December 21, 1998

Mr. Michel Camdessus
Managing Director
International Monetary Fund
Washington, D.C. 20431

Dear Mr. Camdessus:

1.  For nearly ten years, Benin has been implementing economic and financial reforms aimed at achieving sustainable growth, improving living standards, and reducing domestic and external imbalances. In support of the government's program for the period 1996-99, the Executive Board of the International Monetary Fund approved a second three-year arrangement under the Enhanced Structural Adjustment Facility (ESAF) on August 28, 1996, as well as the first annual arrangement thereunder. The performance under the first annual program, which expired on June 30, 1997, was broadly satisfactory. To consolidate the progress made thus far and support the program covering the period from October 1, 1998 to September 30, 1999, the government of Benin requests a second annual arrangement under the ESAF equivalent to SDR 9.06 million.

2.  The government of Benin, in cooperation with the staffs of the International Monetary Fund and the World Bank, has updated the policy framework paper for the period 1998-2001, which will be sent to you under a separate cover.

3.  The attached memorandum on Benin's economic and financial policies, which is based on the above-mentioned policy framework paper, describes the economic objectives and policies that the government intends to pursue for the period 1998-2001, as well as the objectives and specific measures for the 1998-99 program.

4.  The government believes that the policies set forth in the attached memorandum are adequate to achieve the objectives of its program but stands ready to take additional measures that may prove necessary for this purpose. During the period of the second annual arrangement, the government will consult with the Managing Director of the International Monetary Fund on the adoption of any measures that may be appropriate, either at the initiative of the government or whenever the Managing Director requests such consultation. Moreover, after the period of the second annual arrangement and while Benin has outstanding financial obligations to the International Monetary Fund arising from loans under the arrangement, the government will consult with the Fund from time to time, at the initiative of the government or whenever the Managing Director requests consultation on Benin's economic and financial policies.

5.  The government will provide the International Monetary Fund with any information the Fund may request regarding the progress made in policy implementation and the achievement of the program objectives. Benin will also conduct with the Fund two reviews of its second-year program; the first will be completed no later than end-May 1999, and the second no later than end-November 1999.

Attachment: Memorandum on Economic and Financial Policies for 1998-99

1.  For nearly ten years, Benin has been implementing a series of economic and financial reforms aimed at restoring a high and sustained rate of growth, improving living standards, and reducing domestic and external imbalances. These reforms have been supported by the International Monetary Fund, including in the context of a three-year arrangement under the Enhanced Structural Adjustment Facility (ESAF), and the first annual arrangement thereunder, which the Executive Board approved on August 28, 1996.

2.  Major progress was made under the first-year program covering the period July 1, 1996-June 30, 1997, as the macroeconomic performance was generally satisfactory. However, discussions on the second-year program took some time because of the need to reach a consensus within Benin on key structural reforms, in particular in the areas of the civil service, the cotton sector, and the government divestiture program. The government is aware that the economic situation is still fragile and that efforts must be continued to preserve and build upon the progress made. Accordingly, the main objectives for the medium term continue to be fiscal consolidation, the channeling of increased government resources toward productive investment and basic social spending, and the establishment of a regulatory framework conducive to private sector development and job creation. This strategy is described in the policy framework paper (PFP) for 1998-2001, prepared with the cooperation of the staffs of the International Monetary Fund and the World Bank. To support the program for the period from October 1, 1998 to September 30, 1999, the government has sought Fund assistance through the second annual arrangement under the ESAF, as well as support from Benin's development partners.

3.  Economic and financial performance since 1997 has been generally satisfactory despite stagnating cotton production and the disruptive effects of a serious power shortage in the second quarter of 1998. Real GDP growth is estimated at 5.6 percent in 1997 and is projected to be 4.4 percent in 1998. After slowing to 2.4 percent in 1997, inflation has picked up again in 1998 and is expected to reach 3.7 percent by year's end. Preliminary indications are that national saving is likely to decline by about 2 percentage points of GDP in 1998, owing to a drop in private saving. This decline is to be matched by a similar fall in total investment resulting from difficulties in implementing the public investment program. However, the external current account deficit should remain unchanged at about 5 percent of GDP, with an improvement in the terms of trade offsetting a larger reduction in the growth of real exports than that of real imports.

