorities and objectives (as presented)
- Tax Administration: Minimize tax expenditures and simplify taxes
- Customs Administration: Improve management and governance
- Public Financial Management: Strengthen budget execution and control
- Statistics:
  - National account: update base year and move to 2008 SNA;
  - government finance: expand to general government;
  - external statistics: improve current and financial account
- Dissemination of statistics: Implement e-GDDS (completing expected end-February 2017)

### Annex V — Technical Assistance, 2015-17: assessment highlights
- General assessment:
  - TA aimed to increase domestic resource mobilization, strengthen PFM, improve statistics and national accounts, and strengthen capacity building.
  - Implementation of past TA recommendations was broadly satisfactory, while key structural reforms continued to lag due to low capacity to implement and business obstacles.
- Selected TA results and staff appraisals (summary):
  - e-GDDS: Completed in 2017. The National Summary Data Page (NSDP) was set up in March. Economic statistics remain a priority with special focus on balance of payments and launching an enhanced GDDS.
  - High Frequency Indicators: Good. Improved firm response rates for Industrial Production Index (IPI) and Industrial Production Price Index (IPPI).
  - National Accounts (Oct–Nov 2016): Good. Assisted with implementation of the System of National Accounts, 2008 (2008 SNA); delays in publication of National Account statistics hamper analysis; data gaps and lack of timely data collection remain issues.
  - Medium-term debt management strategy (Aug 2017): Trained officials; debt sustainability is an anchor to the ECF arrangement; room for improvement regarding data on state guaranties.
  - Customs Reforms (FAD, completed 2017): Project for integration of SYDONIA with SGS presented; goals partially implemented due to lack of coordination and follow up. Lack of coordination between customs and tax administrations has significant negative effects on strengthening revenue administration.
  - Customs revenue underperformed during the first eight months of 2016 due to the Nigeria effect, reducing the ratio to 13.1 percent of GDP for the year.
  - Staff estimates unrealized tax potential at three percent of GDP.
  - PFM/PIMA (2016-17): PIMA report to estimate PIM efficiency and provide practical recommendations. Lack of transparency in procurement persists; need to computerize expenditure channels and produce quarterly comprehensive assessments of budget execution.
  - Revenue Administration—HR policies: Insufficient.
  - Revenue Administration—revenue mobilization: A set of performance indicators designed to improve fiscal operations; POSAF (Plan d’orientation stratégique de l’administration fiscale) developed but not fully implemented; risk management at Customs stalled; tax arrears yet to be reduced.
  - Audits of big firms (Sept 2016): Support to strengthen audits of big firms to improve compliance—recommended to be maintained.
  - AFRITAC CENTRAL customs administration project (2013-17): Mission completed but automated risk management is yet to be implemented; emphasis on strengthening post-clearance audit (PCA).
  - Public finance statistics: Strengthened TOFE classification including metadata—mission completed.
  - Strengthening Fiscal Operations at the National Directions of Taxes (DGI): Good. Identified companies with significant risks to income taxes and VAT—critical for achieving a quantitative performance criterion.
  - Debt Administration (May 2017): Completed workshop to improve debt sustainability analyses; training completed but need to strengthen capacity on implementing domestic issuance plan.
  - Macroeconomic Analysis (2016-17): Good. Training at Directorate-General for Economic Affairs (DGAE) to strengthen macroeconomic analysis and forecasting.
  - National Account Statistics (2016-17): Good. Implementing 2008 SNA and quarterly accounts—critical for GDP rebasing and extrapolation of series.
  - Public Expenditure Management (2016-17): Good. Preparing audits of the expenditure chain, adapting budgetary and accounting information systems, and setting a program mode execution guide.

