On June 21, 2019, the Board of Directors of the International Monetary Fund (IMF) completed the fourth review of the three-year agreement in favor of Benin under the Extended Credit Facility (ECF). The Board’s decision disburses SDR 15.917 million (approximately $ 22 million) immediately to Benin, bringing total disbursements under the arrangement to SDR 79.585 million (approximately $ 110. $ 4 million). In completing the review, the Board of Directors also approved the request presented by the Beninese authorities for a modification of the performance criteria relating to the basic primary balance, net domestic financing and new external debt contracted or guaranteed by the government. ‘State. The three-year agreement in favor of Benin, for an amount of SDR 111.42 million (approximately $ 154.6 million, or 90% of the country’s quota when the agreement was approved), was approved on April 7, 2017 (see press release n ° 17/124). It aims to support the country’s economic and financial reform program, and emphasizes raising living standards and preserving macroeconomic stability. Following the discussions by the Board of Directors, Mr. David Lipton, Senior Deputy CEO and Interim Chairman, made the following statement: “The macroeconomic and budgetary results obtained by Benin under the program supported by the IMF remain solid. All the quantitative performance criteria at the end of 2018 and all the structural benchmarks were observed. The macroeconomic and structural measures stated by the authorities are appropriate to achieve the objectives of the program and the risks surrounding the execution of the program are considered to be manageable. “To ensure debt sustainability, it is essential to keep the budget deficit below 3% of GDP in 2019 and beyond. The authorities are implementing an ambitious package of tax measures that focus on reducing tax expenditures. The deficit should thus be reduced from 4.0% of GDP in 2018 to 3.0% of GDP in 2019. Revenues are expected to continue to increase after 2019, notably thanks to the exploitation of the full potential of value added tax and excise duties. An additional effort on the revenue side will create fiscal space for social spending and avoid further cuts in public investment. It will also contribute to the regional strategy aimed at promoting external stability at the level of the WAEMU. “Prudent fiscal policy will help keep the debt ratio on a firmly downward path. The debt-to-GDP ratio is expected to decline in 2019 after five years of continuous increases. The issuance of a Eurobond in March 2019 will not increase debt, as the authorities have decided to reduce domestic borrowing by the same amount. The euro bond paves the way for increased access to non-concessional external financing in the future; it will help diversify sources of financing and open up possibilities for extending debt maturities. However, it could also create new vulnerabilities that will need to be carefully monitored and mitigated through a strengthened debt management strategy. “To promote vigorous and inclusive growth, it will be important to continue to strive to improve the business climate, diversify the economy and invest in human capital. “
