IMF reaches staff-level agreement on fourth review of the Enlarged Fund and expanded credit lines, first review of the Resilience and Sustainability Facility, and concludes Article IV consultation by 2024

Benin: IMF reaches staff-level agreement on fourth review of the Enlarged Fund and expanded credit lines, first review of the Resilience and Sustainability Facility, and concludes 2024 Article IV consultation

May 8, 2024

End-of-mission press releases include statements by IMF staff teams that convey preliminary findings after a country visit. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.

• IMF staff reached a staff-level agreement with Benin on the Fourth Review of Benin’s SAF/ECF and the First Review of the Resilience and Sustainability Facility (RSF) and completed the 2024 Article IV consultation.
• The Beninese economy, supported by public and private investments, including those related to the special economic zone, has demonstrated resilience in the face of multiple crises.
• Authorities began rebuilding political buffers last year; are seeking fiscal consolidation to converge to the West African Economic and Monetary Union (WAEMU) fiscal deficit norm of 3 percent of GDP by 2025.

Washington DC: A team from the International Monetary Fund (IMF), led by Constant Lonkeng, visited Cotonou from April 25 to May 8, 2024 for discussions on the Fourth Review of Benin’s economic program under the Expanded Fund Facility (EFS). and the Expanded Credit Facility (ECF). ) and the First Review of the Resilience and Sustainability Fund (RSF) agreement, and carry out the 2024 Article IV consultation.

At the end of the mission, Mr. Lonkeng issued the following statement:

“I am pleased to announce that the IMF staff and the Benin authorities have reached a staff-level agreement on policies to complete the Fourth Review of Benin’s combined 42-month SAF/ECF and the First Review of the RSF. Subject to the approval of the IMF Executive Board, Benin will receive a disbursement of SDR 31.2 million (about USD 42 million) under the ECF and SAF and SDR 19.8 million (about USD 26 million) under the under the RSF, bringing the total disbursement under the SAF/ECF to SDR 420.8 million (about $555 million).

“The Beninese economy has demonstrated remarkable resilience in the face of multiple crises, with economic activity estimated to have expanded by 6.4 percent in 2023, above expectations, driven by public and private investment. Growth is expected to remain strong in the coming years as activities in the special economic zone expand and the economy diversifies. The government has launched an education reform to prepare the labor market to respond to the needs of a changing economy.

“Program performance has been strong: all quantitative targets were met by the end of December 2023, some by wide margins. Authorities began rebuilding policy buffers last year, after justified fiscal accommodation in recent years. They are committed to pursuing revenue-based fiscal consolidation to converge to the regional headline deficit norm of 3 percent of GDP by 2025. The strong implementation of the government’s reform agenda has helped catalyze partner financing for the development and international financial markets.

“The agenda of structural reforms, which integrate climate considerations, is advancing. The mission recognized the progress in the draft decrees that put the anti-corruption agency into operation and encouraged the authorities to finalize this important legislation in accordance with the Government Action Program. The authorities reiterated their commitment to fossil fuel subsidy reform, taking into account the specificities of Benin’s local fuel market.

“While noting that strong macroeconomic performance in recent years has led to a reduction in poverty, the mission recommends that the government strengthen measures aimed at reducing inequality that has persisted across all regions and income groups. In this sense, an update of the social registry would help improve the targeting of expanding social assistance programs. Furthermore, with an average age of 18, the continued increase in budget allocation to education and the expansion of digitalization can help harness the demographic dividend.

“The mission took note of the legislative and regulatory measures to contain fiscal and non-fiscal incentives in the special economic zone and highlighted the need to continue the rationalization of fiscal expenditures. Furthermore, the mission encourages the government to gradually reduce its footprint in the economy to level the playing field among all market participants and foster inclusive growth led by the private sector. He recommended greater vigilance against the expansion of the public financial sector in recent years, despite solid financial indicators.

“The team met with His Excellency President Talon, Senior Minister of Economy and Finance Wadagni, Senior Minister of Development and Coordination of Government Action Bio Tchané, Minister of Justice and Legislation Detchenou, Minister of Environment and Development Sustainable Tonato, the Minister of Agriculture, Livestock and Fisheries Dossouhoui, Minister of Social Affairs and Microfinance Tognifodé, Minister of Energy, Water and Mines Adambi, National Director of the BCEAO (the regional central bank) Assilamehoo, other senior government officials, civil society , businesswomen, university students, the donor community, multilateral and regional development banks, the banking association and other representatives of the private sector.

“The IMF team would like to thank the Beninese authorities and various stakeholders for their cooperation and candid discussions during the mission.”