IMF Executive Board Completes Fourth Review Under the Extended Credit Facility Arrangement and Approves US$22.1 Million Disbursement for Benin
IMF News, June 21, 2019
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- Published: June 21, 2019
Review outcome and disbursement
- Executive Board completed the 4th review of Benin’s three-year Extended Credit Facility (ECF) arrangement on June 21, 2019.
- The Board’s decision enables an immediate disbursement of SDR15.917 million (about US$22.1 million) to Benin.
- Total disbursements under the arrangement now amount to SDR 79.585 million (about US$110.4 million).
- The Board approved Benin’s request for modification of the performance criteria on:
- basic primary balance,
- net domestic financing,
- new external debt contracted or guaranteed by the government.
Program background and objectives
- Benin’s three-year arrangement totals SDR111.42 million (about US$154.6 million or 90 percent of the country’s quota at the time of approval).
- The arrangement was approved on April 7, 2017.
- Program aims: support economic and financial reform, raise living standards, and preserve macroeconomic stability.
Performance under the program
- Performance during the 4th review was described as "very satisfactory."
- All Quantitative Performance Criteria at end-2018 and all Structural Benchmarks were met.
- IMF assessment: the macroeconomic and structural policies outlined by the authorities are adequate to achieve the program’s objectives and risks are deemed manageable.
Fiscal stance, debt, and financing
- Maintaining a fiscal deficit below 3 percent of GDP in 2019 and 2020 and enhancing debt management are identified as key to putting the debt ratio on a firm downward path.
- The authorities implemented an ambitious tax package primarily focused on reducing tax expenditures.
- Expected fiscal impact: lower the deficit from 4.0 percent of GDP in 2018 to 3.0 percent of GDP in 2019.
- Revenue mobilization priorities after 2019 include exploiting the full potential of the value added tax and excises to create budgetary space for social spending and avoid further cuts to public investment.
- Debt outlook:
- Debt, as a share of GDP, is projected to decline in 2019 after five years of continuous increase.
- The March 2019 Eurobond issuance "will not raise debt" because domestic borrowing was scaled back by the same amount.
- The Eurobond is expected to diversify the financing mix and lengthen debt maturity but may generate new vulnerabilities that need monitoring and mitigation through an enhanced debt management strategy.
Structural reforms and growth
- Policy recommendations emphasized by IMF management (David Lipton):
- Continue efforts to improve the business environment.
- Diversify the economy.
- Invest in human capital.
- These actions are highlighted as important to promote strong and inclusive growth.
Key statistics and dates (as reported)
- Disbursement approved: SDR15.917 million (about US$22.1 million).
- Total disbursements under arrangement: SDR 79.585 million (about US$110.4 million).
- Total arrangement size: SDR111.42 million (about US$154.6 million; 90 percent of quota).
- Arrangement approval date: April 7, 2017.
- Press release date: June 21, 2019.
- Fiscal deficit: 4.0 percent of GDP in 2018; expected 3.0 percent of GDP in 2019.
- Policy horizon highlighted: 2019 and 2020.
- Event: March 2019 Eurobond issuance.
- Review number: 4th review.
- All Quantitative Performance Criteria at end-2018 and all Structural Benchmarks: met.
IMF Press Release No. 19/230 — June 21, 2019