### Annex VI — External and Public Debt Sustainability: key assumptions and results
- Opening statement:
  - The rapid increase in domestic debt in recent years calls for strict adherence to the programmed fiscal consolidation path to preserve long-term debt sustainability.
  - The September 2017 DSA confirms a moderate risk of debt distress for Benin.
- Underlying assumptions in the baseline scenario:
  - Global environment: The nominal exchange rate (FCFA/USD) is assumed to appreciate slightly by about 3 percent over the baseline horizon and stabilize in the medium and long term. External demand from Benin’s trading partners is projected to be stable.
  - Growth impact: Real GDP is expected to grow, on average, by 6.0 percent over the horizon 2017–19. Growth is expected to stabilize at 6.6 percent in 2020-2022.
  - Inflation: Inflation is projected to average 2.8 percent on average in 2018–22, below the WAEMU convergence threshold of 3 percent.
  - Fiscal impact:
    - Tax revenue is projected to increase from 12.6 percent of GDP in 2016 to 14.8 percent of GDP in 2019 as expected reforms in tax policy and administration mature.
    - The primary deficit rises temporarily with higher capital spending and then turns into a surplus in 2021.
  - Current account impact: The current account deficit (including grants) is projected to peak in 2017, decline to 8.2 percent of GDP in 2018 and average 6.4 percent of GDP for 2019-22.
  - Financing:
    - The increase of central government investments of 9 percent of GDP is financed by concessional resources but also domestic financing.
    - Non-concessional PPG debt financing is also included.
    - Recent rise of FDI in construction, manufacturing, and services is projected to continue.
  - Doing Business ranking: increased by 4 places from 155th ranking in 2017 to 151st ranking in 2018.
- External debt sustainability results:
  - The external DSA shows debt dynamics are sustainable under the baseline scenario, facing a moderate risk of debt distress.
  - In the baseline, all debt indicators remain below their relevant policy-dependent thresholds.
  - PV of total PPG external debt:
    - about 14.9 percent of GDP in 2017,
    - expected to rise to 15.8 percent of GDP on average for 2019–21,
    - surging to 18.1 percent of GDP in 2037.
    - The ratio would remain below the corresponding threshold of 40 percent of GDP throughout the projection period.
  - Stress and historical scenarios:
    - One indicator—the ratio of the PV of external debt to exports—exceeds its threshold in the case of an extreme shock to exports, while the debt-to-GDP ratio and all debt service indicators remain below thresholds.
    - In the historical scenario, the ratios of the PV of debt-to-GDP plus remittances, PV of debt-to-exports plus remittances, and PV of debt-to-revenue show breaches to the thresholds.
  - Overall assessment: Benin’s risk of external debt distress is assessed to be moderate.

*Excerpted and summarized from cr1801 - 4.      The TA strategy for Benin should focus on revenue and customs administration, PFM—*

### 3.      Total public (external and domestic) debt is projected to rise during the scaling up of

### 3.      Total public (external and domestic) debt is projected to rise during the scaling up of

### Debt trajectory and projections
- The present value (PV) of public debt was 48.4 percent of GDP in 2017 (against 46.7 percent in the march 2017 DSA).
- The PV of debt-to-GDP ratio is projected to rise from 41.9 percent in 2016 to 48.3 percent in 2017 with the surge in investment and then decline steadily.
- Public sector debt (in percent of GDP): 30.5 (2014); 42.4 (2015); 49.5 (2016); 55.6 (2017); 56.2 (2018); 53.5 (2019); 48.9 (2020); 44.6 (2021); 40.6 (2022); 33.6 (2027); 33.5 (2037).
- PV of public sector debt (selected years, in percent of GDP): 41.9 (2016); 48.4 (2017); 48.3 (2018); 44.7 (2019); 39.9 (2020); 35.8 (2021); 31.7 (2022); 23.8 (2027); 24.8 (2037).
- Gross financing need (Billions of U.S. dollars): 0.5 (2014); 0.6 (2015); 0.6 (2016); 0.5 (2017); 0.3 (2018); 0.0 (2019); 0.0 (2020); -0.1 (2021); 0.5 (2022); 0.7 (2027); (2037 not listed in table).

### Composition of debt and financing sources
- Domestic public debt increased from about 8.6 percent of GDP to 33.6 percent of GDP between 2013 and 2017 and accounted for 60 percent of the total debt in 2017.
- Of public sector debt, foreign-currency denominated share (percent of GDP): 19.8 (2014); 21.3 (2015); 22.5 (2016); 22.1 (2017); 23.3 (2018); 24.6 (2019); 24.9 (2020); 24.5 (2021); 24.9 (2022); 27.1 (2027); 27.0 (2037).
- PV of public sector external (and PPG external) debt (in percent of GDP): 14.9 (2017); 14.9 (2018); 15.4 (2019); 15.8 (2020); 15.9 (2021); 15.7 (2022); 15.9 (2027); 17.3 (2037); 18.3 (later projection row).
- Grant element of new external borrowing (in percent): 44.9; 44.6; 44.4; 44.8; 45.2; 45.3; 44.9; 39.5; 34.9 (selected projection years).

### Benchmarks and risk assessment
- The PV debt-to-GDP ratio remains consistently below the indicative benchmark of 56 percent, which research has linked to increased probability of debt distress.
- The debt level also remains below the WAEMU convergence criteria of 70 percent of GDP.
- In the most extreme shock scenario, the peak PV of debt-to-GDP ratio exceeds 50 percent but remains below the 56 percent threshold.
- Overall, the dynamics in total public debt are consistent with a moderate risk of debt distress.