4.  The government pursued a prudent fiscal policy over the past two years. In 1997 the primary deficit fell to 2.5 percent relative to GDP, compared with a target of 3.8 percent, and the overall deficit (on a payment order basis and excluding grants) was reduced to 4.2 percent. The performance of government revenue was satisfactory, while expenditure contracted to 18.8 percent of GDP, or 1.6 percentage points below the target level. Expenditure management improved significantly during the year, but the use of budget allocations fell short of projections for the operating outlays of priority sectors and the public investment program. The wage bill remained below its ceiling as planned recruitments were postponed, owing to delays in organizing required exams.

5.  Despite the power shortage, fiscal policy was much tighter than expected during the first nine months of 1998, mainly on account of a tight control of government expenditure, lower public investment, and higher-than-expected tax receipts. Revenue is estimated to increase from 14.6 percent to 15.3 percent of GDP in 1998, while expenditure is projected to decrease from 18.8 percent to 16.3 percent of GDP. Following the adoption of a merit-based promotion system in the civil service in September 1998, the government decided to raise wages by 10 percent retroactive to January 1998. The increase brings salaries to the level equivalent to the grade positions reached in 1992; it is also a step to definitely resolve the discrepancy between salaries and grades arising from advancement granted during the 1986-91 wage freeze. Overall, the primary balance should be in equilibrium, and the overall deficit on a payment order basis should decline from 4.2 percent to 1.0 percent of GDP in 1998.

6.  The government expects to settle CFAF 15.9 billion in domestic arrears in 1998. However, preliminary results of an inventory conducted by a private auditing firm in October 1998 indicate that verified arrears could still amount to CFAF 12 billion by the end of this year. Also, the government has serviced all external debt during the year. Meanwhile, Benin received debt relief from Russia on Naples terms (applied to total outstanding debt, including arrears, after a discount of 70 percent) in September 1998, and it is holding discussions with other non-Paris Club creditors to obtain debt relief on terms that are at least as favorable. Consequently, about CFAF 39 billion of external arrears could be cleared in 1998. In addition to financing related to investment and debt relief, the deficit in 1998 should be largely covered by loans and grants related to the government's adjustment program (CFAF 27 billion).

7.  Since 1997, the banking system's net claims on the central government have continued to decline as the treasury has increased its deposits. By contrast, owing to the growth in claims on the cotton sector, bank credit to the nongovernmental sector picked up, especially in 1998. Commercial banks continue to maintain a sound financial situation and generally observe the main prudential ratios defined by the West African Economic and Monetary Union (WAEMU) Banking Commission. However, banks were unable to observe the ratio of medium-term assets to medium-term liabilities, and there is a growing concentration of bank claims on the largest borrowers. In August, the Central Bank of West African States (BCEAO) raised its key lending rates (the repurchase rate from 5.50 percent to 5.75 percent; the discount rate from 6 percent to 6.25 percent) and increased the reserve requirements ratio from 1.5 percent to 9.5 percent in Benin. The purpose of these measures is to absorb banks' excess reserves without affecting their profitability, given that reserve requirements can be met with government securities in the banks' portfolios.

8.  Mutual savings banks have developed rapidly to become a major source of financing for microenterprises, as well as for small- and medium-size enterprises, in recent years. These activities are governed by a regional law promulgated in August 1997, and the unit in charge of their supervision in the Ministry of Finance has been operating since January 1998.

9.  Implementation of structural reforms improved in 1998 after some delays in 1997. The National Assembly adopted a law on the new merit-based promotion and compensation system for the civil service in September 1998, and an audit of the retirement fund for the civil service (FNRB) was completed in April 1998. In the area of transportation and infrastructure, the government abolished the monopoly of the public enterprise handling containers at the port of Cotonou (SOBEMAP) in April 1998. The sale of 55 percent of the capital of the public enterprise distributing petroleum products (SONACOP) was delayed because no valid bid was received by December 1997. After modifying the strategy, a new auction has been launched, and the winning bid is expected to be selected before December 31, 1998. Furthermore, private operators have already acquired 25 percent of the company's service stations. The insurance sector was liberalized in November 1997, and the Ministry of Finance authorized several insurance companies to operate in Benin; one of them has taken over the portfolio of contracts from the liquidated national insurance company (SONAR). In July 1998, the government announced its intention to privatize the management of the water and power distribution monopoly (SBEE), and it will shortly undertake a study on the required institutional reform of the sectors. In addition, the government is preparing the laws required to restructure the postal service and liberalize the telecommunications sector.

