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Benin: Second Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for a Waiver of the Nonobservances of a Continuous Performance Criterion—Informational Annex

Author(s):
International Monetary Fund
Published Date:
September 2011
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I. Relations with the Fund

(As of June 30, 2011)

I. Membership Status: Joined: July 10, 1963 Article VIII

II. General Resources Account:

SDR Million%Quota
Quota61.90100.00
Fund holdings of currency59.7296.48
Reserve Tranche Position2.193.53
Notes Issuance
Holdings Exchange Rate

III. SDR Department:

SDR Million%Allocation
Net cumulative allocation59.17100.00
Holdings49.7384.05

IV. Outstanding Purchases and Loans:

SDR Million%Quota
ECF Arrangements45.9174.17

V. Latest Financial Arrangements:

TypeDate of ArrangementExpiration DateAmount Approved

(SDR Million)
Amount Drawn

(SDR Million)
ECFJun 14, 2010Jun 13, 201374.2821.23
ECF 1/Aug 05, 2005Jun 30, 200924.7724.77
ECF 1/Jul 17, 2000Mar 31, 200427.0027.00

VI. Projected Payments to Fund2/

(SDR Million; based on existing use of resources and present holdings of SDRs):

Forthcoming
20112012201320142015
Principal0.090.440.623.936.02
Charges/Interest0.030.170.170.160.15
Total0.110.610.784.096.16

VII. Implementation of HIPC Initiative:

I. Commitment of HIPC assistanceEnhanced

Framework
Decision point dateJuly 2000
Assistance committed
by all creditors (US$ million) 1/265.00
Of which: IMF assistance (US$ million)24.30
(SDR equivalent in millions)18.40
Completion point dateMarch 2003
II. Disbursement of IMF assistance (SDR million)
Assistance disbursed to the member18.40
Interim assistance11.04
Completion point balance7.36
Additional disbursement of interest income 2/1.66
Total disbursements20.06

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts can not be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts can not be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI):

I.MDRI-eligible debt (SDR million)1/36.06
Financed by: MDRI Trust34.11
Remaining HIPC resources1.95
II.Debt Relief by Facility (SDR million)
Eligible Debt
Delivery
DateGRAPRGTTotal
January 2006N/A36.0636.06

The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.

The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.

Decision point - point at which the IMF and the World Bank determine whether a country qualifies for assistance under the HIPC Initiative and decide on the amount of assistance to be committed.

Interim assistance - amount disbursed to a country during the period between decision and completion points, up to 20 percent annually and 60 percent in total of the assistance committed at the decision point (or 25 percent and 75 percent, respectively, in exceptional circumstances).

Completion point - point at which a country receives the remaining balance of its assistance committed at the decision point, together with an additional disbursement of interest income as defined in footnote 2 above. The timing of the completion point is linked to the implementation of pre-agreed key structural reforms (i.e., floating completion point).

IX. Implementation of Post-Catastrophe Debt Relief (PCDR): Not Applicable.

X. Safeguards Assessments:

The Central Bank of West African States (BCEAO) is a common central bank of the countries of the West African Economic and Monetary Union (WAEMU). The most recent safeguards assessment of the BCEAO was completed on March 1, 2010. The 2010 update assessment found that the BCEAO continues to have controls in place at the operational level. The overall governance framework should nonetheless be strengthened by the addition of an audit committee to ensure that the Board of Directors exercises appropriate oversight over the control structure, including the audit mechanisms and financial statements. The Institutional Reform of the WAMU and the BCEAO completed after the approval of the safeguards report stipulated creation of the Audit Committee, which should now start working. Efforts to implement fully the International Financial Reporting Standards reporting framework should also be pursued.

XI. Exchange Arrangement:

Benin is a member of the WAEMU and has no separate legal tender. The union’s common currency, the CFA franc, is pegged to the Euro at a rate of CFAF 655.957 = EUR 1, consistent with the official conversions rate of the French franc to the Euro and the previous fixed rate of the CFA franc to the French franc of CFAF 100 = F 1. Effective January 1, 2007, the exchange arrangement of the WAEMU countries has been reclassified to the category of conventional pegged arrangement from the category of exchange arrangement with no separate legal tender. The new classification is based on the behavior of the common currency, whereas the previous classification was based on the lack of a separate legal tender. The new classification thus only reflects a definitional change, and is not based on a judgment that there has been a substantive change in the exchange regime or other policies of the currency union or its members. The exchange system common to all member countries of the WAEMU is free of restrictions on payments and transfers for current international transactions subject to Fund jurisdiction.

XII. Article IV Consultations:

The last Article IV consultation discussions were held in Cotonou during March 10-26, 2010. The staff report (Country Report No. 10/195; 5/27/10) and selected issues paper were discussed by the Executive Board, and the 2010 Article IV consultation concluded, on June 14, 2010.

