A team from the International Monetary Fund (IMF) that visited Benin recently said the country overcomes the low-growth environment that resulted from negative spillovers from Nigeria.
- The economy grew by 4 percent in real terms in 2016, overcoming the low-growth environment that resulted from negative spillovers from Nigeria.
- The authorities are implementing a package of measures to maintain macroeconomic and financial stability and raise living standards.
- IMF staff and the authorities agreed that the early progress in program implementation should be strengthened via timely enactment of the reforms.
The team which was led by Norbert Toé visited Benin from June 7–14, 2017, to review recent economic and financial developments and discuss program implementation ahead of a formal review slated for later this year.
Toé said the economy grew by 4 percent in real terms in 2016, overcoming the low-growth environment that resulted from negative spillovers from Nigeria and that inflation turned negative in 2016 (-0.8 percent), reflecting bumper harvest and low oil prices.
According to the report, the fiscal deficit narrowed in 2016, due to the authorities’ strong measures to contain expenditure, adding that prospects for 2017 and the medium term are favorable and largely dependent on a sustained implementation of the Government’s Action Program (GAP), 2016–21 and the recovery of the Nigerian economy.
“For 2017-19, the budget program foresees an average deficit (including grants) of 4.6 percent of GDP consistent with the sustainability of the budget and the debt. The medium-term macroeconomic framework foresees a shrinkage 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,” Toé said.
He also said that consistent with the economic program supported by the Extended Credit Facility (ECF) arrangement approved by the Executive Board on April 7, 2017, the authorities are implementing a package of measures to maintain macroeconomic and financial stability and raise living standards. They have passed legislation to strengthen domestic revenue
“The authorities have passed legislation to strengthen domestic revenue mobilization and improve the quality of spending to create fiscal space for infrastructure and priority social spending, preserving debt sustainability. They are also implementing reforms to integrate the electronic systems of the tax and customs administrations to enhance their respective efficiencies, strengthen their coordination, and improve revenue mobilization,” he added.
Toé said IMF staff and the authorities agreed that the early progress in program implementation should be strengthened through the timely enactment of the programmed reforms, reiterating that continued efforts to promote good governance and transparency are needed to attract private investments and foster implementation of the GAP, accelerating the implementation of the new harmonized framework at regional level for the resolution of bank failures and the strengthening of the microfinance supervisory body to maintain the stability and development of the financial sector.
He said policies to achieve more efficient financial intermediation and deepening the financial sector are needed to increase rural people’s access to financial services and promote financial inclusion.