IMF Executive Board Completes the First Reviews under the Extended Fund Facility and Extended Credit Facility Arrangements for Benin

IMF News, December 14, 2022

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Canonical URL: IMF Executive Board Completes the First Reviews under the Extended Fund Facility and Extended Credit Facility Arrangements for Benin

The Executive Board completed the First Review of Benin’s Fund-supported program on December 14, 2022.
The program is a 42-month blended EFF/ECF under High Combined Credit Exposure (HCCE), approved on July 8, 2022.
This review completion allows for the immediate disbursement of SDR 108.30 million (about US$144 million) toward budget support.
Total disbursements under the program so far amount to SDR 216.6 million (about US$287 million).

Economic activity is projected to expand by 6 percent this year, driven by agroindustry, construction, and port-related activity.
The current account deficit is projected to widen to 6.1 percent of GDP, due to high fuel and food prices, compounded by the strong US dollar appreciation.
Inflation has remained subdued, owing to a strong harvest season and subsidy measures adopted by the government since Russia’s invasion of Ukraine.

All end-June 2022 program quantitative performance criteria and indicative targets were met with wide margins.
All structural benchmarks for end-June 2022 were implemented.
After three years of warranted policy accommodation to contain the impact of severe and repeated shocks, the National Assembly adopted a budget law resuming the consolidation of public finances next year.
The adopted budget law allocates substantial resources to critical social and security-related spending.
The envisaged revenue-based fiscal consolidation aims to create space for Benin’s large development needs while preserving debt sustainability.
Near-term support for consolidation will come from the authorities’ recent strategy for streamlining tax expenditures.
Outer-year support will come from the upcoming Medium-Term Revenue Mobilization Strategy (MTRS) that seeks to further expand the tax base and improve the overall efficiency of the tax system.

Continue strong tax collection efforts and spending reprioritization to complement frontloaded IMF financing and meet unanticipated spending needs related to the protracted war in Ukraine and regional security spillovers.
Fine-tune policy calibration to translate macroeconomic gains into improved social outcomes.
Implement a fundamental reform of fuel subsidies to help release resources toward human capital development for future generations.
Clearly communicate policy tradeoffs and provide targeted support measures to the most vulnerable to maintain broad support for necessary reforms.
Swiftly operationalize the recently established social registry to provide the necessary infrastructure to channel support to vulnerable households in the adjustment process.
Steadfastly implement the authorities’ action plan to strengthen the AML/CFT framework.
Enhance governance and transparency—building on the IMF governance diagnostic once finalized—to bolster institutional foundations of private-sector led inclusive growth.
Promote access to finance, particularly for small- and medium-sized enterprises, while remaining vigilant vis-à-vis financial sector risks.
Undertake efforts to mitigate food insecurity and strengthen climate resilience.

IMF Press Release No. 22/432 (December 14, 2022).