The Executive Board of the International Monetary Fund (IMF) today completed the sixth review of Benin's economic performance under a program supported by the Extended Credit Facility (ECF) arrangement.1 The Board's decision, which was taken without a formal meeting and enters into effect today,2 enables the immediate disbursement of an amount equivalent to SDR 10.61 million (about US$-16.4 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 74.28 million (about US$114.5 million).
In completing the reviews, the Board granted waivers for the nonobservance of the continuous performance criterion on new non-concessional external debt with a maturity of more than one year.
The ECF arrangement for Benin was approved on June 14, 2010 (see Press Release No.10/243) for the equivalent of a total of SDR 74.28 million (about US$114.5 million).
Benin's growth is projected to reach about 5½ percent in 2014 for the third consecutive year. This performance has closed the gap in per capita GDP growth between Benin and the Sub-Saharan African (SSA) average which was about 2 percentage points on average between 2005 and 2011.
Program performance was satisfactory and most criteria were met except for the ceiling on non-concessional borrowing. Thanks to prudent fiscal policy, macroeconomic performance remains satisfactory and progress has been achieved in structural reforms. The implementation of the new approach to customs reform is moving ahead well despite some delays.
Sound policies have created fiscal space for scaling up investment to create favorable conditions for sustainable long-term growth. To preserve the authorities' achievements under this ECF arrangement, rising investment has to be accompanied by further progress in public financial management and integrated into a medium-term framework anchored in debt sustainability. In addition, the government has initiated reforms to strengthen the efficiency of investment spending. Government efforts to enhance the business environment are starting to show some results, but broad-based reforms will be necessary to improve productivity.
1 The ECF is the IMF's main tool for medium-term financial support to low-income countries. Financing under the ECF currently carries a zero percent interest rate, with a grace period of 5½ years, and a maturity of 10 years (http://www.imf.org/external/np/exr/facts/ecf.htm).
2 The Executive Board takes decisions without a meeting when it is agreed by the Board that a proposal can be considered without convening formal discussions.