IMF Executive Board Approves US$200 million under the Resilience and Sustainability Facility for Benin and Completes Third Review of Extended Fund Facility and Extended Credit Facility

IMF News, December 14, 2023

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Canonical URL: IMF Executive Board Approves US$200 million under the Resilience and Sustainability Facility for Benin and Completes Third Review of Extended Fund Facility and Extended Credit Facility

Approved a new two-year arrangement under the Resilience and Sustainability Facility (RSF) in the amount of SDR 148.56 million (about $US200 million, 120 percent of quota); disbursements to start when the First Review of the arrangement is completed.
Completed the Third Review under the 42-month blended EFF/ECF arrangement (approved on July 8, 2022), allowing immediate disbursement of SDR 101.58 million (about US$136 million) toward budget support.
Total disbursement under the program now amounts to SDR 369 million (about US$494 million).

Program performance remains strong, with all end-June 2023 quantitative targets met and structural benchmarks implemented.
Robust tax collection is supporting fiscal consolidation and complementing stepped-up budget support from Benin’s development partners and frontloaded Fund disbursements under the EFF/ECF.
The Medium-Term Revenue Strategy (MTRS) has been recently adopted; it is aimed at improving the efficiency of the tax system and expanding the tax base.

Authorities are navigating headwinds from the Niger border closure, regional sanctions on that country, and the phasing-out of fuel subsidies in Nigeria.
Remaining vigilant regarding the financial and socio-economic fallout from these shocks is emphasized to preserve macroeconomic stability.
Contingency planning is stressed given heightened uncertainty; authorities should maintain flexibility in budget execution, including a phased approach to public investment.
Remaining vigilant vis-à-vis financial sector risks and promoting financial inclusion are highlighted as important to support sustainable growth.

The RSF will support the authorities’ goal to mainstream climate considerations in policymaking, mitigate transition risks through a comprehensive fuel subsidy reform, and catalyze other sources of climate financing.
RSF reform measures build on the authorities’ national adaptation plan and existing diagnostics, including the IMF’s Climate Public Investment Assessment (C-PIMA), the World Bank’s Country Climate and Development Report (CCDR), and leverage the Global Center on Adaptation’s expertise.
Steadfast implementation of the authorities’ climate change agenda under the RSF is intended to complement the EFF/ECF in supporting overall socio-economic resilience, address structural challenges that expose Benin to climate shocks, help mitigate balance of payment risks, and catalyze other sources of climate financing.

Continue fiscal consolidation toward converging to the West-African Economic and Monetary Union-wide fiscal deficit norm of 3 percent of GDP by 2025, in line with the program’s debt sustainability objectives.
Sustain and deepen implementation of the Medium-Term Revenue Strategy (MTRS) to sustain ongoing revenue collection efforts and help meet Benin’s large development needs over time.
Accelerate operationalization of the social registry to facilitate targeting as social programs are scaled up, and to help compensate vulnerable households during the fiscal adjustment process.
Sustain reforms to enhance the rule of law and the anticorruption framework to solidify institutional foundations for private sector-led growth that benefits all Beninese.

Press Release No. 23/452, December 14, 2023.