The International Monetary Fund (IMF) Executive Board has completed the Fifth Reviews of Benin's Extended Fund Facility (EFF) and Extended Credit Facility (ECF), along with the Second Review of the Resilience and Sustainability Facility (RSF). These arrangements, initially approved in July 2022 and complemented by the RSF in December 2023, aim to support Benin's economic growth and sustainability efforts.
The completion of these reviews enables an immediate disbursement of SDR 31.2 million (approximately US$41 million) under the EFF/ECF, bringing total disbursements to SDR 431.4 million (around US$565 million). Additionally, SDR 29.7 million (about US$39 million) will be disbursed under the RSF arrangement.
Benin is witnessing emerging industries with increased exports of higher value-added goods, particularly in information technology and tourism. Economic activity expanded by an estimated 6.4 percent year-over-year in the first half of this year, with continued strong growth anticipated. Despite a temporary deterioration in the balance of payments due to large investments related to a special economic zone, recovery is expected as local commodity transformation boosts exports.
Program performance has been robust, meeting all quantitative targets for June 2024 and completing structural benchmarks under the EFF/ECF. In terms of resilience and sustainability, climate budget tagging has been implemented under the 2025 budget alongside a predictable price adjustment mechanism for fuel products. Urban water tariff reform is expected by early 2025.
Following discussions on Benin, IMF Deputy Managing Director Mr. Okamura stated: “Sound macroeconomic management and steadfast reform implementation over the past several years have underpinned promising signs of economic transformation in Benin, including strong growth, credit rating upgrades and continued support from development partners."
Mr. Okamura highlighted that while Benin should remain vigilant against global uncertainties through contingency planning, its parliament has adopted a budget targeting compliance with WAEMU’s fiscal deficit norm while increasing social spending. Fiscal adjustments will focus on revenue-based strategies anchored in a Medium-Term Revenue Strategy.
He further noted: “The adoption of a predictable mechanism for fuel products that accounts for the specificities of Benin’s local fuel market as well as the related compensatory mechanism is welcome."
To preserve macroeconomic gains and foster inclusive growth led by the private sector, strengthening anti-corruption frameworks was emphasized as crucial by Mr. Okamura: “A key challenge ahead for Benin is to maintain the reform momentum and further strengthen inclusive policies for an economic transformation that generates jobs and benefits all Beninese."
The full operationalization of a social registry is expected to improve coordination among social assistance programs across regions. Continued implementation of climate change agendas under RSF will support socio-economic resilience while capitalizing on climate finance pledges made at COP29.