IMF Staff Concludes Visit to Benin
IMF News, September 23, 2022
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- Published: September 23, 2022
Mission overview
- IMF team led by Mr. Constant Lonkeng visited Cotonou during September 19–23, 2022 to assess recent economic developments, discuss the 2022 supplementary budget and gauge progress in commitments under Benin’s Fund-supported program.
- The IMF Executive Board approved, on July 8, 2022, a new blended EFF/ECF arrangement for Benin under High Combined Credit Exposure (HCCE) in the amount of US$638 million (equivalent of 391 percent of quota) to help address pressing financing needs and support the country’s National Development Plan (2018–25).
Fiscal policy and 2022 supplementary budget
- The authorities are finalizing, for submission to Parliament, a supplementary budget for 2022 in line with the new Fund-supported EFF/ECF.
- Purpose of the supplementary budget:
- Pause the fiscal tightening that was initially envisaged in the 2022 budget law when it was crafted a year ago.
- Scale up social and security-related spending.
- Continued budget support from Benin’s development partners will complement large and front-loaded IMF support.
Economic conditions, growth drivers, and inflation
- The mission finds that:
- Benin’s established track record in public finance is providing policy room to counter global headwinds, negative spillovers from regional security risks, and the legacy of COVID-19.
- Economic recovery is underway, supported by a rebound in agriculture and continued expansion of port activity, albeit at a slower pace than prior to the war in Ukraine.
- Inflation has surprised on the downside, as a good harvest season and supportive policy measures adopted by the government since Russia’s invasion of Ukraine partially offset pressures from imported food prices.
- Nevertheless, sustained price increases for some essential consumption items for vulnerable households is exacerbating food insecurity risks.
- Policy recommendation:
- The mission reiterated the need to shift toward more targeted, efficient, and cost-effective measures in the domestic policy response to the war in Ukraine.
Program commitments and reforms
- Progress gauged under the new EFF/ECF includes:
- Establishment of a social registry that will enable the government to reach the vulnerable in times of hardship.
- Enactment of the legislation on beneficial ownership in public procurement contracts.
- Implementation of the authorities’ action plan for strengthening the AML/CFT framework.
- The IMF team will return to Cotonou later this year for the First program Review.
Stakeholder engagement and next steps
- The mission met with:
- Senior Minister of Economy and Finance Wadagni.
- Special Advisor to the President Dagnon.
- Minister of Social Affairs and Microfinance Tognifode.
- Deputy Secretary General of the Presidency and Government’s Spokesperson Houngbédji.
- National Director of the BCEAO Assilamehoo.
- Other senior government officials, labor unions, investors, civil society, the opposition, and representatives of the donor community.
- Closing statement excerpt from Mr. Lonkeng: “Benin’s established track record in public finance is providing much-needed policy room to counter headwinds from a highly uncertain global economic environment, negative spillovers from regional security risks and the legacy of COVID-19.”
IMF Staff Concludes Visit to Benin — Press Release No. 22/321, September 23, 2022