BENIN: IMF Reaches Staff-Level Agreement on Fifth Review of Extended Fund and Extended Credit Facilities and the Second Review of Resilience and Sustainability Facility

IMF News, October 17, 2024

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Canonical URL: BENIN: IMF Reaches Staff-Level Agreement on Fifth Review of Extended Fund and Extended Credit Facilities and the Second Review of Resilience and Sustainability Facility

IMF staff and Beninese authorities reached a staff-level agreement to complete the Fifth Review of Benin’s 42-month blended EFF/ECF and the Second Review of the RSF.
Subject to approval by the IMF Executive Board, Benin will receive:
- a disbursement of SDR 31.2 million (about $42 million) under the ECF and EFF arrangements; and
- up to SDR 39.6 million (about $53 million) under the RSF arrangement.
These disbursements would bring the total disbursement under the EFF/ECF to SDR 431 million (about $576 million).

Economic activity is estimated to have expanded by 6.5 percent year-over-year in the first half of this year.
Growth is expected to remain strong in the near-term.
Program performance:
- All quantitative targets for end-June 2024 were met.
- Fiscal consolidation is reported as well underway, supported by robust tax collection.
Balance of payments:
- The balance of payments has deteriorated temporarily due to large investments, including related to the special economic zone (SEZ).
- Recovery is expected to be gradual as transformation of local commodities at the SEZ boosts exports.

The authorities submitted to Parliament the draft 2025 budget targeting compliance with the WAEMU overall deficit norm of 3 percent of GDP.
Fiscal consolidation approach:
- Set to be revenue-based (drawing on the Medium-Term Revenue Strategy).
- Significant increases planned in social spending (education, health, and social protection).
Social protection targeting:
- Recommendation to update regularly and fully operationalize the social registry to improve targeting of expanded social assistance programs.

Anti-corruption:
- Mission discussed next steps to strengthen Benin’s anti-corruption framework, complementing the recently operationalized anti-corruption agency.
Safeguarding macroeconomic gains:
- Discussion on mechanisms to safeguard macroeconomic gains over the political cycle.

Climate finance:
- Authorities are advancing their climate finance agenda following the climate finance roundtable in Cotonou in July.
- Climate change has been mainstreamed in the draft 2025 budget.
Utilities and subsidies:
- Mission discussed next steps in advancing water tariff reform.
- Mission discussed fuel subsidy reform that accounts for the specificities of Benin’s local fuel market.

The IMF team met with:
- Senior Minister of Economy and Finance Wadagni;
- Senior Minister of Development and Government Action Bio Tchane;
- National Director of the BCEAO Assilamehoo;
- Other senior government officials;
- Head of Opposition;
- Finance Commission of the National Assembly in Porto Novo;
- Civil society, university students, association of women entrepreneurs, and a farmers’ association;
- The donor community and other stakeholders.
Mission period and leadership:
- An IMF team led by Constant Lonkeng visited Cotonou during October 8–17, 2024.

Source: IMF press release, October 17, 2024.