Press Release No. 20/178

IMF Reaches Staff-Level Agreement on the Sixth Review for Benin’s Extended Credit Facility (ECF) Arrangement

April 21, 2020

• The IMF team reached a staff-level agreement with the Beninese authorities on the sixth and final review under the Extended Credit Facility. The authorities have requested an increase in financial support provided by the IMF, which, pending the IMF Executive Board approval, would make about US$125 million available mid-May 2020.
• The COVID-19 pandemic will have a significant impact on Benin’s near-term economic outlook, leading to a deterioration of its external and fiscal accounts.
• The authorities have prepared an emergency response plan, focusing on higher health spending, assistance to the most vulnerable households, and support to impacted businesses. Higher access to IMF financing will help meet urgent health and socio-economic needs, secure other donors’ funding, and support the recovery.

Washington, DC – A staff team from the International Monetary Fund (IMF), led by Luc Eyraud, conducted discussions on the sixth review of the three-year economic and financial program supported by the IMF under the Extended Credit Facility (ECF) ^[1] arrangement with the Republic of Benin over April 9-17, 2020.

At the conclusion of the mission, Mr. Eyraud issued the following statement:

“The authorities and the IMF team reached a staff-level agreement, subject to approval by IMF management and the Executive Board. Consideration by the IMF’s Executive Board is expected mid-May 2020. Staff will recommend an increase in IMF support to Benin equivalent to 61.4 percent of quota (about US$ 103.5 million) to help finance health and economic measures, meet balance of payments needs arising from the COVID-19 pandemic, and catalyze support from the international community. This would bring the total disbursement associated with the completion of this review at US$ 125 million.

“Performance under the IMF-supported program remain very satisfactory. All quantitative performance criteria at end-December 2019 and the structural benchmarks under review have been met.

“Following strong growth estimated at nearly 7 percent in 2019, the COVID-19 pandemic, as well as the prolonged bordure closure with Nigeria, are expected to significantly weaken Benin’s near-term economic outlook. Economic growth is projected to decelerate to 3.2 percent in 2020, as a result of COVID-related restrictions on domestic activity, substantially lower external demand, and disruptions in global trade and supply chains.

“The authorities are taking decisive measures to contain the pandemic and limit its repercussions. The response package, estimated at 1.7 percent of GDP, includes higher healthcare spending, assistance to the most vulnerable households, and targeted and temporary support to affected businesses. The authorities are committed to ensuring strong governance and transparency in the implementation of these programs.

“The 2020 fiscal deficit is expected to widen to 3.5 percent of GDP, as a result of the revenue shortfall, higher health spending, and measures to support the economy. The authorities are mobilizing additional financing from the IMF and other international partners to finance the higher fiscal deficit. While the government debt is projected to reach 43.3 percent of GDP in 2020, the authorities are committed to the goal of fiscal sustainability, anchored in a steady decline in the public debt-to-GDP ratio over the medium term as the crisis abates.

“The IMF team would like to thank the authorities for the open and constructive discussions in this difficult context. The IMF team also wishes to express its deepest sympathies and support to the people of Benin whose lives are profoundly impacted by the devastating effects of the COVD-19.”