10.  To consolidate the progress made over the past few years, the government intends to implement rigorously economic and structural reforms and make up for recent delays. The medium-term strategy set out in the policy framework paper for 1998-2001 aims at further reducing financial imbalances, keeping the economy on the path of sustained growth and job creation, and diversifying the productive base. The principal objectives of the medium-term economic program are to achieve an average real GDP growth of 5.5 percent per annum, keep inflation below 3 percent, and reduce the external current account deficits to levels that can be covered without recourse to exceptional financing.

11.  To maintain high real GDP growth, total investment should rise by close to 3 percentage points of GDP between 1998 and 2001. Public investment is expected to recover from 4.7 percent of GDP in 1998 to 7 percent in 2001, with priority given to investment in the education and health sectors and to infrastructure development. Private investment should rise slightly to more than 12 percent of GDP in 2001, as higher levels of investment are anticipated from the enterprises to be privatized and from private firms in the construction and mining sectors. More generally, private investment will benefit from an improvement of the regulatory and judicial framework. The additional investment is expected to be financed by an increase in national saving from 11½ percent of GDP in 1998 to almost 15 percent of GDP in 2001, as private saving is projected to progressively return to the level attained in the mid-1990s.

12.  The government's fiscal policy aims at reducing the debt-to-GDP ratio, as well as increasing social expenditure and investment, which fell to an unsustainable level in 1998. To achieve this dual objective, the primary deficit will be contained below 2 percent of GDP over the medium term, while the overall deficit on a payment only basis will increase by some 2 percentage points to 3 percent of GDP. The authorities intend to strengthen tax administration and expand the tax base, in order to increase total government revenue by about 1 percentage point to 16 percent of GDP by 2001. In particular, the government will aim at raising receipts from indirect domestic taxes so as to offset a decline in the revenue from the cotton sector and from customs. Indeed, the liberalization of the cotton sector is likely to reduce the profits and tax payments of the public enterprise marketing seed cotton (SONAPRA) while boosting producers' income, which is scarcely taxed at present.

13.  The government is also concerned about the revenue impact of the new tariff classification. The classification is to be introduced in January 1999 in the context of the implementation of the common external tariff by WAEMU member countries, which is scheduled for January 2000. The reform will increase the average rate of protection in Benin, where the tariff rates are relatively low. Hence, this reform could have spillover effects on cross-border trade with nonmember countries of the CFA franc zone and increase the domestic prices of some products. To cushion the impact of the reform, and as envisaged under the WAEMU treaty, the government has requested that the classification of eight products be kept unchanged for one year. In addition, with the assistance of development partners, the government will prepare a study on a tax regime for transit trade by June 1999. The recommendations of this study will be discussed with the Fund staff during the discussions for the third-year program.

14.  Public expenditure will increase by 2.5 percentage points of GDP to close to 19 percent by 2001, mainly as a result of the increase in investment expenditure financed from the government's own resources. Most of this expenditure is to be reallocated to health and education, where spending will continue to expand at a rapid rate.

15.  Implementation of the above-mentioned economic policies, as well as of a prudent monetary and credit policy at the regional level, are expected to reduce the external current account deficit from 4.9 percent of GDP in 1998 to 4.5 percent in 2001. The terms of trade gains, expected mainly from a rise in world cotton prices, should more than offset the impact of the higher growth in the volume of imports relative to exports. In addition, the debt relief granted by bilateral creditors since 1996 has significantly reduced the external debt-service burden. Overall, therefore, the reduction in the external current account deficit and the support from the international community to finance investment should improve the country's external position and allow gradual progress toward external viability.

16.  Within the medium-term framework described above, the authorities have adopted an economic and financial program for the period from October 1998 to September 1999, encompassing a set of measures in the following areas: financial policy, restructuring of public enterprises, incentives for private sector development, and social policy. Real GDP is expected to grow by 5.7 percent in 1999, owing to a recovery in economic activity in the aftermath of the power shortage. The principal objectives for 1999 are to reduce inflation to less than 3 percent and bring the external current account deficit to below 4.5 percent of GDP. Taking into account external financing commitments, the overall balance of payments should show a small surplus.

