IMF Staff Completes Program Review Mission to Benin

IMF News, October 29, 2018

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A staff level agreement was reached on the third review under the ECF-supported program, subject to approval by IMF management and the Executive Board Discussions.
A staff team from the IMF led by Luc Eyraud visited Cotonou during October 18 to 29, 2018.
Consideration by the IMF’s Executive Board is expected in December 2018.
The Benin’s ECF-supported program was approved by the IMF Executive Board in April 2017.

2017 growth is estimated at 5.8 percent, driven by high public investment, record cotton production and processing, and the recovery of the Nigerian economy.
For 2018 preliminary estimates indicate that growth will further accelerate, mostly because of buoyant port activity.
The medium-term outlook remains favorable with economic growth projected to remain above 6 percent over 2019–23, driven by rising private investment and stronger demand from Nigeria.
The current account deficit widened in 2017 due to an increase in imports of goods reflecting the scaling-up of public investment.
Inflation is expected to stay below the WAEMU convergence rate of 3 percent in 2019.

Performance under the ECF-supported program remains satisfactory.
Based on available data, all program monitoring indicators (quantitative and structural) at end-June 2018 were broadly met.

The authorities and the IMF mission agreed on fiscal policy measures for the 2019 budget to secure key program objectives.
These measures should enable the projected fiscal deficit to decrease to 2.7 percent of GDP in 2019 and thus comply with the WAEMU regional deficit norm.

The IMF welcomed the efforts included in the budget to mobilize domestic revenues.
The revenue measures will help allocate more resources to social programs to protect the most vulnerable segments of the population.
In particular, the new health insurance system will enter in pilot phase next year.
Better revenue mobilization will also create space to finance the infrastructure projects of the Government Action Program (2017-2021).

Further efforts are needed to strengthen the evaluation and prioritization of new investment projects and improve the efficiency of public investment.
The authorities are implementing the recommendations of the Technical Assistance mission on the management of public investment conducted by the IMF at the end of 2017.

Authorities and IMF staff agreed on policies to secure public debt sustainability through a prudent borrowing strategy and the reinforcement of debt management.
The team encouraged actions to lengthen debt maturities, lower interest costs and rebalance the structure of the debt portfolio.
The recent debt reprofiling operation contributes to this objective.

The mission noted recent improvement in governance and the business environment and encouraged the government to push further reforms.
Priority reforms highlighted include facilitating access to electricity and finance, and reinforcing the anti-corruption framework.

The team met with President Patrice Talon; Abdoulaye Bio Tchané, Minister of State for Planning and Development; Romuald Wadagni, Minister of Economy and Finance; Alain Komaclo, National Director of the regional central bank, BCEAO; and other senior government officials.
“The mission thanks the authorities for their strong cooperation and the constructive discussions.”

IMF Press Release No. 18/394 (October 29, 2018).