### Stress tests and sensitivity analysis (select results)
- Table A2 baseline PV of debt-to-GDP ratio: 15 (2017), 15 (2018), 16 (2019), 16 (2020), 16 (2021), 16 (2022), 17 (2027), 18 (2037).
- Table A2 alternative scenario A2 (new public sector loans on less favorable terms) shows higher PV of debt-to-GDP ratios: 21 (2017), 51 (later entries in table indicate elevated ratios across horizons).
- Table A4 PV of Debt-to-GDP Ratio baseline: 48 (2017), 48 (2018), 45 (2019), 40 (2020), 36 (2021), 32 (2022), 24 (2027), 25 (2037).
- Table A4 bound test B4 (one-time 30 percent real depreciation in 2018) yields PV of Debt-to-GDP Ratio: 48 (2017), 54 (2018), 49 (2019), 43 (2020), 39 (2021), 34 (2022), 24 (2027), 24 (2037).
- Figure A2 notes: “The most extreme stress test is the test that yields the highest ratio on or before 2027.”

### Macroeconomic assumptions underpinning projections (selected)
- Real GDP growth (in percent): 6.4 (2014); 2.1 (2015); 4.0 (2016); 4.3 (2017); 1.9 (2018); 5.6 (2019); 6.0 (2020); 6.3 (2021); 6.7 (2022); 7.1 (2027); 6.2 (2037 average row); 6.3 (2023-37 average row); 4.8; 4.8; 5.0 (various average entries).
- Inflation rate (GDP deflator, in percent): -0.2 (2014); 0.1 (2015); -0.3 (2016); 2.3 (2017); 2.8 (2018); 0.4 (2019); 2.3 (2020); 2.6 (2021); 2.7 (2022); 2.8 (2027); 2.6; 2.2; 2.0; 2.0; 2.1 (various rows).
- Average nominal interest rate on forex debt (in percent): 1.3 (2014); 1.5 (2015); 1.2 (2016); 3.0 (2017); 4.6 (2018); 1.8 (2019); 2.1 (2020); 1.8 (2021); 1.7 (2022); 1.6; 1.6; 1.8; 1.6; 1.8; 1.7 (various rows).
- Average real interest rate on domestic debt (in percent): 2.3 (2014); 3.9 (2015); 5.3 (2016); 0.9 (2017); 3.7 (2018); 6.2 (2019); 3.6 (2020); 3.9 (2021); 3.8 (2022); 4.2 (2027); 4.4; 4.4; 8.8; 8.8; 8.1 (various rows).

### Policy recommendations and staff advice
- Staff urged the authorities to remain steadfast in the implementation of the fiscal reforms to ensure that the programmed fiscal consolidation path is achieved to support the public debt anchor and preserve long-term debt sustainability.
- Staff emphasis is on achieving the programmed fiscal consolidation path while scaling up public investment financed increasingly from the regional financial market.

*Source: IMF staff estimates and projections as presented in the Benin Debt Sustainability Analysis tables and figures (2014–37).*

### 5.6 percent in 2017. Because domestic prices accelerated in July, inflation is forecasted to turn

### cr1801 - 5.6 percent in 2017. Because domestic prices accelerated in July, inflation is forecasted to turn

### Recent economic developments
- GDP growth:
  - 2012-14: growth of 6 percent on average.
  - 2015: growth fell to 2,1 percent.
  - 2016: GDP growth estimated at 4 percent.
  - 2017 (projected based on figures available as of end of July 2017): 5.6 percent.
- Inflation:
  - Consumer price index (average) in 2016: -0.8 percent.
  - 2015: 0.3 percent.
  - 2017 (forecasted): 0.6 percent.
- Poverty:
  - Proportion of population below the poverty line: 36.2 percent in 2011; 40.1 percent in 2015.
- Sectoral contributions (2016):
  - Secondary sector added-value growth: 2.6 percent (2016) versus 10.1 percent (2015).
  - Tertiary sector added-value growth: 3.4 percent (2016) against an initial forecast of 2.7 percent.
- External and exchange developments:
  - Depreciation of the naira (mainly on the parallel market) contributed to lower general price level in 2016.

### Fiscal and debt developments
- Fiscal balances:
  - Overall fiscal deficit (excluding grants): 6.7 percent of GDP (post-adjustment) versus 8.6 percent in 2015.
  - 2017 expected overall fiscal deficit (excluding grants): 7.8 percent (lower than initially programmed 9.3 percent).
- Domestic public debt:
  - Increased from about 8.6 percent of GDP to 33.6 percent of GDP between 2013 and 2017.
  - Domestic debt accounted for 60 percent of total debt in 2017.
  - Present value of debt share: 46.7 percent in 2016; 48.4 percent in 2017.
- Public revenue and basic primary balance (end-June 2017 QPCs):
  - Net Domestic Financing (FINE) for end-June 2017: 113.7 billion CFAF (adjusted ceiling 131.1 billion CFAF).
  - Basic primary fiscal balance (payment order basis): 33.1 billion CFAF (ceiling 73.1 billion CFAF).
  - Total revenues (TOFE definition) at end-June 2017: 443.9 billion CFAF (floor 386.1 billion CFAF).
- Revised projections as of end-June 2017 for full year:
  - Total revenues projected: 907.5 billion CFAF (initial objective 843.9 billion CFAF).
  - Basic primary fiscal balance deficit projected: 142.6 billion CFAF (initial objective 171.3 billion CFAF).

