IMF Executive Board Completes Third Review of Extended Credit Facility Agreement with Benin and Approves US $ 22.0 Million Disbursement • The decision of the board of directors makes it possible to immediately disburse 22 million US dollars in favor of Benin. • The objective of the program is to support the country’s economic and financial reform program and mainly aims to raise living standards and preserve macroeconomic stability. • To ensure debt sustainability, it is essential to keep the budget deficit below 3% of GDP in 2019 and beyond. On December 6, 2018, the Board of Directors of the International Monetary Fund (IMF) completed the third review of the three-year agreement with Benin under the Extended Credit Facility (ECF). This decision by the Board of Directors disburses SDR 15.917 million (approximately US $ 22.0 million) immediately to Benin, bringing total disbursements under the arrangement to SDR 63.668 million (approximately US $ 88.1 million). In completing the review, the Board of Directors also approved the request presented by Benin to establish the conditionality of the program for 2019, and granted a waiver for non-compliance with the continuous performance criterion relating to the non-accumulation of new payment arrears relating to domestic debt. The three-year agreement with Benin for an amount of SDR 111.42 million (approximately US $ 154.2 million, or 90% of the country’s quota at the time of approval of the agreement) was approved on April 7, 2017 (see press release n ° 17/124). Its objective is to support the country’s economic and financial reform program, and mainly seeks to raise living standards and preserve macroeconomic stability. Following the discussions by the Board of Directors, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Interim President, made the following statement: “Benin’s performance under the ECF-supported program remains solid. The budgetary position has improved significantly, mainly due to the containment of expenditure. The growth momentum continues, and the medium-term economic outlook is favorable, driven by increased demand from Nigeria and a better climate for private investment. “To ensure debt sustainability, it is essential to keep the budget deficit below 3% of GDP in 2019 and beyond. The proposed finance law for 2019, which is in line with the WAEMU convergence criterion for the deficit, provides for an ambitious effort to mobilize tax revenue. This will help strengthen the revenue strategy, reducing reliance on windfall non-tax revenue and prioritizing sustainable tax measures that broaden the tax base. “To ensure the sustainability of public finances, it is also essential to improve public debt management. The authorities should continue their efforts to extend the average maturity of the debt and reduce interest charges. The recent debt reprofiling operation is a step in the right direction. “To sustain high growth, it is necessary to involve the private sector more in the years to come. Benin’s economic growth has picked up since 2016, in part due to increased public investment. With the consolidation of public finances underway, the private sector will have to become the main engine of growth. It will be necessary to continue to improve the business climate, to carry out new reforms that facilitate access to electricity and credit, as well as to strengthen the system to fight corruption. “
