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Business and Economics > Public Finance

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Cover IMF Staff Country Reports
Benin: Fifth Review under the Extended Fund Facility and the Extended Credit Facility Arrangements, and the Second Review under the Resilience and Sustainability Facility-Press Release; Staff Report; and Statement by the Executive Director for Benin
International Monetary Fund. African Dept.
This paper presents IMF’s Fifth Review under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) Arrangements, and the Second Review under the Resilience and Sustainability Facility (RSF) for Benin. New industries are emerging in Benin, with higher value-added goods’ exports and momentum in information technology and tourism. The 2025 budget recently adopted by Parliament targets compliance with the West African Economic and Monetary Union (WAEMU) fiscal deficit norm of 3 percent of gross domestic product, supported by sustained domestic revenue mobilization and scaling up social spending. The adoption of a predictable mechanism for fuel products that accounts for the specificities of Benin’s local fuel market as well as the related compensatory mechanism is welcome. Early implementation of those schemes will be important. A key challenge ahead for Benin is to further strengthen inclusive policies for an economic transformation that generates jobs and benefits all Beninese.
Keywords:
deficit norm; spending restraint; staff appraisal; services deficit; reform effort; RSF arrangement; Debt sustainability analysis; Capital spending; West Africa; Global; Africa
Cover IMF Staff Country Reports
Benin: Selected Issues
International Monetary Fund. African Dept.
This Selected Issues paper presents stylized facts on Benin’s ongoing economic transformation, and analyzes the country’s new eco-system. A recent IMF paper explores conditions under which the country’s industrial policy could meet its intended goals while avoiding unintended economic distortions down the road. While economic diversification is found to be associated with higher economic growth, evidence on the causal impact of industrial policies is hard to establish. While empirical evidence suggests that Benin’s reliance on traditional sectors, notably the Port of Cotonou, is moderating, economic diversification remains limited. The government embarked on industrial policy with the transformation of local commodities as main engine, including via the launching of a Special Economic Zone (SEZ) in 2020. It is recommending that the authorities should pursue efforts to ensure transparency in the selection of SEZ-related incentives. Intra-regional trade integration holds significant potential for Benin and could support economic diversification. Ongoing post-electoral policy shifts in Nigeria and formalization underway of economic ties between both nations, if permanent, would curb rent-seeking in Benin.
Keywords:
demographics dividend; B. addressing Internet accessibility; infrastructure investment; Beninese government; completion rate; Digitalization; Exports; Global; Sub-Saharan Africa; West Africa
Cover IMF Staff Country Reports
Benin: 2024 Article IV Consultation-Fourth Review under the Extended Fund Facility and the Extended Credit Facility Arrangements, and the First Review under the Resilience and Sustainability Facility, and Request for Modification of a Quantitative Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Benin
International Monetary Fund. African Dept.
This page presents Benin’s 2024 Article IV consultation with Benin, the Fourth Review under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) Arrangements, and the First Review under the Resilience and Sustainability Facility (RSF). The Beninese economy has proven remarkably resilient to recent shocks, supported by continued reform drive and a robust government response made possible by policy space created pre-pandemic. Program performance has been strong. An important priority going forward is to continue anchoring Benin’s growth and development in sustainable and inclusive policies that leave neither region nor socio-economic group behind. Contingency planning remains paramount, considering global uncertainty and regional geo-economic and security headwinds. In this context, the authorities should maintain flexibility in budget execution and stand ready to reprioritize public investment in case shocks materialize. Steadfast implementation of the climate change agenda under RSF will complement EFF/ECF in supporting overall socio-economic resilience in Benin. Initiatives underway to catalyze private climate finance are welcome developments in this regard. Reforming fuel subsidies in a way that accounts for the specificities of Benin’s local fuel market and protect vulnerable groups remains a policy priority.
Keywords:
SDR equivalent; IMF's holding; CFA franc; policy buffer; holdings of SDR; Anti-money laundering and combating the financing of terrorism (AML/CFT); West Africa; Global; Sub-Saharan Africa
Cover Regional Economic Outlook, Sub-Saharan Africa, October 2024
Regional Economic Outlook, Sub-Saharan Africa, October 2024
Reforms amid Great Expectations
International Monetary Fund. African Dept.