### Implementation of the 2017 program
- Performance:
  - All quantitative performance criteria (QPC) at end-June 2017 met.
  - Continuous performance criteria (CPC), including prefinancing-related, were respected.
  - Structural benchmarks for end-June implemented; second-half 2017 benchmarks ahead of schedule.
- Prior actions and structural benchmarks met include:
  - Improvement of procurement transparency.
  - Implementation of the Strategic Unit at the Minister of Finance to evaluate budgetary risks related to PPPs.
  - Adoption of a framework of multiannual commitments for investment projects.
- Challenges:
  - Rejection by Parliament in April 2017 of constitutional amendment complicated implementation of some key structural reforms.

### Structural reforms and governance
- Judicial reforms:
  - Creation and operationalization of commercial courts (Trade Court of Cotonou and Trade Appeals Court of Porto Novo) in 2017.
  - Next steps: prepare and submit legislation to strengthen audit and control agencies (Corps de contrôle).
- Public-Private Partnerships (PPPs):
  - 61% of the PAG expected to be financed from the private sector.
  - Law No. 2016-24 adopted October 2016; revised law promulgated June 2017 after Constitutional Court decision.
  - CAPPP (PPP support unit) created and attached to the Presidency.
  - A fiscal-risk assessment unit for PPPs created at the Ministry of Economic and Finance.
- Anti-corruption and AML/CFT:
  - National Anti-Corruption Authority (ANLC) working to adapt law to ensure sanctions for absence of asset declaration, require comprehensive declarations (domestic and abroad), and allow online publication of declarations.
  - November 2, 2017: government approved for submission to the NA a bill merging the uniform law on money laundering with that on financing of terrorism; includes measures to limit cash use, address financing of proliferation of weapons of mass destruction, and align cross-border physical transport declarations with Community Regulation on external financial relations.

### Statistics and institutional improvements
- National accounts:
  - Work to rebase national accounts and implement SNA 2008; expected finalization with Afritac West mission by end of 2017.
- Debt management:
  - Debt agency (CAA) website online; quarterly public debt statistical bulletin published; annual report prepared.
  - Medium-term debt management strategy appended to 2017 budget law; next steps include adding a public debt ceiling and extending coverage to state-owned enterprises’ debt.
- Financial inclusion and financial sector reforms:
  - Law on Credit Information Offices (BIC) promulgated January 23, 2017.
  - Plans to finalize establishment of a credit bureau; adopt time-bound bank resolution framework; facilitate collateral use; promote electronic land title registration nationwide.
  - New regulatory framework for microfinance institutions to strengthen supervision planned.

### Program for 2018 (macroeconomic framework and objectives)
- Growth and inflation:
  - 2018 real GDP growth target: 6 percent.
  - 2019-22 average growth: 6.6 percent.
  - Inflation projections: 2.5 percent on average in 2018; 2.8 percent in 2019-22.
- External sector:
  - Current account deficit (including grants) projected: 8.4 percent of GDP in 2018; 6.9 percent of GDP on average over 2018-22.
- Drivers of medium-term growth:
  - Good performance of agricultural sector, rise of private sector investment, recovery of the Nigerian economy.
- Risks and mitigation:
  - Risks to the macro-budgetary framework; mitigants include accelerating structural transformation, improving public investment management, enhancing business climate, favoring concessional borrowing over expensive domestic financing, and strengthening domestic revenue mobilization.

### Macro-budgetary framework for 2018 (budget and fiscal targets)
- 2018 draft budget (Council of Ministers approval on September 27):
  - Budget deficit, excluding grants, projected to improve to 6.1 percent of GDP in 2018 (compared with 7.8 percent expected for 2017).
  - Government revenues projected to reach 17.5 percent of GDP in 2018 (compared to 16 percent of GDP initially programmed).
  - Pursuit of fiscal consolidation aimed to reduce budget deficit below WAEMU convergence criterion of 3 percent of GDP in 2019.
- Notes:
  - Slight increase in public investments compared to program; some increase reflects carry-over of projects slated for 2017.

