The COVID-19 pandemic has severely affected Benin. The authorities’ early and decisive action has helped stave off the spread of the virus, and a sizeable fiscal response has kept a recession at bay. Nevertheless, the economy has suffered a substantial downgrade in its economic outlook, with growth slowing down from 6.9 percent in 2019 to 2 percent in 2020, against an initial projection of 7 percent before the pandemic. Large financing needs, opened by the authorities’ fiscal response to the crisis, have given rise to an urgent balance of payments need.
This paper discusses Niger’s Fifth Review Under the Extended Credit Facility Arrangement and Request for Modification of Performance Criteria. Niger faces daunting development challenges, aggravated by terrorist incursions, climate change, and low uranium export prices. Presidential elections are due in late 2020. Reforms are advancing and economic activity is reasonably strong. Program implementation has been broadly satisfactory. All quantitative targets for end-June 2019 were met. However, a subsequent weakening of revenues, partly due to Nigeria’s closure of its borders to trade, as well as topped-up budget support, required mitigating policy measures and the adjustment of end-December 2019 targets. Structural reforms are advancing with delays. Niger can strengthen prospects for a successful transition by securing favorable contractual arrangements with foreign investors; establishing a framework for administering oil resources in line with good practices, notably channeling all revenues directly through the Treasury; and increasing spending on physical and human capital, while being mindful of the inherent volatility in natural resource revenues.
Mindaugas Leika, Hector Perez-Saiz, Ms. Olga Ilinichna Stankova, and Torsten Wezel
The paper finds that supervisory stress tests are conducted in more than half of sub-Saharan African countries, particularly in western and southern Africa, and that the number of individual stress tests has grown exponentially since the early 2010s. By contrast, few central banks publish assessments of macro-financial linkages; the focus leans more toward discussing trends and weaknesses within the financial sector than on outside risks that may negatively affect its performance.
This paper discusses Benin’s Fifth Review Under the Extended Credit Facility Arrangement, Request for Extension, and Request for Modification of Performance Criteria. Program implementation continues to be very satisfactory. The macroeconomic and structural policies outlined by the authorities are adequate to pursue the program’s objectives, and risks to program implementation are deemed manageable. Benin’s economic performance remains strong despite a less supportive external environment and the border closure with Nigeria. The significant increase in the share of external debt in total debt in the past two years warrants caution. The recent debt reprofiling operation and the Eurobond issuance have contributed to lowering borrowing costs, diversifying the financing structure, and extending debt maturity. However, these operations can also generate new vulnerabilities that will need to be mitigated through an enhanced debt management strategy and continued capacity improvements at the debt management office.