Benin: IMF team foresees favourable economic outlook in Benin

Cotonou, Benin (PANA) – The medium-term outlook of Benin’s economy continues to be favourable with high growth and low inflation, which would be facilitated by an efficient implementation of the government’s Action Programme, 2016–21 and the recovery of the Nigerian economy, according to the International Monetary Fund (IMF) experts.

“In 2016, Benin’s economy weathered negative spillovers stemming from a difficult external environment and grew by 4 percent with an acceleration expected in 2017,” said Norbert Toé, IMF Mission Chief for Benin in a statement released Wednesday at the end of a two-week visit to Cotonou by the Fund’s staff team.

During the visit, the team held discussions with Benin authorities on the 2017 Article IV consultation and the first review under the Extended Credit Facility (ECF) arrangement which was approved by the IMF Executive Board in April 2017.

The discussions covered economic and financial developments in 2016 and 2017 and policies needed to foster inclusive growth, preserve fiscal and debt sustainability, increase the efficiency of public spending, and promote financial stability and inclusion.

“In 2016, Benin’s economy weathered negative spillovers stemming from a difficult external environment and grew by 4 percent with an acceleration expected in 2017. Economic growth was driven by strong agricultural production, an increase in public investment, and a buoyant tertiary sector. Inflation remained negative in 2016 and through end-August 2017 but is forecasted to average 0.6 percent in 2017,” said Mr. Toé.

According to the team, Benin’s revised budget approved by parliament in July 2016 was instrumental in reducing the budget deficit (including grants) to 6 percent of gross domestic product (GDP) from 8.0 percent in 2015.

“For 2017, better-than-programmed domestic revenue performance and a rigorous spending management are expected to lead to a smaller than programmed budget deficit. Nonetheless, the rising burden of domestic debt service requires attention,” Mr. Toé observed while summarizing the team’s findings.

"Despite the favourable economic outlook, the team and the authorities agreed that there are challenges that need to be addressed going forward. These include prioritizing public expenditures to foster inclusive growth and to reduce poverty; accelerating the tax and customs administration reforms to mobilize more domestic resources; making public investment more efficient to sustain the expected growth over the medium term, and strengthening debt management to preserve public debt sustainability,” he said.

The IMF mission has encouraged authorities to continue to allocate more resources to priority social programmes to protect the most vulnerable segments of the population.

“The IMF will continue to support the authorities’ reform agenda and in this regard, the staff team reached understandings on the main objectives of the economic program for 2018,” said the mission leader.

He noted that the fiscal consolidation path foresees a significant reduction of the deficit to 1.9 percent of GDP in 2019, well below the West African Economic and Monetary Union convergence criterion of 3 percent of GDP.
-0- PANA AR 27Sept2017

27 september 2017 20:09:39

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