### Tax policy measures in the 2018 budget law
- Revenue-enhancing measures include:
  - Cancellation of some VAT exemptions.
  - Strengthened fiscal control with better risk assessment and monitoring of big firms.
  - Implementation of penalties for tax delays.
  - Acceleration of tax litigation cases.
  - Improved tax compliance.
  - Reinforced coordination between tax and customs administrations to broaden the tax base.
- Additional revenue measures:
  - Increase in non-tax revenues through non-renewal of tax exemptions benefiting cellphone companies, collection of arrears, and other special taxes (electronic communications, road fees).
- Expected impact:
  - Total revenues expected to increase by 1.5 percent of GDP compared to the program.

*Attachment I. Supplementary Memorandum of Economic and Financial Policies (MEFP) 2017–19 (excerpt).*

### 23.      Going forward, the government intends to reduce tax expenditure, by identifying and

### 23.      Going forward, the government intends to reduce tax expenditure, by identifying and

### Government intent and actions
- The government intends to reduce tax expenditure by identifying and removing those that are no longer justified from an economic and social standpoint, or that do not have a legal basis.
- The 2018 budget law lays on the non-renewal of the exemptions enjoyed by the telecommunications companies with regard to GSM licensing.
- A complete analysis of the tax expenditures is planned to take place before the end of the year 2017 to elaborate a strategy aiming at containing and rationalizing them.

### Policy implications and planned strategy
- Identify tax expenditures lacking economic or social justification.
- Remove tax expenditures without a legal basis.
- Use the complete analysis (to be completed before end-2017) as the basis to elaborate a containment and rationalization strategy for tax expenditures.
- Implement non-renewal of specific exemptions via the 2018 budget law (example: GSM licensing exemptions for telecommunications companies).

### Key dates and legal measures
- Complete analysis planned before the end of the year 2017.
- 2018 budget law implements non-renewal of GSM licensing exemptions for telecommunications companies.

### Next procedural steps (implied)
- Conduct comprehensive tax expenditure review by end-2017.
- Develop and adopt a strategy to contain and rationalize tax expenditures based on the review.
- Enforce non-renewal provisions specified in the 2018 budget law.

*Quantitative performance Criteria and structural benchmarks*

### 24.      Quantitative performance criteria are proposed for end-June and end-December 2018 and

### Quantitative performance criteria are proposed for end-June and end-December 2018 and indicative targets are proposed for end-March and end-September 2018

### Overview
- Quantitative performance criteria (PCs) are proposed for end-June and end-December 2018 and indicative targets (ITs) for end-March and end-September 2018 for monitoring the ECF-supported program.
- The prior action (agree upon a 2018 budget consistent with the ECF-supported program) has been met.
- The second, third, and fourth program reviews are expected to be completed on or after April 30, 2018; October 31, 2018; and April 30, 2019, respectively.

### Proposed quantitative performance criteria and indicative targets (Table 1) — key figures (Billions of CFA francs)
- Net domestic financing of the government (ceiling) (cumulative since January 1 of the same year):
  - March 31, 2018 (Indicative Targets): 22.0
  - June 30, 2018 (Performance Criteria): 190.9
  - September 30, 2018 (Indicative Targets): 103.0
  - December 31, 2018 (Performance Criteria): 118.8
  - December 31, 2017 (Performance Criteria): 183.7
  - (Also shown for program/review columns: 177.7; 183.7; 22.0; 190.9; 103.0; 118.8 as in Table 1)
- Basic primary balance (excluding grants) (floor) (cumulative since January 1 of the same year):
  - March 31, 2018 (Indicative Targets): -69.7
  - June 30, 2018 (Performance Criteria): -47.5
  - September 30, 2018 (Indicative Targets): -20.3
  - December 31, 2018 (Performance Criteria): 3.9
  - December 31, 2017 (Performance Criteria): -142.6
  - (Also shown for program/review columns: -171.3; -142.6; -69.7; -47.5; -20.3; 3.9)
- Total revenue (floor) (cumulative since January 1 of the same year):
  - March 31, 2018 (Indicative Targets): 204.8
  - June 30, 2018 (Performance Criteria): 445.5
  - September 30, 2018 (Indicative Targets): 707.1
  - December 31, 2018 (Performance Criteria): 1021.6
  - December 31, 2017 (Performance Criteria): 907.5
  - (Also shown for program/review columns: 843.9; 907.5; 204.8; 445.5; 707.1; 1021.6)

Continuous quantitative performance criteria (ceilings) — all periods
- Accumulation of external payments arrears: 0.0
- Ceiling on the present value of new external debt contracted or guaranteed by the government: 402.8
- Accumulation of domestic payments arrears: 0.0
- Contracts by the government for the prefinancing of public investments projects: 0.0

