- The IMF Executive Board today completed the Sixth Reviews of Benin's Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) and the Third Review under the Resilience and Sustainability Facility (RSF). The decision allows for an immediate disbursement of about US$ 90 million.
- Benin's successful fiscal reforms supported the convergence to the West African Economic and Monetary Union (WAEMU) fiscal deficit norm of 3 percent of GDP one year ahead of schedule, with sustained domestic revenue mobilization and prioritized social spending. The 2025 budget is designed to sustain this achievement.
- A key challenge ahead for Benin is to preserve the reform momentum and strengthen policies that foster inclusive growth and an economic transformation that benefits all Beninese.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) has completed the Sixth Reviews under the 42-month blended Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) arrangements, and the Third Review under the Resilience and Sustainability Facility (RSF) arrangement. The EFF/ECF was approved by the IMF Executive Board in July 2022 (see PR 22/252 ) and complemented by the RSF in December 2023 (see PR 23/452 ).
The completion of the reviews allows for the immediate disbursement of about US$ 36 million (SDR 26.2 million) under the EFF/ECF—bringing total disbursements under the program to about US$ 623 million (SDR 457.6 million)—and of about US$ 54 million (SDR 39.616 million) under the RSF arrangement.
Economic activity in Benin accelerated over the past five years, and markedly in 2024. Growth reached 7.5 percent year-over-year—its highest level yet— and it is expected to remain strong in the medium term. The current account of the balance of payments deteriorated temporarily, due to large professional services imports related to the Glo-Djigbé Industrial Zone (GDIZ). It is expected to recover gradually, as exports from the special economic zones increase and the services deficit continues to moderate over time.
Program performance under the EFF/ECF has been strong, with all end-December 2024 quantitative targets met and structural benchmarks completed. On the RSF front, the authorities adopted new regulations for water resources monitoring, construction, and renewable energy. They also revised electricity tariff regulations to improve the financial sustainability of electricity production and distribution companies. Benin's partners have pledged financial support for the country's climate agenda following COP29 and the 2024 climate finance roundtable. Accordingly, the authorities are working on a climate-related taxonomy that is aimed at further catalyzing climate finance.
Following the Executive Board discussion on Benin, Mr. Okamura, Deputy Managing Director, and acting chair, issued the following statement:
"Benin's performance under its Fund-supported arrangements has been strong. Its strong institutional foundation and the authorities' economic reform drive and sound macroeconomic management have yielded tangible dividends, with high and more stable growth, favorable access to international markets, and continued support from development partners. The authorities should nonetheless remain vigilant to regional and global risks, maintain fiscal discipline and reform momentum, and strengthen inclusive policies.
"Frontloaded fiscal consolidation in 2024 supported Benin's convergence to the West African Economic and Monetary Union (WAEMU) fiscal deficit norm of 3 percent of GDP, one year in advance. The 2025 budget continues to target compliance with the deficit norm, while the fiscal adjustment remains anchored in the Medium-Term Revenue Strategy. In that context, maintaining the tax collection efforts coupled with prudent spending will preserve fiscal discipline. Rebalancing the debt portfolio toward domestic debt over time while remaining cognizant of refinancing risks, in line with the authorities' Medium-Term Debt Strategy, and together with continued proactive debt management, will help mitigate external rollover risks.
"The authorities should continue laying the foundation for inclusive private sector-led growth to entrench the ongoing economic transformation. Fiscal transparency and good governance are key to maintaining market confidence. Further efforts are needed to support the development of SMEs. Regularly updating the social registry and developing a comprehensive mapping of social protection programs will improve the efficiency and targeting of social assistance initiatives toward vulnerable households across the country.
"Continued vigilance by supervisory authorities vis-à-vis public and non-public financial sector risks will help safeguard financial stability and limit contingent liability risks.
"The authorities have revised regulations for water resources monitoring, construction, electricity tariffs, and renewable energy in line with their climate agenda. The authorities should accelerate the reforms aimed at enhancing resilience to climate change and continue to advance their agenda under the Resilience and Sustainability Facility (RSF), to promote long-term balance of payments stability and catalyze private-led climate finance."
