Press Release No. 23/312

IMF Staff Concludes Visit to Benin

September 12, 2023

• After strong performance in the first half of the year, the Beninese economy faces headwinds from Niger border closure amidst regional sanctions after the recent coup and higher prices of gasoline following pump price hikes in Nigeria.
• Budget support to Benin from development partners is expected to be larger than programmed, which could unlock room for additional spending in these challenging times.
• The authorities are preparing a draft 2024 budget in line with their broad objective of converging to the West African Economic and Monetary Union (WAEMU) deficit norm of 3 percent of GDP by 2025.

Washington, D.C.: An International Monetary Fund (IMF) team, led by Mr. Constant Lonkeng, visited Cotonouduring September 6–12, 2023, to assess recent economic developments and gauge progress in commitments under Benin’s Fund-supported program. The IMF Executive Board approved, on July 8, 2022, a blended arrangement under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) for Benin in the amount of US$638 million, equivalent of 391 percent of quota (see Press Release No 22/252), to help meet pressing financing needs and support the country’s progress towards the Sustainable Development Goals. The Second Review of the program was successfully completed in May 2023 (Press Release No 23/158).

At the end of the visit, Mr. Lonkeng issued the following statement:

“After strong GDP print in the first half of the year (6.3 percent), the Beninese economy faces headwinds from Niger border closure amidst regional sanctions following the recent coup. Pump price hikes in Nigeria have translated into significant increases in the price of smuggled gasoline in Benin (by about 60 percent), exerting pressure on inflation.

Following policy accommodation in recent years, fiscal consolidation is underway, underpinned by tax collection. Budget support to Benin from development partners is expected to be larger than programmed this year, which could unlock additional spending under the EFF/ECF in these challenging times.

The authorities are preparing a draft 2024 budget in line with their broad objective of converging to the West African Economic and Monetary Union (WAEMU) deficit norm of 3 percent of GDP by 2025. They are also developing a medium-term revenue mobilization strategy to support fiscal consolidation while meeting Benin’s large development needs.

The authorities requested Fund support under the new Resilience Sustainability Fund (RSF). In this context, the IMF team—joined by experts from the Global Center on Adaptation (GCA)—explored the authorities’ climate agenda with various domestic stakeholders.

“The mission met with Senior Minister of Economy and Finance Wadagni, Senior Minister of Development and Coordination of the Governmental Action Bio Tchané, Minister of Justice and Legislation, Detchenou, Minister of Social Affairs and Microfinance Tognifode, National Director of the Central Bank of West African States (BCEAO) Assilamehoo, and other senior government officials. The team also met with the donor community, the banking association, the civil society, private sector representatives and the women business association.

“The IMF team would like to thank the authorities and various stakeholders for their warm hospitality and open and constructive discussions. The team is expected to return to Cotonou later this year for the Third program Review and RSF considerations.”