Memorandum items (cumulative since January 1 of the same year)
- Priority social expenditure (floor):
  - March 31, 2018: 15.0
  - June 30, 2018: 50.0
  - September 30, 2018: 101.0
  - December 31, 2018: 167.0
  - (Program/review columns: 160.0; 160.0; 15.0; 50.0; 101.0; 167.0)
- Memorandum item: Budgetary assistance (Gross disbursements, not adjusted for debt service obligations) (cumulative since January 1 of the same year):
  - March 31, 2018: 22.6
  - June 30, 2018: 22.6
  - September 30, 2018: 39.6
  - December 31, 2018: 55.4
  - (Program/review columns: 55.0; 55.0; 22.6; 22.6; 39.6; 55.4)

### Structural benchmarks and macroeconomic rationale (Table 2) — measures, deadlines, rationale, status
- Prior action (Met)
  - Agree upon a 2018 budget consistent with the ECF-supported program. Rationale: Preserve fiscal sustainability. Status: Met.
- June 2018 (continuous thereafter)
  - Limit the granting of special conventions outside the investment code to exceptional cases after decision by the Council of Ministers. Rationale: Boost revenue collection.
- December 2018
  - Implement the system of control of the effectiveness of the realization of the investments envisaged within the framework of approvals to the code of investments and approvals for the installation of special economic zones (MEFP ¶23). Rationale: Fight fiscal fraud and rationalize exemptions.
- June 2018
  - Implement a plan to strengthen tax compliance (MEFP ¶22). Rationale: Increase fiscal revenues by improving tax compliance-risk management.
- June 2018
  - Prepare and adopt in the Council of Ministers a plan for the reorganization and professionalization of the administrative control bodies of the State (MEFP ¶14). Rationale: Improve economic governance.
- June 2018
  - Prepare monthly cash flow forecasting plans and comprehensive quarterly budget performance evaluations (MEFP ¶23). Rationale: Increase transparency, timeliness and accuracy of budget information.
- December 2018
  - Establish a credit bureau and a policy framework for time-bound bank resolution (MEFP ¶19). Rationale: Improve financial intermediation.
- December 2018
  - Adopt a new regulatory framework for microfinance institutions strengthening their supervision (MEFP ¶19). Rationale: Promote financial inclusion.
- September 2018
  - Complete the data collection of SOEs’ debt and operationalize the monitoring framework (MEFP ¶19). Rationale: Better monitor contingent liabilities and improve public debt management.
- December 2018
  - Set performance contracts with key SOEs (MEFP ¶19). Rationale: Improve SOEs contribution to government revenues.

### Technical Memorandum of Understanding — program assumptions and key definitions
- Exchange rates (average for 2018 as of August 2017):
  - CFAF/US$ 557.6
  - CFAF/euro 655.96
  - CFAF/SDR 785.4
- Definition of "government": central government of the Republic of Benin excluding political subdivisions, the central bank, or other autonomous public entities not included in government TOFE.
- Definition of "debt" follows IMF Executive Board Decision No. 6230-(79/140) as amended by Decision No. 15688-(14/107), including:
  - loans; suppliers' credits; leases (present value at inception of lease payments); Treasury bills and bonds issued in CFA francs on the WAEMU regional market (included in public debt for the Memorandum).
- Present value of loans: discount using OECD commercial interest reference rates (CIRRs) — 10-year average for maturities >15 years; six-month average for maturities <15 years; add OECD margins: 0.75 percent (<15 years), 1.00 percent (15–19 years), 1.15 percent (20–29 years), 1.25 percent (30 years or more).
- Domestic debt: debt denominated or serviced in CFA francs unless contracted with another member state.
- External debt: debt denominated in any currency other than the CFA franc and debt in CFA francs contracted with another member state.

### Quantitative performance criteria — definitions, targets, and adjustments
- Net domestic financing (NDF) of the government (ceiling):
  - Definition: sum of (i) net bank credit to the government and (ii) net nonbank financing of the government (including proceeds of sale of government assets, Treasury bills and other securitized obligations issued by the government in CFA francs on the WAEMU regional market, and any BCEAO credit to the government, including CFA franc counterpart of SDR allocations).
  - Net bank credit: balance between debts and claims of the government vis-à-vis the central bank and national commercial banks (scope used by BCEAO).
  - Figures deemed valid: net bank credit and net amount of Treasury bills and bonds in CFA francs on WAEMU regional market calculated by BCEAO; nonbank financing calculated by the Treasury.
  - Projected ceilings (cumulative since January 1 of the same year):
    - End-March 2018: CFAF 22 billion
    - End-June 2018: CFAF 190.9 billion
    - End-September 2018: CFAF 103.0 billion
    - End-December 2018: CFAF 118.8 billion
  - Adjustment rules if net external budgetary assistance deviates from projections:
    - If net external budgetary assistance exceeds projected cumulative amounts by over CFAF 5 billion at end of a quarter, the NDF ceiling will be lowered by the excess minus CFAF 5 billion.
    - If net external budgetary assistance falls short of projected cumulative amounts, the NDF ceiling will be increased by the shortfall subject to limits: increase may not exceed CFAF 15 billion at End-June 2017 and CFAF 25 billion at End-December 2017. The same rule applies for 2018.
  - Projected program amounts for calculating adjustments (cumulative since January 1 of the same year):
    - Gross external budgetary assistance projected in program for 2018: End-March 2018: CFAF 22.6 billion; End-June 2018: CFAF 22.6 billion; End-September 2018: CFAF 39.6 billion; End-December 2018: CFAF 55.4 billion.
    - External debt service obligations projected in program for 2018: End-March 2018: CFAF 9.7 billion; End-June 2018: CFAF 29.3 billion; End-September 2018: CFAF 38.9 billion; End-December 2018: CFAF 60.6 billion.