A.  Fiscal Policy

17.  The government has set the target for the primary deficit at 1.4 percent of GDP in 1999. The target for total revenue has been maintained at 15.3 percent of GDP, in light of the uncertainty about revenue from customs duties resulting from implementation of the new tariff classification. In that context, the government has set up an interministerial committee, supported by a technical committee, to pursue implementation of the reform. In addition, revenue from the cotton sector is expected to decline as a result of the worsening financial situation of SONAPRA, partly attributable to a drop in international prices. In the 1999 budget law (approval by the National Assembly is expected at end-December 1998), the government adopted the following specific measures: introduction of the new tariff classification, unification of presumptive profit tax levied on imports to 5 percent (instead of 3 percent and 10 percent), and improvement of the simplified taxation system. Also, efforts to strengthen the performance of tax administration will continue through the implementation of the measures indicated in the PFP (para. 17). In particular, the unit in charge of the taxation of large enterprises will be restructured in accordance with the recommendations of a recent Fund technical assistance mission (including reorganizing and updating all files by taxpayer rather than by individual taxes; increasing department staffing; restructuring auditing services, and transferring to other departments responsibilities for enterprises with sales of less than CFAF 80 million).

18.  The target for overall expenditure has been set at 18.0 percent of GDP in 1999, or 1.7 percentage points higher than in 1998. In order to make resources available for priority sectors and investment, the government will pursue a tight wage policy, leading to a slight decrease in the ratio of the wage bill to GDP from 4.9 percent in 1998 to 4.7 percent in 1999. In view of the pay increase granted at end-1998, no general wage increase is envisaged in 1999, but the recruitments scheduled for education, health, and justice will push the wage bill slightly upward. In this regard, budgetary allocations for education and health are expected to increase from 5.1 percent of GDP in 1998 to 5.5 percent of GDP in 1999. Also, the government intends to increase investment spending from 4.7 percent of GDP in 1998 to 6.2 percent of GDP in 1999, with domestically financed investment almost doubling to 1.5 percent of GDP. In addition, the 1999 budget includes an appropriation of CFAF 1.8 billion for social programs targeted to underprivileged groups.

19.  Following the 1998 inventory, payment of domestic arrears is expected to amount to CFAF 9 billion in 1999. In addition, the government intends to use privatization proceeds (which could be as much as CFAF 8 billion in 1999) to settle local government arrears, repay part of the frozen deposits of the liquidated banks, and pay off part of SONAR's liabilities. These financial transactions will have no impact on the budget deficit. Should privatization proceeds be greater than restructuring expenses, the government intends to deposit the additional amounts in a special bank account, pending discussions on their allocation during the first review of the program. After taking into account the amortization payments for the external debt (CFAF 19 billion) and net bank financing, including net drawings of CFAF 2 billion on the International Monetary Fund, program financing requirements amount to CFAF 76.4 billion in 1999. With project-related financing estimated at CFAF 65 billion, or 4.4 percent of GDP, and grants related to the adjustment program projected at CFAF 11.4 billion, the program is fully financed.

20.  The Ministry of Finance will continue to strengthen the monitoring of budget execution globally and at the level of individual ministries in 1999. The budget and treasury departments, in cooperation with the tax and customs departments and the Autonomous Debt Agency, will prepare each month a rolling three-month cash-flow plan. This plan will be communicated to the national commission in charge of monitoring the adjustment program. The government will also continue the training program for the officials in individual ministries responsible for budget execution, and it will strengthen controls to ensure that all procedures are observed. Furthermore, during the year, the government will implement a strategy aimed at gradually eliminating the widening deficit of the FNRB.

B.  Money and Credit

21.  Monetary policy, which is conducted at the regional level by the BCEAO, will be consistent with the maintenance of the exchange rate peg in 1999 and will be aimed at strengthening the net international reserves of the zone as a whole. Money stock growth is expected to be slightly higher than that of nominal GDP. The growth of net domestic assets of the banking system is projected to slow to the equivalent of 0.6 percent of the beginning-of-period money stock, owing to a reduction in net claims on government and a slowdown in the growth of credit to the nongovernment sector.

22.  The strengthening of the banking sector remains an important objective of the program. The government will continue to implement the recommendations of the WAEMU Banking Commission so as to ensure that commercial banks' lending portfolios remain sound and that all prudential ratios are observed. Since September 1997, the treasury has taken over the responsibility of collecting the loans of liquidated banks from a trustee in charge of the liquidation. For 1999, the target for loan collection has been set at CFAF 0.7 billion, including cash payments and sales of assets. As regards mutual and savings banks, the unit responsible for their supervision will prepare quarterly accounting statements for the main savings banks, starting in June 1999.

