The International Monetary Fund has issued the following press release:
Following an official request for a new Fund-supported program by the Beninese authorities to anchor the country’s homegrown development plan, an International Monetary Fund (IMF) mission led by Constant Lonkeng conducted in-person and virtual meetings with the Beninese authorities during Nov. 15–23 to discuss recent economic developments and enquire about policy priorities to inform future discussions on an IMF-supported program.
“At the end of the visit, Mr. Lonkeng issued the following statement:
“Benin’s three-year Fund-supported Extended Credit Facility (ECF) arrangement (about US$255 million, including the augmentation of access of US$103 million at the onset of COVID-19) reached an end in May 2020. To further support the people of Benin through the pandemic, the IMF Executive Board approved emergency financing under the Rapid Credit Facility and the Rapid Financing Instrument (US$178 million) in December 2020. Benin also benefited from the IMF general SDR allocation (US$168 million, 1 percent of GDP) in August 2021.
“Strong macroeconomic fundamentals entering COVID-19 provided much-needed fiscal space and continuous access to financing to Benin, which helped contain the economic fallout from the crisis. The government responded swiftly to the pandemic, designing a package of mitigating health-related and economic support measures to the tune of 4.5 percent of GDP extending over 2020–22. This, together with a strong public investment push and a sanitary belt around the cities most exposed to the pandemic, helped expand economic activity by 3.8 percent, one of the strongest growth rates among developing countries in 2020.
“A robust economic recovery is underway despite setbacks in agriculture amid weather-related events, with the normalization of merchandise traffic at the Port of Cotonou—one of Benin’s main economic engines—providing additional impetus. While aggregate inflation has remained subdued, food prices have risen (8 percent in October 2021, y/y), reflecting both global factors and negative domestic weather events.
“Benin recently went through its most severe wave of COVID-19 infections, with the number of weekly confirmed cases peaking at 4,760 in September. While the situation has since eased, the vaccination rate, while on the rise, remains low (only about 460,000 persons or 3.7 percent of the population have been fully vaccinated), making the country vulnerable to potential future outbreaks. The authorities are revamping their vaccination strategy, including through close engagement with local communities and expansion of rollout capacity.
“The mission noted the online publication of procurement documents and key contract information related to major projects implemented under the COVID-19 response plan. The operationalization of the Court of Auditors—previously Accounting Chamber—following an institutional change that set it at arm’s length from the Supreme Court is underway. This transition has delayed the ex-post independent audit of COVID-19 related funds, which the authorities intend to accelerate to help preserve the integrity of emergency financing and bolster trust in public institutions.
“The mission discussed recent economic developments and the outlook, including the impact of the COVID-19 pandemic, and inquired about budget execution under the 2021 supplementary and the assumptions underpinning the 2022 budget, as well as the authorities’ policy priorities going forward. These facts will inform the upcoming Article IV consultation and discussions on a possible Fund-supported program for Benin, expected to take place early next year.
“The mission met with Senior Minister of Economy and Finance Wadagni, Minister of Development and Coordination of the Governmental Action Bio Tchané, Minister of Health Hounkpatin, Minister of Social Affairs and Microfinance Tognifodé, National Director of the BCEAO (the regional central bank) Assilamehoo, other senior government officials, the civil society, representatives of the business community, including the national federation of small-and-medium-size enterprises, the banking association, as well as other private sector actors in Cotonou and other communes.
“The IMF team would like to thank the authorities and various stakeholders for their warm hospitality and open and constructive discussions.”