- Basic primary fiscal balance (floor):
  - Definition: total fiscal revenue minus basic primary fiscal expenditure (current plus capital expenditure minus (a) interest payments on domestic and external debt and (b) capital expenditure financed by external grants and loans). Grants excluded from revenue; net government lending excluded from fiscal expenditure.
  - Projected floors (cumulative since January 1 of the same year):
    - End-March 2018: CFAF -69.7 billion
    - End-June 2018: CFAF -47.5 billion
    - End-September 2018: CFAF -20.3 billion
    - End-December 2018: CFAF 3.9 billion

- Total government revenue (floor):
  - Definition: tax and nontax revenue as shown in the TOFE, excluding external grants, revenue of autonomous agencies, and privatization receipts.
  - Projected floors (cumulative since January 1 of the same year):
    - End-March 2018: CFAF 204.8 billion
    - End-June 2018: CFAF 445.5 billion
    - End-September 2018: CFAF 707.1 billion
    - End-December 2018: CFAF 1021.6 billion

- Non-accumulation of new domestic payments arrears (continuous PC):
  - Definition: domestic payments due but not paid after a 90-day grace period unless specified otherwise.
  - Government undertakes not to accumulate any new domestic payments arrears; continuously monitored.

- Non-accumulation of external payments arrears (continuous PC):
  - Definition: payments due but not paid by the government at the due date specified in the contract, taking into account applicable grace periods, on external debt of or guaranteed by the government.
  - Government undertakes not to accumulate any external public payments arrears, except arrears relating to debt under renegotiation or rescheduling; continuously monitored.

- Present value of new external debt contracted or guaranteed (continuous PC):
  - Applies to debt as defined and to commitments contracted or guaranteed by the government including lease-purchase contracts and private sector debt guaranteed by the government.
  - Ceiling (continuous through program): CFAF 402.8 (present value)

- Ceiling on pre-financing contracts for public investments (continuous PC):
  - Definition: pre-financing contracts defined where government guarantees a private entity’s loan and agrees to replace the private entity to honor full principal and interest.
  - Government undertakes to refrain from entering any pre-financing contracts during the program; ceiling: 0.0

### Indicative targets — Priority social expenditures and memoranda
- Priority social expenditures (indicative target; cumulative since January 1 of the same year) — payment orders issued under specified budget lines:
  - End-March 2018: CFAF 15.0
  - End-June 2018: CFAF 50.0
  - End-September 2018: CFAF 101.0
  - End-December 2018: CFAF 167.0
- Priority social expenditure budget codes (Table 1 in TMU):
  - 36 Ministry of Health
  - 37 Ministry of Energy, Water, and Mines
  - 39 Ministry of Agriculture, Livestock, and Fisheries
  - 26 Ministry of Justice
  - 31 Ministry of Labor, the Civil Service, and Social Affairs
  - 44 Ministry of Higher Education and Scientific Research
  - 62 Ministry of Nursery School and Primary School Education
  - 63 Ministry of Secondary and Technical Education and Professional Training
  - 34 Ministry of Living Standards and Sustainable Development
- Memorandum item: Budgetary assistance (gross disbursements, cumulative since January 1 of the same year):
  - End-March 2018: CFAF 22.6
  - End-June 2018: CFAF 22.6
  - End-September 2018: CFAF 39.6
  - End-December 2018: CFAF 55.4

### Information for program monitoring — reporting frequencies and required data
- Monthly submissions:
  - Data on any loan (terms and creditors) contracted or guaranteed by the government, in the first week after the end of the month.
  - Monthly consumer price index, within two weeks of the end of the month.
  - TOFE including revenue, detailed data on net domestic financing (bank and nonbank), and data on the basic primary fiscal balance (including SIGFiP data), within six weeks of the end of the month.
  - Data on the balance, accumulation, amount (stock), and repayment of public domestic and external payments arrears, within six weeks of the end of the month.
  - Monetary survey, within eight weeks of the end of the month.
- Quarterly submissions:
  - Data on exceptional payment procedures or other exceptional measures, within six weeks of the end of the quarter.
  - Data on priority social expenditures, within six weeks of the end of the quarter.
  - Data on implementation of the public investment program including detailed sources of financing, within four weeks of the end of the quarter.
  - Data on stock of external debt, external debt service, signing of external loans and disbursements of external loans, within twelve weeks of the end of the quarter.
- Other:
  - Banking supervision indicators for bank and nonbank financial institutions monthly, within eight weeks of the end of the month.
  - On an ad hoc basis: a copy of the budget law and supplementary documents, the most recent budget execution law, and any decree or law pertaining to the budget or IMF-supported program in the quarter when available.

