Conclusion of a new 42-month ECF/MEDC agreement with the IMF and Article IV consultations for the year 2022

Benin: conclusion of a new 42-month ECF/MEDC agreement with the IMF and Article IV consultations for the year 2022

Apr 22, 2022

Press releases at the end of the mission include statements from IMF staff teams reporting their preliminary findings after visiting a country. The views expressed in this statement are those of IMF staff and not necessarily those of the Executive Board.

  • The Beninese authorities and the IMF team have reached a staff-level agreement on an innovative 42-month program to support Benin in meeting urgent financing needs (notably related to security challenges, the aftermath of COVID-19 and the war in Ukraine) and support its National Development Plan.
  • Mobilizing revenues, the cornerstone of the reform program of the authorities, prioritizing expenditure and improving its efficiency, will allow to create the necessary budgetary space for an effective response to Benin’s significant needs in terms of of economic development and security. maintain the sustainability of the debt.
  • Strengthening the anti-money laundering and anti-terrorist financing system, together with improving governance and the rule of law, will lay the foundations for inclusive and sustainable private-sector-led growth in an environment of peace and security strengthen.

Washington.
An International Monetary Fund (IMF) team, led by Constant Lonkeng, met with representatives from Benin from April 4-13 in Cotonou and April 19-22 in Washington to negotiate a new program to support the ambitious Action Program 2021-2026 of the Government of Benin and conduct the consultations for the year 2022 under Article IV. The resulting agreement will be submitted to IMF executives and the Governing Council for approval in mid-June 2022.

At the end of the mission, Mr. Lonkeng the following statement:

“I am pleased to announce that the Beninese authorities and the IMF team have reached a new service-level agreement, for a period of 42 months, under both the Extended Credit Facility (ECF) and the Extended Credit Mechanism (MEDC), including in support of the economic and financial program of the Benin authorities. The exceptional access provided under this program at a cost of SDR 484,058 million (approximately $700 million, or 391 percent of the country’s quota) is intended to help Benin meet urgent financing needs, the macro-economic maintain economic stability and support its national development plan aimed at achieving the Sustainable Development Goals (SDGs).

“Benin has made significant progress in its macroeconomic management over the past five years, placing the economy on a solid foundation. However, the country is now facing the combined effects of the deterioration of the regional security situation, the COVID-19 pandemic and the erosion of purchasing power in a context marked by the war in Ukraine. IMF staff and Benin authorities have agreed on an innovative program, the first under IMF policies to apply to high combined credit exposure, to support the economy in the short term while continuing policies and reforms to promoting inclusive and sustainable private sector-led growth in an environment of peace and security.

“Mobilising revenue is the cornerstone of the authorities’ reform agenda. Together with prioritizing expenditures and improving their efficiency, this strategy will create the necessary fiscal space to meet Benin’s important development and security needs, while preserving debt sustainability. In order to achieve this objective, it is of course necessary to pursue a medium-term public finance consolidation policy, based on Benin’s performance in sound public finance management. This means narrowing the tax revenue gap vis-à-vis peers, in particular through the short-term rationalization of tax expenditures and the progressive broadening of the tax base, in particular through the development of a revenue mobilization strategy in the medium term which improves the overall efficiency of the tax system.

“Given the level of income inequality in Benin, the IMF-supported program under the ECF/MEDC aims at ‘development for human prosperity’ by improving access to public services and the state’s presence in vulnerable areas , in line with the “civilian approach” to mitigating security risks. Achieving these ambitious goals will require an unwavering commitment to reform and strong technical and financial support from Benin’s development partners to complement the exceptional financial support of the IMF , largely concentrated in the year in classes.

“Strengthening the anti-money laundering and countering terrorist financing framework, governance and the rule of law should further strengthen trust in national institutions and consolidate the foundations for sustainable sector-driven growth. Pursuing digital transformation and building the resilience of the economy to climate change would help achieve Benin’s development goals and further unlock the country’s growth potential.

“The team met Mr. Wadagni, Minister of State, Minister of Economy and Finance, Mr. Bio Tchané, Minister of State, Minister of Development and Coordination of Government Actions, Mr. Dagnon, Special Adviser to President Talon, Mr. Assilamehoo, National Director of the BCEAO (Regional Central Bank), General Bada, Director of the Military Cabinet of the President of the Republic, representatives of the Ministry of Social Affairs and Microfinance and Banking Commission of the WAMU based in Abidjan, senior officials of the Beninese government, representatives of civil society and business and various donors, including representatives of the African Development Bank, the World Food Program and the World Bank.

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

IMF Communications Department
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