The Executive Board of the International Monetary Fund (IMF) today completed the second review of Benin’s economic performance under the program supported by the Extended credit Facility (ECF). The approval will enable the immediate disbursement in an amount equivalent to SDR 10.61 million (US$16.9 million), bringing total disbursements under the program to an amount equivalent to SDR 31.84 million (US$50.6 million).
In completing the review, the Executive Board granted a waiver for nonobservances of the performance criterion on the concessionality of external debt. The three-year ECF arrangement for Benin was approved on June 14, 2010 (see Press Release No. 10/243) in an amount equivalent to SDR 74.28 million (about US$118 million).
Following the Executive Board’s discussion on Benin, Mr. Min Zhu, Deputy Managing Director and Acting Chair, issued the following statement:
“After overcoming setbacks and a natural catastrophe in 2010, economic recovery is expected to accelerate in 2011. Growth is expected to strengthen to close to 4 percent, led by a resumption of investment and post-flood reconstruction, a rebound in agriculture, and growth in the region. Inflation is projected to remain subdued.
“Program implementation has been broadly satisfactory during the second program review period. All end-March 2011 quantitative targets were met, with the exception of the floor on priority social spending, which was missed amid restraint in expenditure execution. The implementation of the structural reforms has been mixed. Since March, the continuous performance criterion on nonconcessional external debt has been missed. The authorities are taking measures to strengthen performance in these areas.
“A prudent fiscal policy remains essential to preserve macroeconomic stability. Enhancing revenue mobilization in the second half of the year will be critical for generating fiscal space for priority spending. Strengthening public financial management and mobilizing external concessional assistance remain key to consolidate recent gains in debt sustainability and strengthen resilience to shocks.
“The authorities are committed to keeping the wage bill within the program envelope in 2011. This policy would be conducted within the framework of a comprehensive civil service reform.
“Important structural reforms will be introduced in the remainder of 2011 and 2012. The envisaged new reforms would reinforce the program by expanding the tax base and encouraging tax compliance, and improving the efficiency of public enterprises,” Mr. Zhu added.