Press Release No. 22/321

IMF Staff Concludes Visit to Benin

September 23, 2022

• Benin’s established track record in public finance is providing much-needed policy room to counter headwinds from a highly uncertain global economic environment, negative spillovers from regional security risks and the legacy of COVID-19.
• In line with the new Fund-supported EFF/ECF, the authorities are finalizing, for submission to Parliament, a supplementary budget for 2022 to pause the fiscal tightening—planned in the original budget when it was crafted a year ago—to scale up social and security-related spending.
• Continued budget support from Benin’s development partners will complement large and front-loaded IMF support.

Cotonou: An International Monetary Fund (IMF) team, led by Mr. Constant Lonkeng, visited Cotonou during September 19–23, 2022, to assess recent economic developments, discuss the 2022 supplementary budget and gauge progress in commitments under Benin’s Fund-supported program. The IMF Executive Board approved, on July 8, 2022, a new blended EFF/ECF arrangement for Benin under High Combined Credit Exposure (HCCE) in the amount of US$638 million (equivalent of 391 percent of quota) (see Press Release No 22/252 ), to help address pressing financing needs and support the country’s National Development Plan (2018–25) centered on achieving Sustainable Development Goals (see IMF Country Focus ).

At the end of the visit, Mr. Lonkeng issued the following statement:

“Benin’s established track record in public finance is providing much-needed policy room to counter headwinds from a highly uncertain global economic environment, negative spillovers from regional security risks and the legacy of COVID-19. The authorities are finalizing, for submission to Parliament, a supplementary budget for 2022 in line with the new Fund-supported EFF/ECF. The supplementary budget will pause the fiscal tightening that was initially envisaged in the 2022 budget law when it was crafted a year ago; it seeks to increase social and security-related spending.

“While uncertainty remains high, the economic recovery is underway, supported by a rebound in agriculture and continued expansion of port activity, albeit at a slower pace than prior to the war in Ukraine. Inflation has surprised on the downside, as a good harvest season and supportive policy measures adopted by the government since Russia’s invasion of Ukraine partially offset pressures from imported food prices. Nevertheless, sustained price increases for some essential consumption items for vulnerable households is exacerbating food insecurity risks. In this context, the mission reiterated the need to shift toward more targeted, efficient, and cost-effective measures in the domestic policy response to the war in Ukraine.

“The mission gauged progress in Benin’s commitments under the new EFF/ECF, including the establishment of a social registry that will enable the government to reach the vulnerable in times of hardship, the enactment of the legislation on beneficial ownership in public procurement contracts and the implementation of the authorities’ action plan for strengthening the AML/CFT framework. The team will return to Cotonou later this year for the First program Review.

“The mission met with Senior Minister of Economy and Finance Wadagni, Special Advisor to the President Dagnon, Minister of Social Affairs and Microfinance Tognifode, Deputy Secretary General of the Presidency and Government’s Spokesperson Houngbédji, National Director of the BCEAO (the regional central bank) Assilamehoo, and other senior government officials. The team also met with labor unions, investors, the civil society, the opposition, and representatives of the donor community.

“The IMF team would like to thank the authorities and various stakeholders for their warm hospitality and open and constructive discussions.”