C.  Structural Policies

23.  The government will give a new thrust to the implementation of structural policies in 1999 by revitalizing the public administration, disengaging the public sector from commercial activities, and creating a regulatory framework conducive to private sector development and job creation. These reforms are described in detail in the PFP.

24.  The government intends to revitalize the management of the civil service by implementing the new merit-based promotion and compensation system and setting up a single-reference master database of government employees' administrative files. In this context, the government will prepare a policy report by the end of December 1998 defining the new salary grid, the compensation system, and the performance appraisal system, in order to ensure that the compensation policy is fair and transparent. This report will be adopted by the end of March 1999. In addition, the government will complete the study on individual job descriptions in all ministries, which will be used to set objectives against which performances will be appraised. The new system will be tested in a sample of ministries in September 1999 before being applied to all of them in January 2000, and it will be used as the basis for granting salary increases in January 2001.

25.  The government will continue the work undertaken to strengthen civil service management. In particular, the Ministry of Civil Service will complete the verification of the information collected during the 1997 survey, and the payroll and civil service files will be merged in a master database that will become operational in August 1999. The government will maintain the master database, which should ensure that salaries reflect the latest change in the public employees' position and, hence, solve the recurrent problem of high levels of back pay.

26.  The government has launched a wide-ranging program to bring the central government administration closer to the people and increase their participation in the management of local communities. The laws on the decentralization of the administration, recently adopted by the National Assembly, define the responsibilities of the municipalities, providing them with legal and financial autonomy. These entities will replace the current local governments. During 1999, the government will determine the revenue to be earmarked for the municipalities, create the institutions in charge of controlling their financial activities, and establish the rules and procedures necessary for the preparation and monitoring of their budgets. By June 1999, the government will assess the financial situation of local governments and introduce a system for monitoring their budgets. In addition, the budget department will prepare quarterly performance indicators showing the execution of local budgets. The authorities also intend to increase the budgetary responsibilities of the central government representatives at the local level. The government, with technical assistance from its development partners, will take measures to ensure that this transfer of budgetary responsibility does not weaken either budget execution or its monitoring.

27.  The government intends to give renewed impetus to the public divestiture program in order to increase foreign and domestic private investment, and thereby bolster economic growth. It will accelerate the liberalization of the cotton sector by implementing a strategy agreed upon with its development partners. In this connection, the producer price for the 1998/99 crop was increased by 12.5 percent (from CFAF 200/kg to CFAF 225/kg). Furthermore, beginning in December 1998, SONAPRA will sell seed cotton to private ginning enterprises through an auction mechanism. With respect to the petroleum sector, the government will sell a majority share of the capital of SONACOP by March 1999 and liberalize petroleum product prices in July 1999; the management of the oil storage facilities will be determined by the new SONACOP, in conjunction with the other petroleum companies. The government will place under private management two public enterprises jointly owned by Benin and Nigeria by the end of December 1998, as well as the Hôtel Croix du Sud by end-March 1999. In addition, the government will adopt a divestiture strategy for its holdings in the textile sector by the end of December 1998. In the water and power sector, the government's strategy for privatizing the management of the SBEE will be defined and implemented by the end of December 1999. At the same time, the government will implement measures to strengthen the management capacity of the SBEE. Similarly, a strategy will be prepared to restructure the postal services and liberalize the telecommunications sector. Based on this strategy, the government will adopt a plan to separate telecommunications services from postal services by June 1999 and open the capital of the telecommunications entity to private investors by end-1999. In addition, the government, with the support of its development partners, will define a strategy by June 1999 for the public enterprises remaining in its portfolio.

28.  With a view to promoting private sector development, the government included in the draft 1999 budget law a project to create an export processing zone with private capital and management. The decree defining the procedures for setting up the export processing zone will be adopted by the government only after a study on the impact of such a zone on tax receipts has been prepared and discussed with Fund staff. Also, with support from the African Development Bank and the West African Development Bank, the government is seeking to create a development fund for small- and medium-size enterprises, which will receive no budgetary support from the government. Once completed, the fund's financing plan will be discussed with Fund staff.

29.  The government has made it a priority to cushion the impact of the adjustment policy on the most underprivileged segments of the population. As indicated in the PFP, the government will continue to implement its strategy for addressing the social dimensions of development, which was supported by the National Economic Conference in December 1996. The strategy comprises four main areas: (i) strengthen national capacities to design and implement social policies; (ii) improve the knowledge and capacity to monitor living conditions of the most vulnerable groups in the population; (iii) promote community development through microprojects; and (iv) foster job creation. In addition, the government will implement policies to improve access to essential social services.

