The IMF opens its floodgates in Benin, one of the highest growth rates in 2020

“The strong macroeconomic fundamentals entering COVID-19 have provided Benin with much needed fiscal space and continued access to finance, which has helped to increase economic activity by 3.8% in 2020, l ‘one of the strongest growth rates among developing countries’.

This is the finding of the last IMF mission to Benin. In its press release published on November 23, the mission chaired by Constant Lonkeng and which conducted virtual and physical meetings from November 15 to 23, noted a “solid economic recovery underway”, with the normalization of goods traffic at the port of Cotonou , one of the main economic engines of Benin, giving an additional impetus.

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

“Benin’s three-year Extended Credit Facility (ECF) agreement (approximately $ 255 million, including access increase of $ 103 million at the onset of COVID-19) ended in May 2020. To further support the population of Benin through the pandemic, the IMF Executive Board approved emergency financing under the Rapid Credit Facility and the Rapid Financing Instrument ($ 178 million) in December 2020. Benin also benefited from the IMF’s general SDR allocation ($ 168 million, 1% of GDP) in August 2021.

“The strong macroeconomic fundamentals entering COVID-19 have provided Benin with much needed fiscal space and continued access to finance, which has helped contain the economic fallout from the crisis. The government responded quickly to the pandemic, devising a package of health-related mitigation and economic support measures to the tune of 4.5% of GDP spanning 2020-2022. This, together with a strong surge in public investment and a health belt around the cities most exposed to the pandemic, helped to increase economic activity by 3.8%, one of the fastest growth rates among developing countries in 2020.

“A solid economic recovery is underway despite the setbacks in agriculture against the backdrop of climatic events, the normalization of goods traffic at the port of Cotonou, one of the main economic engines of Benin, providing additional impetus. While headline inflation has remained subdued, food prices have risen (8% in October 2021, year-on-year), reflecting both global factors and negative national weather events.

“Benin recently went through its most severe wave of COVID-19 infections, with the number of weekly confirmed cases peaking at 4,760 in September. While the situation has since improved, the vaccination rate, although rising, remains low (only around 460,000 people or 3.7% of the population have been fully vaccinated), making the country vulnerable to future potential epidemics. The authorities are reorganizing their immunization strategy, including through close engagement with local communities and expanding deployment capacity.

“The mission noted the online publication of procurement documents and key information on contracts related to major projects implemented as part of the COVID-19 response plan. The operationalization of the Court of Accounts – formerly the Chamber of Accounts – following an institutional change away from the Supreme Court is underway. This transition has delayed the independent ex post audit of COVID-19 funds, which authorities intend to speed up to help preserve the integrity of emergency funding and build confidence in public institutions.

“The mission discussed recent economic developments and outlook, including the impact of the COVID-19 pandemic, and inquired about budget execution under the Supplementary 2021 and assumptions that under- outline the 2022 budget, as well as the authorities’ political priorities for the future. These facts will inform the upcoming Article IV consultation and discussions on a possible program supported by the Benin Fund, which is expected to take place early next year.

“The mission met the Principal Minister of Economy and Finance Wadagni, the Minister of Development and Coordination of Governmental Action Bio Tchané, the Minister of Health Hounkpatin, the Minister of Social Affairs and Microfinance Tognifodé , the National Director of the BCEAO (the regional central bank) Assilamehoo, other senior government officials, civil society, representatives of the business community, including the national federation of small and medium enterprises, the banking association, as well as than other private sector actors in Cotonou and other municipalities.

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

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