The Executive Board of the International Monetary Fund has approved a three-year arrangement under the Extended Credit Facility (ECF) for Benin for an amount equivalent to SDR111.42 million (about US$ 151.03 million, or 90 percent of Benin’s quota) to support the country’s economic and financial reform program.
This new program aims to address Benin’s protracted balance of payments needs, and alleviate the impediments to inclusive growth, and poverty reduction by creating fiscal space for infrastructure investment and priority social spending. It is also aimed at helping to catalyze official and private financing and build resilience to future economic shocks.
The Executive Board’s decision will enable an immediate disbursement of SDR 15.917 million (about US$ 21.58 million). The remaining amounts will be phased over the duration of the program, subject to semi-annual reviews.
Program summary
The new program aims to create fiscal space by stepping up domestic revenue mobilization and enhancing the efficiency of government spending; increasing gradually absorptive capacity to scale up investment; strengthening public debt management, and promoting private sector investment by strengthening institutions and improving the business environment while preserving debt sustainability.
More importantly, it will aim to ensure that scaled-up public investment is consistent with debt sustainability. This is particularly important for Benin, as recent borrowing has significantly reduced available fiscal space, and potential risks from growth shortfalls, fiscal slippages, and contingent liabilities from state-owned enterprises have materialized.
The overarching macroeconomic policy goal is to limit the present value of non-financial public sector debt to no more than 50 percent of GDP.
To this end, current indicative projections for the 2018 and 2019 budgets will be reassessed in future program reviews against debt developments as assessed through the debt sustainability analysis.
Background
Benin, which became a member of the IMF on July 10, 1963, has an IMF quota of SDR 123.80 million.
Source: Africafeeds.com/ Fred Dzakpata