Abstract

Sub-Saharan African countries are implementing difficult and much needed reforms to restore macroeconomic stability, and while overall imbalances have started to narrow, the picture is varied. Policymakers face three main hurdles. First, regional growth, at a projected 3.6 percent in 2024, is generally subdued and uneven, although it is expected to recover modestly next year to 4.2 percent. Second, financing conditions continue to be tight. Third, the complex interplay of poverty, scarce opportunities, and weak governance--compounded by a higher cost of living and short-term hardships linked to macroeconomic adjustment--are fueling social frustration. Within this environment, policymakers face a difficult balancing act in striving for macroeconomic stability while also working to address development needs and ensure that reforms are socially and politically acceptable. Protecting the most vulnerable from the costs of adjustment and realizing reforms that create sufficient jobs will be critical to mobilize public support.

Keywords:
Sub-Saharan Africa; Fiscal consolidation; Policy adjustment; Structural reforms; Macroeconomic imbalances; Growth; Inflation; Funding squeeze; Poverty; Governance; Social acceptability of reforms; Political pressures; Job creation; IMF staff calculation; IMF financing arrangement; headline inflation; balancing act; financing constraint; countries in Sub-Saharan Africa; Government debt management; Emerging and frontier financial markets; Global; Africa
Cover IMF Staff Country Reports
Nigeria: 2024 Article IV Consultation-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Nigeria
International Monetary Fund. African Dept.
The 2024 Article IV Consultation discusses that Nigeria, under its new administration, has set out on an ambitious reform path to restore macroeconomic stability and support inclusive growth. The authorities reformed the fuel price subsidies, unified official foreign exchange windows, and are focused on revenue mobilization, governance, and enhancing the monetary and exchange rate policy frameworks, as well as strengthening social safety nets. Near-term risks are tilted to the downside, but determined and well-sequenced implementation of the authorities’ policy intentions would pave the way for faster, more inclusive and resilient growth. Further strengthening bank capitalization and tight supervision are needed to mitigate emerging financial sector stability risks. Improving the functioning of the domestic securities and foreign exchange markets should enhance the monetary transition mechanism and attract capital inflows. Structural reforms can ease near-term policy trade-offs. Nigeria should continue supporting agricultural productivity, sustain actions to reduce oil theft, remove burdensome border procedures, and accelerate climate adaptation measures.
Keywords:
March inflation; inflation projection; monetary policy committee meeting; March production; inflation print; Anti-money laundering and combating the financing of terrorism (AML/CFT); Inflation; Currency markets; Energy subsidies; Global; Africa
Cover IMF Staff Country Reports
Nigeria: Post-Financing Assessment Discussions-Press Release; and Staff Report
International Monetary Fund. African Dept.
This paper presents Nigeria’s post-financing assessment discussions. President Tinubu has moved ahead with important structural reforms: removing fuel subsidies and unifying the various official foreign exchange windows. Growth is projected at 2.9 percent for 2023, and 3 percent in 2024, as hydrocarbon performance revives, including from better control of theft. If the authorities succeed in developing and implementing a comprehensive reform agenda, the medium-term outlook would be much improved. The government’s focus on revenue mobilization and digitalization would improve public service delivery and safeguard fiscal sustainability. The IMF staff assesses that Nigeria’s capacity to repay the Fund is adequate under the baseline. The authorities’ policy intentions are well placed to address risks of a downside scenario where difficult trade-offs may arise between urgent humanitarian needs and debt service, including to the Fund. In such circumstances, aggressive monetary tightening and fiscal adjustment combined with support from development partners would be needed to restore macroeconomic stability.
Keywords:
analytical balance balance sheet; inflation-depreciation spiral; government support; CBN team; CBN financing; CBN definition; Energy subsidies; Inflation; International reserves; Global
Cover IMF Staff Country Reports
Benin: Third Review under the Extended Fund Facility and the Extended Credit Facility Arrangements and Request for an Arrangement under the Resilience and Sustainability Facility-Press Release; Staff Report; and Statement by the Executive Director
International Monetary Fund. African Dept.
This paper discusses Benin’s Third Review under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) Arrangements and Request for an Arrangement under the Resilience and Sustainability Facility (RSF). Robust tax collection is supporting fiscal consolidation, complementing stepped-up budget support from Benin’s development partners and frontloaded Fund disbursements under the EFF/ECF. The RSF will support the authorities’ goal to mainstream climate considerations in policymaking and complement the EFF/ECF in supporting overall socio-economic resilience in Benin. Contingency planning is paramount, considering heightened uncertainty. The authorities should maintain flexibility in budget execution, including a phased approach to their public investment. Sustaining the ongoing reform drive to enhance the rule of law and the anticorruption framework will solidify the institutional foundations of private sector led growth that benefits all Beninese. Remaining vigilant vis-à-vis financial sector risks and promoting financial inclusion will support sustainable growth. They aim at addressing key structural challenges that expose Benin to climate shocks and should help mitigate balance of payment risks and catalyze other sources of climate financing.
Keywords:
government action program II; consolidation effort; RSF arrangement; RSF reform measures build; RSF design; Climate change; Natural disasters; Climate finance; Global; West Africa; Africa
Cover IMF Working Papers
How the Brady Plan Delivered on Debt Relief: Lessons and Implications
Mr. Neil Shenai
and
Marijn A. Bolhuis
Rising debt vulnerabilities in low- and middle-income countries have rekindled interest in a Brady Plan-style mechanism to facilitate debt restructurings. To inform this debate, this paper analyzes the impact of the original Brady Plan by comparing macroeconomic outcomes of 10 Brady countries to 40 other emerging markets and developing economies. The paper finds that following the first Brady restructuring in 1990, Brady countries experienced substantial declines in public and external debt burdens and a sharp pick-up in output and productivity growth, anchored by a comparatively strong structural reform effort. The impact of the Brady Plan on overall debt burdens was many times greater than initial face value reductions, indicating the existence of a “Brady multiplier.” Brady restructurings took longer to complete than non-Brady restructurings. Today, similar mechanisms could be helpful in delivering meaningful debt stock reduction when solvency challenges are acute, but Brady-style mechanisms alone would not solve existing challenges in the sovereign debt landscape, including those related to creditor coordination, domestic barriers to economic reforms, and the increased prevalence of domestic debt, among others.
Keywords:
Brady Plan; sovereign debt restructuring; debt relief; debt sustainability; differences-in-differences; synthetic control method; stock reduction; Brady deal; IMF program performance; IMF working paper 23/258; Brady country; Debt restructuring; Structural reforms; Caribbean; Global
Cover Regional Economic Outlook, Sub-Saharan Africa, October 2023
Regional Economic Outlook, Sub-Saharan Africa, October 2023
Light on the Horizon?
International Monetary Fund. African Dept.

