Innovation and a strong reform drive have strengthened Benin's resilience to regional and global challenges, supporting progress toward meeting the Sustainable Development Goals. In 2022, Benin faced several challenges including regional security issues at its northern border, lingering effects of COVID-19, and increased living costs due to the war in Ukraine. To counter these difficulties, the country sought IMF support with a $650 million blended Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangement, along with a $200 million Resilience and Sustainability Facility (RSF) in 2023.
Despite these obstacles, there are promising signs of economic transformation. Growth has been robust, fiscal adjustments are underway while allowing for significant increases in social spending, and efforts to strengthen governance are advancing.
Romuald Wadagni, Senior Minister of State of Economy and Finance for Benin, emphasized that their ongoing reform program has enabled them to navigate severe shocks with technical and financial support from development partners. "Our economy has shown remarkable resilience," he noted.
Constant Lonkeng, IMF Mission Chief for Benin, explained that one key design consideration was balancing financing and fiscal adjustment in a shock-prone environment. He said they opted for a flexible design due to Benin's established track record in macroeconomic management.
The reforms focus on enhancing human capital through initiatives like the Integrated School Feeding Program providing free meals to students in rural areas and making lower education tuition-free for girls across all communes. Additionally, the Insurance for Human Capital Enhancement (ARCH) aims to foster social resilience through various programs.
Finance Minister Wadagni highlighted the strategic role of the Glo-Djigbé Industrial Zone dedicated to local agricultural product transformation as part of their structural transformation efforts. He also mentioned plans to expand social safety nets.
Benin innovated by issuing the first Social Development Goal (SDG) bond in the region—a €500 million bond framework around social and climate priorities used since 2021. This framework is intended to catalyze financing for climate change adaptation among other projects.
IMF Mission Chief Lonkeng stressed that program ownership has been crucial due to public consultation traditions around reform agendas under national plans. Moving forward involves expanding the tax base drawing on medium-term revenue strategies developed recently while fostering private sector job creation away from traditional models.