XIII. ROSC Assessment:

An FAD mission conducted the fiscal module of a Report on Observance of Standards and Codes (ROSC) in May 2001. The mission recommended the adoption of a three-year action plan containing measures to improve expenditure management. The mission also identified a list of actions to be taken quickly to ensure that the authorities were able to monitor budget execution. The ROSC fiscal transparency module for Benin was circulated to the Board on June 6, 2002 (Country Report No. 02/217). In 2009, the World Bank conducted an Accounting and Auditing ROSC, for which the report was published on April 18, 2009.

XIV. Technical Assistance for the Last Five Years:

A. Headquarters

DepartmentType of AssistanceTime of DeliveryPurpose
LEGTechnical

assistance
April 24-26, 2006Providing in-depth training on the AML/CFT framework.
FADTechnical

assistance
October 10-23, 2006Reviewing the status of implementation of reforms to modernize the tax and customs administrations.
FADTechnical

assistance
October 30-November 13, 2006Conducting a public financial management diagnostic and preparing a reform plan.
FADTechnical

assistance
June 16-30, 2008Conducting a diagnostic of the tax system and preparing a tax policy reform.
FADTechnical

assistance
June 15-26, 2009Assessing progress in modernizing the tax and customs administration and identifying reform priorities.
MCMTechnical

assistance
September 10-24, 2010Conducting a crisis resolution and financial systems vulnerability assessment.

B. AFRITAC West

DepartmentType of AssistanceTime of DeliveryPurpose
FADTechnical

assistance
2006, 2007Customs Administration
FADTechnical

assistance
2006, 2007Public Expenditure Management
FADTechnical

assistance
2006, 2007, 2008Tax Administration
FADTechnical

Assistance
2009Public Expenditure Management
FADTechnical

Assistance
2010Tax administration
FADTechnical

Assistance
2010Customs Administration
FADTechnical

Assistance
2010Tax administration
MCMTechnical

assistance
2006, 2007Bank Supervision and Regulation
MCMTechnical

assistance
2007, 2008Public Debt and Debt Sustainability
STATechnical

assistance
2006Government Finance Statistics
STATechnical

assistance
2007, 2008Multisector Statistics
STATechnical

assistance
2006, 2009National Accounts Statistics
STATechnical

assistance
2006, 2008Real Sector Statistics
STATechnical

Assistance
2009National Accounts Statistics
STATechnical

assistance
2010Government Finance Statistics
MCMTechnical

assistance
2010Public Debt and Debt Sustainability
MCMTechnical

assistance
2010Bank Supervision and Regulation
FADTechnical

assistance
2011Customs Administration
FADTechnical

Assistance
2011Tax Administration
FADTechnical

assistance
2011Public Expenditure Management
STATechnical

Assistance
2011Real Sector Statistics

XV. Resident Representative:

Mr. Farah assumed his position in Cotonou as Resident Representative on June 20, 2011.

II. Joint World Bank-IMF Work Program, 2011-12

TitleProductsProvisional

timing of

mission
Expected

delivery date
A. Mutual information on relevant work programs
Bank work

program in

next 12

months
1. Poverty/Gender Assessment



2. PRSC-7



3. Debt Management Performance Assessment (DeMPA)



4. Review of Central Financial Agencies



5. The Political Economy of Public Finances in Benin
June/July 2012



November 2011



September 2011



September 2011



October 2011
IMF work

program in

next 12

months
1. Second ECF review



2. Third ECF review
July 2011



January 2012
September 2011



March 2012
B. Requests for work program inputs
Fund request

to Bank
Draft technical assistance report on

establishing an energy regulatory

framework
September 2011
Bank request

to Fund
Regular updates on macroeconomic

performance and assessment letters for

PRSC operations
Ongoing
C. Agreement on joint products and missions
Joint products