30.  The overall balance of payments should register surpluses of CFAF 15 billion in 1998 and CFAF 21 billion in 1999, while the external current account deficit is expected to narrow from 4.9 percent of GDP in 1998 to 4.4 percent in 1999. Benin will continue to receive a high level of external assistance in support of investment projects and sectoral restructuring programs, particularly in the areas of education, health, and infrastructure. Exceptional assistance for 1999 is estimated at CFAF 11.4 billion, comprising about CFAF 9.7 billion in financial assistance from the European Union and CFAF 1.7 billion from bilateral donors. In addition, the International Monetary Fund is expected to provide CFAF 7.3 billion under the second annual ESAF arrangement. Beyond 1999, nonproject financing requirements should fall sharply, given the expected fiscal consolidation. Program execution is still subject to a number of risk factors, however, such as delays in the disbursement of external assistance or deterioration in the terms of trade. Any adjustments to the program that might be needed will be identified during the first review.

31.  The government will implement an exchange policy and exchange control regulations consistent with those in force in WAEMU member countries. It will not introduce or intensify foreign exchange restrictions, introduce multiple currency practices, conclude bilateral agreements inconsistent with Article VIII of the Articles of Agreement of the International Monetary Fund; moreover, it will not introduce or intensify import restrictions for balance of payments reasons. A liberal policy will be followed regarding ceilings on travel allowances, and any requests made in good faith exceeding these limits will be granted.

32.  The program will be monitored by means of quarterly quantitative benchmarks, structural benchmarks and indicators established for the period from October 1, 1998 to September 30, 1999, and two reviews. The quantitative limits for end-December 1998 and end-June 1999 constitute program benchmarks; those for end-March 1999 and end-September 1999 constitute program performance criteria, the observance of which is a condition for drawing the second and third loans under the second annual arrangement. The quantitative benchmarks and performance criteria for end-March 1999 and end-September 1999 include (i) a ceiling on net bank credit to the government; (ii) a reduction of the stock of domestic payments arrears; (iii) the nonaccumlation of new external payment arrears by the central government; (iv) a ceiling on new nonconcessional foreign borrowing at terms of 1-12 years, contracted or guaranteed by the central government; and (v) a ceiling on new short-term foreign borrowing, with the exception of regular import financing. The quarterly ceilings on net bank credit to the government will be adjusted downward (or upward), depending on the amount by which exceptional external assistance, excluding debt relief, exceeds (or falls short of) program estimates, as indicated in the attached Table 1.

33.  The structural performance criteria will comprise the following: (i) adoption of a new salary grid, a new compensation system, and a performance appraisal system by end-March 1999; (ii) restructuring of the unit in charge of large enterprises in the domestic tax department and the establishment of a single taxpayer file by end-January 1999; (iii) adoption by March 1999 of an action plan to eliminate the FNRB deficit; and (iv) adoption by June 1999 of a plan to separate the postal service from telecommunications. The structural benchmarks pertain to the sale of 55 percent of capital in SONACOP by end-March 1999, the adoption of a strategy to reform the energy sectors by July 1999, government expenditure on education and health, and collection by the treasury of a minimum of liquidated banks' outstanding claims.

34.  The government of Benin will conduct program reviews with Fund staff by the end of May and the end of November 1999. The first review will examine economic and financial developments in the last quarter of 1998 and the first quarter of 1999, the second review will examine economic and financial developments in the second and the third quarter of 1999 as well as the outlook for the rest of the year, with special emphasis on fiscal developments, civil service reform, and the divestiture program. The government of Benin will provide the Fund, upon request, with any information necessary for monitoring the implementation of economic and financial policies and the achievement of program objectives. The Beninese government believes that the policies set out in this memorandum will enable it to meet the program objectives, and it will take any other measures deemed necessary for that purpose. During the period covered by the arrangement, the Beninese authorities will consult with the Fund on any appropriate measures in accordance with the relevant Fund policies. Furthermore, after the arrangement has ended, the Beninese authorities will continue to consult regularly with the Fund, of their own accord or whenever the Managing Director requests consultations on Benin's economic and financial policies, while Benin has outstanding financial obligations to the International Monetary Fund arising from loans under the arrangement.