IMF Staff Concludes Visit to Benin

IMF News, September 13, 2023

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Published: September 13, 2023

Mission and program context

IMF team led by Mr. Constant Lonkeng visited Cotonou during September 6–12, 2023.
The IMF Executive Board approved, on July 8, 2022, a blended arrangement under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) for Benin in the amount of US$638 million, equivalent of 391 percent of quota.
The Second Review of the program was successfully completed in May 2023.
This mission will not result in a Board discussion.

Recent economic developments and shocks

After strong GDP print in the first half of the year (6.3 percent), the Beninese economy faces headwinds from:
- Niger border closure amidst regional sanctions following the recent coup.
- Higher prices of gasoline following pump price hikes in Nigeria that have translated into significant increases in the price of smuggled gasoline in Benin (by about 60 percent), exerting pressure on inflation.
Budget support to Benin from development partners is expected to be larger than programmed this year, which could unlock room for additional spending under the EFF/ECF.

Fiscal policy, budget planning, and revenue strategy

Following policy accommodation in recent years, fiscal consolidation is underway, underpinned by tax collection.
The authorities are preparing a draft 2024 budget in line with their broad objective of converging to the West African Economic and Monetary Union (WAEMU) deficit norm of 3 percent of GDP by 2025.
The authorities are developing a medium-term revenue mobilization strategy to support fiscal consolidation while meeting Benin’s large development needs.

Resilience and climate-related engagement

The authorities requested Fund support under the new Resilience Sustainability Fund (RSF).
The IMF team—joined by experts from the Global Center on Adaptation (GCA)—explored the authorities’ climate agenda with various domestic stakeholders.
The team is expected to return to Cotonou later this year for the Third program Review and RSF considerations.

Stakeholder engagement during the mission

Meetings included:
- Senior Minister of Economy and Finance Wadagni
- Senior Minister of Development and Coordination of the Governmental Action Bio Tchané
- Minister of Justice and Legislation Detchenou
- Minister of Social Affairs and Microfinance Tognifode
- National Director of the Central Bank of West African States (BCEAO) Assilamehoo
- Donor community, the banking association, civil society, private sector representatives, and the women business association
The IMF team thanked the authorities and stakeholders for warm hospitality and open and constructive discussions.

Key statements and next steps

“After strong GDP print in the first half of the year (6.3 percent), the Beninese economy faces headwinds from Niger border closure amidst regional sanctions following the recent coup. Pump price hikes in Nigeria have translated into significant increases in the price of smuggled gasoline in Benin (by about 60 percent), exerting pressure on inflation.”
The team is expected to return to Cotonou later this year for the Third program Review and RSF considerations.

IMF Communications Department — Press Release No. 23/312; September 12, 2023.

References

Release No 23/158](https://www.imf.org/en/News/Articles/2023/05/17/pr23158-benin-imf-executive-board-completes-2nd-rev-eff-ecf-arr-approves-us-68m-disbursement)

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