Abstract

Still emerging from the COVID-19 pandemic, countries in sub-Saharan Africa have been hit by a sluggish global economy, worldwide inflation, high borrowing costs, and a cost-of-living crisis. In many cases, inflation is still too high, borrowing costs are still elevated, exchange-rate pressures persist, and political instability is an ongoing concern. To ensure that the coming rebound is more than just a transitory glimpse of sunshine, it is important for authorities to guard against a premature relaxation of stabilization policies, while also focusing on reforms to both claw back lost ground from the four-year crisis and also to create new space to address the region’s pressing development needs.

Keywords:
economic conditions; economic forecasting; Africa economic development; economic policy; sub-Saharan Africa; inflation expectation; inflation-depreciation spiral; funding squeeze; food price inflation; IMF financing arrangement; consumption basket; sub-Saharan Africa face; inflation fall; Inflation; Exchange rates; Food prices; Central bank policy rate; Government debt management; Global
Cover IMF Staff Country Reports
Benin: Technical Assistance Report-Governance Diagnostic
International Monetary Fund. Fiscal Affairs Dept.
,
International Monetary Fund. Legal Dept.
, and
International Monetary Fund. Monetary and Capital Markets Department
This technical assistance report on Benin presents the governance diagnostic. The current President of the Republic Patrice Talon has repeatedly stressed the major importance of good governance for the country’s future and has made it a strong focus of his second term. The Governance Diagnostic shed light on very positive developments in recent or ongoing reforms, but also highlighted what needs to be done to overcome the weaknesses in governance in some areas. Rule of law, contract execution, and protection of property rights have seen some progress. The planned creation of a court specializing in land matters and the establishment of a Commercial Court of Appeal will be welcome additions. Public financial management has seen considerable progress, recognized in particular by the Open Budget Survey 2021. Nevertheless, efforts must still be made to reap all the benefits of the transition to program-based budgeting as far as the administration’s accountability is concerned and to finalize the internal audit and control reform, an essential counterweight to the new responsibilities entrusted to managers.
Keywords:
IMF resident representative; IMF department; Customs governance system; IMF executive director; public finance; computer system; governance diagnostic; IMF's assistance; IMF legal department; IMF Fiscal Affairs Department; investment incentive regime; IMF Monetary; Corruption; Anti-money laundering and combating the financing of terrorism (AML/CFT); Customs administration core functions; Internal audit; West Africa; Africa