A staff team from the International Monetary Fund (IMF) led by Norbert Toé,
visited Cotonou from March 21 to April 1, 2018 to conduct the second review
under the Extended Credit Facility (ECF)
[1]
arrangement with the Republic of Benin. The discussions covered recent
economic and financial developments and policies needed to foster inclusive
growth, preserve fiscal and debt sustainability, increase the efficiency of
public spending, and promote financial stability and inclusion.
At the end of the visit, Mr. Toé issued the following statement:
“The IMF team reached staff-level agreement with the authorities on
policies that could support the completion of the second review of Benin’s
ECF-supported program. The Executive Board is expected to consider the
review in June 2018.
“Economic activity in 2017 continued to be strong, buoyed by record cotton
production and the recovery of the Nigerian economy. The economy is
estimated to have expanded by 5.6 percent and inflation turned positive for
the year due to an increase in food and petroleum prices during the last
quarter. The current account deficit is estimated to have widened
marginally in 2017, on the back of an increase in goods import, reflecting
the scaling-up of investment. The medium-term outlook remains favorable
with economic growth projected to accelerate to just above 6 percent over
2019–22, driven by rising private investment. Inflation is expected to
remain below the WAEMU convergence rate of 3 percent. The programmed fiscal
consolidation path aims to reduce the budget deficit (including grants) to
below the WAEMU convergence criterion of 3 percent of GDP by 2019.
“Performance under the EFC-supported program remains broadly satisfactory.
Based on available data, all program monitoring indicators (quantitative
and structural) set for end-December 2017 were met. In particular, domestic
revenue mobilization and spending on priority social programs exceeded the
program targets. The team urged the authorities to step up the mobilization
of domestic revenue in the context of a medium-term strategy to sustain the
strong revenue performance, and continue to allocate more resources to
social programs. Efforts are also needed to strengthen the evaluation and
prioritization of new investment projects and more generally improve the
efficiency of public investment.
“Going forward, the team and the authorities agreed on the need to sustain the efforts to strengthen governance and transparency and accelerate reforms aimed at improving the business environment. The team noted the recent improvement in these areas and encouraged the government to operationalize the recently created inter-ministerial steering committee for the reforms of the business environment.
“The team worked with the government and development partners such as the United Nations and the World Bank to assess sectoral plans for education, water and sanitation, and health consistent with Benin’s National Development Plan. It initiated a costing exercise required to meet the UN Sustainable Development Goals (SDGs) in these three sectors by 2030. Based on this costing exercise in Benin and in a few low-income countries from other parts of the world, an overview paper on SDG costs and needed financing will be prepared. It is expected that this overview paper would be presented to the U.N. General Assembly next fall.
“The team met with Romuald Wadagni, Minister of Economy and Finance;
Abdoulaye Bio Tchané, Minister of State for Planning and Development; Alain
Komaclo, National Director of the regional central bank, BCEAO;
Jean-Baptiste Elias, President of the National Anti-Corruption Authority;
and other senior government officials.
“The team thanks the authorities for their strong cooperation and the constructive discussions.”
[1]
Benin’s ECF-supported program was approved by the IMF Executive
Board in April 2017. The ECF
is a lending arrangement that provides sustained program engagement
over the medium to long term in case of protracted balance of
payments problems.