in the next 12

months
JSAN on new GPRS-III



Debt Sustainability Analysis
July 2011



July 2011
September 2011



September 2011

III. Statistical Issues

A. Assessment of Data Adequacy for Surveillance
General: Data provision has some shortcomings, but is broadly adequate for surveillance. Weaknesses exist in the areas of national accounts, public finance, monetary statistics, and balance of payments.
Real sector statistics: Inadequate resources and weaknesses in data documentation and methodology hamper the accuracy and reliability of the national accounts. Efforts to address these shortcomings are ongoing. Benin participates in WAEMU’s harmonization of statistical methodologies and in the GDDS project for AFRITAC West countries to implement the 1993 SNA. Progress has been slow and the accounts for a few years still need to be converted. The West AFRITAC missions in 2008, 2009, and 2010 sought to accelerate the process and support the compilation of the revised accounts. A statistical register and an industrial production index are being developed, but the implementation has been slower than expected. Consumer price data, measured using the WAEMU harmonized consumer price index, are adequate for surveillance. The methodology for the WAEMU harmonized consumer price index has been updated.
Government finance statistics: The quality of fiscal data is broadly adequate for surveillance, but has some shortcomings in coverage, periodicity, timeliness, and accessibility. The authorities report budgetary central government’s “statement of sources and uses of cash” for publication in the Government Finance Statistics Yearbook, one year after the reference year. The October 2008 and July 2009 STA-GFS missions found that the authorities had yet to compile general government GFS to broaden coverage of nonmarket activities controlled by the government, disseminate the GFS within one quarter after the reference quarter, and present the other major GFS reports to facilitate linkages to other macroeconomic datasets (e.g., the balance sheet).
Monetary and financial statistics: Monetary and financial statistics, compiled and disseminated by the regional Central Bank of West African States (BCEAO), are broadly adequate and their institutional coverage is comprehensive. Accuracy is somewhat hampered by the use of 1990 sorting coefficients to estimate cross border amounts of banknotes among BCEAO countries, which in turn, are used to estimate currency in circulation and to adjust the net foreign assets of each member country.
Balance of payments: External statistics are still affected by shortcomings that prevent an accurate and timely assessment of current account transactions and capital and financial flows. Recent improvements in applying the guidelines of the Balance of Payments Manual, Fifth Edition have not solved the problem. In November 2004, a STA technical assistance mission noted that the human resources devoted to balance of payments statistics by the national agency of the BCEAO were inadequate, and highlighted a series of methodological problems including the use of untested hypotheses and reference bases, the limited coverage of direct investment, and shortcomings in the compilation of net external assets and international investment position. Balance of payments statistics are also disseminated with a lag of almost one year and the international investment position data with a lag of 18 months. Some progress has been achieved in the reconciliation of regional trade data with those of regional partners, and the compilation of trade statistics has been enhanced by the installation of the ASYCUDA customs computer system in all main border customs houses and of ASYCUDA ++ in the port, airport, and some regional offices. Further improvements will require the interconnection between the computer systems of the main customs departments and their integration with the other revenue collecting agencies. Progress is also needed in improving contacts with reporting bodies and enhancing the management of human and technical resources. Financial account data can be improved by extending the coverage of foreign assets of the private non banking sector, expanding the surveys of residents’ foreign assets, and using other data source, such as Bank of International Settlements (BIS) statistics. The BCEAO has updated the compilation of commercial bank data on payments involving nonresidents; however these data are not used to produce annual balance of payments statistics.



External debt data are broadly adequate for surveillance, but are comprehensive only for public and publicly guaranteed debt. Data are collected by the Caisse Autonome d’Amortissement (CAA), which is responsible for signing international loan agreements and servicing the government’s external debt obligations. The CAA’s database is fairly comprehensive and up-to-date, and contains accurate stock data, and produces projected debt-service flows on a loan-by-loan basis, but regular statements are not received from creditors.
B. Data Standards and Quality
Benin commenced its participation in the General Data Dissemination System (GDDS) in 2001; but has since then not updated much of its metadata.An FAD mission conducted the fiscal module of a Report on Observance of Standards and Codes (ROSC) in May 2001.
C. Reporting to STA
Standardized Report Forms (in line with the Monetary and Financial Statistical Manual) are still not regularly used to report monetary data to the IMF. Annual data for balance of payments and international investment position are reported to STA with a lag of about one and a half years.
Benin: Table of Common Indicators Required for Surveillance(As of July 31, 2011)
Date of

latest

observation
Date

received
Frequency

of

Data7
Frequency

of

Reporting7
Frequency

of

publication7
Exchange RatesCurrentCurrentDDM
International Reserve Assets and Reserve Liabilities of the Monetary Authorities14/117/11MMM
Reserve/Base Money4/117/11MMM
Broad Money4/117/11MMM
Central Bank Balance Sheet4/117/11MMM
Consolidated Balance Sheet of the Banking System4/117/11MMM
Interest Rates212/101/11MMM
Consumer Price Index5/117/11MMM
Revenue, Expenditure, Balance and Composition of Financing3 - General Government4NANANANANA
Revenue, Expenditure, Balance and Composition of Financing3- Central Government5/117/11MMNA
Stocks of Central Government and Central Government-Guaranteed Debt520104/11AANA
External Current Account Balance20107/11AAA
Exports and Imports of Goods and Services20107/11AQA
GDP/GNP20104/11AAA
Gross External Debt20104/11AIA
International Investment Position620089/10AAA

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign domestic bank and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability position vis-à-vis nonresidents.

Daily (D); Weekly (W); Monthly (M); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign domestic bank and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability position vis-à-vis nonresidents.

Daily (D); Weekly (W); Monthly (M); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).

Formerly PRGF.

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

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