*Source: Staff report and Technical Memorandum of Understanding contained in the Benin ECF-supported program documentation (November 15, 2017).*

### Appendix I. Benin: Table of Common Indicators Required for Surveillance

### Appendix I. Benin: Table of Common Indicators Required for Surveillance

### Data availability and frequency
- Exchange Rates — Date of latest observation: 08/2017; Date received: 09/2017; Frequency of Data: M; Frequency of Reporting: M; Frequency of Publication: M
- International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 — Date of latest observation: 07/2017; Date received: 10/2017; Frequency of Data: M; Frequency of Reporting: M; Frequency of Publication: M
- Reserve/Base Money — Date of latest observation: 09/2017; Date received: 10/2017; Frequency of Data: M; Frequency of Reporting: M; Frequency of Publication: M
- Broad Money — Date of latest observation: 08/2017; Date received: 09/2017; Frequency of Data: M; Frequency of Reporting: M; Frequency of Publication: M
- Central Bank Balance Sheet — Date of latest observation: 08/2017; Date received: 09/2017; Frequency of Data: M; Frequency of Reporting: M; Frequency of Publication: M
- Consolidated Balance Sheet of the Banking System — Date of latest observation: 07/2017; Date received: 09/2017; Frequency of Data: M; Frequency of Reporting: M; Frequency of Publication: M
- Interest Rates2 — Date of latest observation: 07/2017; Date received: 09/2017; Frequency of Data: M; Frequency of Reporting: M; Frequency of Publication: M
- Consumer Price Index — Date of latest observation: 08/2017; Date received: 09/2017; Frequency of Data: M; Frequency of Reporting: M; Frequency of Publication: M

### Fiscal and debt indicators
- Revenue, Expenditure, Balance and Composition of Financing — General Government4 — Date of latest observation: NA; Date received: NA; Frequency of Data: NA; Frequency of Reporting: NA; Frequency of Publication: Not published
- Revenue, Expenditure, Balance and Composition of Financing3 — Central Government — Date of latest observation: 06/2017; Date received: 08/2017; Frequency of Data: M; Frequency of Reporting: M; Frequency of Publication: NA
- Stocks of Central Government and Central Government-Guaranteed Debt5 — Date of latest observation: 06/2017; Date received: 08/2017; Frequency of Data: Q; Frequency of Reporting: Q; Frequency of Publication: NA

### External sector and national accounts
- External Current Account Balance — Date of latest observation: 2015; Date received: 08/2017; Frequency of Data: A; Frequency of Reporting: A; Frequency of Publication: A
- Exports and Imports of Goods and Services — Date of latest observation: 2016; Date received: 08/2017; Frequency of Data: A; Frequency of Reporting: A; Frequency of Publication: A
- GDP/GNP — Date of latest observation: 2017; Date received: 08/2017; Frequency of Data: A; Frequency of Reporting: A; Frequency of Publication: A
- Gross External Debt — Date of latest observation: NA; Date received: NA; Frequency of Data: A; Frequency of Reporting: I; Frequency of Publication: NA
- International Investment Position6 — Date of latest observation: 2015; Date received: 07/2017; Frequency of Data: A; Frequency of Reporting: A; Frequency of Publication: A

### Notes and footnotes (verbatim)
- 1/ Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
- 2 Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
- 3 Foreign, domestic bank, and domestic nonbank financing.
- 4 The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
- 5 Including currency and maturity composition.
- 6 Includes external gross financial asset and liability positions vis-à-vis nonresidents.
- 7 Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

### Statement by Benin's Executive Director
- Statement by Mr. Sembene, Executive Director for Benin, Mr. Alle, Senior Advisor to the Executive Director and Mrs. Boukpessi, Advisor to the Executive Director
- December 1, 2017
- Statement text (verbatim, as provided in source):
  
       !!"    !#"  !$"% #$& '   (( $# 
   " )  (   	
  
 "$ *+ ,$   #   (  ' #   ) ##
  ,#  "$ % -,. % #$% & '   ((   # '$"   !$"%
  ...
  (additional statement text continues verbatim as in source)

*cr1801 - Appendix I. Benin: Table of Common Indicators Required for Surveillance (PDF).*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2018/cr1801.pdf_