On June 29, 2018, the Executive Board of the International Monetary Fund
(IMF) completed the second review of the three-year arrangement with Benin
under the Extended Credit Facility (ECF). The Board’s decision, which was
taken on a lapse-of-time basis,
[1]
makes available SDR 15.917 million (about US$22.4 million) immediately to
Benin.
Economic activity expanded and inflation stayed low in 2017. Growth is
estimated at 5.6 percent, buoyed by record cotton production, and the
recovery of the Nigerian economy. Inflation turned positive for the year
and averaged 0.1 percent, driven by food and petroleum prices. The current
account deficit is estimated to have widened in 2017, due to an increase in
goods imports, reflecting a scaling-up of investment and higher food
imports. Budget execution in 2017 was better than initially programmed and
the overall fiscal deficit (excluding grants) was limited to 7.0 percentage
points of GDP, due mostly to a stronger domestic revenue performance.
Public spending was contained to the programmed level. As a result, public
debt accumulation was slower than programmed.
Performance under the program continues to be satisfactory. All continuous
and end-December 2017 quantitative performance criteria have been met as
were all the structural benchmarks (SBs). Under-execution of social
spending at end-June 2017 was reversed by September and the indicative
target (IT) for end-December 2017 was exceeded.
The medium-term outlook remains favorable. It assumes an
acceleration of real GDP growth in 2019–22, driven by policy-induced
increase in agricultural production and rising private investment.
Inflation is forecast to remain below the WAEMU convergence rate of 3
percent over the medium term. The programmed fiscal consolidation path is
expected to bring the budget deficit (including grants) down to below the
WAEMU convergence criterion of 3 percent of GDP by 2019. Strong export
growth would drive an improvement in the external current account position
while sustained capital inflows driven by foreign direct and portfolio
investments would enable Benin to contribute modestly to the build-up of
WAEMU's international reserves.
[1]
The Executive Board takes decisions under its lapse-of-time
procedure when it agrees that a proposal can be considered and
approved without convening a formal discussion.
