Abstract
Benin has made significant progress in consolidating macroeconomic stability under the IMF-supported program. Its prudent fiscal policy has kept fiscal deficits at manageable levels and is projected to yield a basic primary surplus in 2012. The Executive Board of the International Monetary Fund (IMF) suggested that the authorities hold current expenditures to provide space for infrastructure spending and meet medium-term fiscal objectives. Benin’s authorities are committed to maintain sound macroeconomic policies, pursue the implementation of critical structural reforms, and take further measure to achieve program objectives.
Key Assumptions Under the Baseline Scenario
1. The medium-term macroeconomic outlook has been revised downward to reflect a more challenging environment, but the assumptions under the baseline scenario remain broadly in line with those used in the previous DSA. Near-term growth and export perspectives have deteriorated moderately, because of the continuing global crisis (Text Table 1). Real GDP growth is still expected to increase to 5 percent over the long term, following the implementation of structural reforms aimed at strengthening competitiveness and improving public infrastructure. The primary fiscal deficit2 and the non-interest external current account deficit are expected to stabilize at 1¼ percent of GDP and at about 4 ½ percent of GDP, respectively. Over the medium-term, it is assumed that the authorities will continue to benefit from sizeable concessional borrowing from multilateral donors. Domestic public debt is projected to start declining in 2013, owing to the clearance of domestic arrears and the authorities’ prudent borrowing strategy.
Benin: Evolution of selected macroeconomic indicators
Benin: Evolution of selected macroeconomic indicators
| 2011 | 2012 | 2013 | ||||
|---|---|---|---|---|---|---|
| Real GDP growth (percent) | ||||||
| Previous DSA | 3.8 | 4.3 | 4.8 | |||
| Current DSA | 3.5 | 3.5 | 3.8 | |||
| Growth of exports (percent) | ||||||
| Previous DSA | 15.3 | 4.9 | 4.8 | |||
| Current DSA | -18.9 | 3.9 | 8.9 | |||
| Non-interest current account deficit (percent of GDP) | ||||||
| Previous DSA | 7.4 | 7.2 | 6.6 | |||
| Current DSA | 9.7 | 9.2 | 9.2 | |||
| Primary fiscal deficit (percent of GDP) | ||||||
| Previous DSA | 0.8 | 0.9 | 0.1 | |||
| Current DSA | 1.4 | 0.1 | 0.6 | |||
Benin: Evolution of selected macroeconomic indicators
| 2011 | 2012 | 2013 | ||||
|---|---|---|---|---|---|---|
| Real GDP growth (percent) | ||||||
| Previous DSA | 3.8 | 4.3 | 4.8 | |||
| Current DSA | 3.5 | 3.5 | 3.8 | |||
| Growth of exports (percent) | ||||||
| Previous DSA | 15.3 | 4.9 | 4.8 | |||
| Current DSA | -18.9 | 3.9 | 8.9 | |||
| Non-interest current account deficit (percent of GDP) | ||||||
| Previous DSA | 7.4 | 7.2 | 6.6 | |||
| Current DSA | 9.7 | 9.2 | 9.2 | |||
| Primary fiscal deficit (percent of GDP) | ||||||
| Previous DSA | 0.8 | 0.9 | 0.1 | |||
| Current DSA | 1.4 | 0.1 | 0.6 | |||
2. The large size of the informal sector complicates the DSA for Benin. The large size of the informal economy, and above all the large amount of imports that subsequently become unregistered exports to Nigeria, lead to an overestimation of the external current account deficit and to large residuals in the external debt sustainability analysis.
3. Risks to the baseline are skewed to the downside. Externally, the deterioration of the global environment could result in lower-than-expected exports,3 foreign direct investment, and remittances. Domestically, much will depend on maintaining prudent macroeconomic policies and implementing structural reforms that will boost the economy’s supply response. The current assessment also critically depends on the authorities’ debt management capacity and the availability of concessional external assistance to finance investment projects.
External and Public Debt Sustainability
A. External Debt Sustainability Analysis
4. With all debt indicators expected to remain below their relevant policy-dependent thresholds, the most extreme shock scenario4 shows that some vulnerability persists (Figure 1, Tables 1 and 2). Stress tests reveal Beninese external debt suitability is vulnerable to a one-time depreciation of the exchange rate and an export shock. In the most extreme shock scenario, the present value (PV) of the debt-to-exports ratio is expected to increase significantly without, however, breaching its threshold.5 The other indicators are also sensitive to the most extreme shock, although to a lesser extent. The historical scenario shows another significant vulnerability to external debt sustainability. 6
Benin: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios, 2012–2032 1/
Citation: IMF Staff Country Reports 2013, 009; 10.5089/9781475592917.002.A003
Sources: Beninese authorities; IMF and World Bank staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio in 2022. In figure b. it corresponds to a One-time depreciation shock; in c. to a Exports shock; in d. to a One-time depreciation shock; in e. to a Terms shock and in figure f. to a One-time depreciation shockBenin: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios, 2012–2032 1/
Citation: IMF Staff Country Reports 2013, 009; 10.5089/9781475592917.002.A003
Sources: Beninese authorities; IMF and World Bank staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio in 2022. In figure b. it corresponds to a One-time depreciation shock; in c. to a Exports shock; in d. to a One-time depreciation shock; in e. to a Terms shock and in figure f. to a One-time depreciation shockBenin: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios, 2012–2032 1/
Citation: IMF Staff Country Reports 2013, 009; 10.5089/9781475592917.002.A003
Sources: Beninese authorities; IMF and World Bank staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio in 2022. In figure b. it corresponds to a One-time depreciation shock; in c. to a Exports shock; in d. to a One-time depreciation shock; in e. to a Terms shock and in figure f. to a One-time depreciation shockBenin: External Debt Sustainability Framework, Baseline Scenario, 2009-2032 1/
(In percent of GDP, unless otherwise indicated)
Includes both public and private sector external debt. Some debt series may not be directly comparable to those presented in Table 1 of the staff report owing to different exchange rate and interest rate forecasts at the time of the preparation of this document.
Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.
Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; capital grants; and valuation adjustments. For projections also includes contribution from price and exchange rate changes.
Assumes that PV of private sector debt is equivalent to its face value.
Current-year interest payments divided by previous period debt stock.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Defined as grants, concessional loans, and debt relief.
Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).
Benin: External Debt Sustainability Framework, Baseline Scenario, 2009-2032 1/
(In percent of GDP, unless otherwise indicated)
| Actual | Historical Average | Standard Deviation | Projections | 2012-2017 Average | 2018-2032 Average | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | Average | 2022 | 2032 | Average | ||||||
| External debt (nominal) 1/ | 15.7 | 17.9 | 17.7 | 17.3 | 18.0 | 18.3 | 18.8 | 19.2 | 19.8 | 19.5 | 17.3 | |||||||
| o/w public and publicly guaranteed (PPG) | 15.7 | 17.9 | 17.7 | 17.3 | 18.0 | 18.3 | 18.8 | 19.2 | 19.8 | 19.5 | 17.3 | |||||||
| Change in external debt | -0.8 | 2.3 | -0.2 | -0.4 | 0.7 | 0.4 | 0.4 | 0.4 | 0.6 | -0.4 | -0.2 | |||||||
| Identified net debt-creating flows | 7.5 | 4.4 | 5.2 | 5.9 | 5.8 | 4.7 | 4.0 | 3.6 | 4.2 | 3.6 | 1.1 | |||||||
| Non-interest current account deficit | 8.7 | 7.0 | 9.7 | 7.5 | 1.5 | 9.2 | 9.2 | 8.3 | 7.8 | 7.5 | 7.3 | 6.8 | 4.2 | 6.0 | ||||
| Deficit in balance of goods and services | 13.4 | 10.6 | 12.7 | 12.7 | 12.6 | 11.8 | 11.3 | 11.1 | 11.0 | 10.3 | 7.9 | |||||||
| Exports | 16.5 | 20.6 | 15.0 | 15.1 | 15.3 | 15.8 | 15.8 | 15.8 | 16.3 | 18.8 | 24.0 | |||||||
| Imports | 29.8 | 31.1 | 27.6 | 27.7 | 27.9 | 27.6 | 27.0 | 26.8 | 27.2 | 29.1 | 31.8 | |||||||
| Net current transfers (negative = inflow) | -5.0 | -4.1 | -3.2 | -5.0 | 1.0 | -3.7 | -3.6 | -3.6 | -3.5 | -3.6 | -3.6 | -3.8 | -3.9 | -3.8 | ||||
| o/w official | -3.9 | -3.0 | -1.8 | -2.3 | -2.1 | -2.0 | -1.9 | -1.9 | -1.9 | -1.9 | -1.9 | |||||||
| Other current account flows (negative = net inflow) | 0.2 | 0.6 | 0.3 | 0.2 | 0.2 | 0.1 | 0.1 | 0.0 | 0.0 | 0.2 | 0.2 | |||||||
| Net FDI (negative = inflow) | -1.6 | -3.0 | -2.9 | -2.1 | 1.3 | -3.0 | -3.2 | -3.3 | -3.5 | -3.6 | -2.8 | -2.5 | -2.5 | -2.6 | ||||
| Endogenous debt dynamics 2/ | 0.4 | 0.3 | -1.6 | -0.3 | -0.3 | -0.3 | -0.3 | -0.3 | -0.4 | -0.6 | -0.6 | |||||||
| Contribution from nominal interest rate | 0.3 | 0.2 | 0.2 | 0.3 | 0.3 | 0.4 | 0.4 | 0.5 | 0.5 | 0.3 | 0.3 | |||||||
| Contribution from real GDP growth | -0.4 | -0.4 | -0.6 | -0.6 | -0.6 | -0.7 | -0.7 | -0.8 | -0.9 | -0.9 | -0.8 | |||||||
| Contribution from price and exchange rate changes | 0.6 | 0.5 | -1.3 | … | … | … | … | … | … | … | … | |||||||
| Residual (3-4) 3/ | -8.3 | -2.1 | -5.5 | -6.3 | -5.1 | -4.4 | -3.6 | -3.1 | -3.6 | -4.0 | -1.4 | |||||||
| o/w exceptional financing | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| PV of external debt 4/ | … | … | 15.2 | 14.3 | 14.4 | 14.3 | 14.2 | 14.2 | 14.3 | 13.6 | 12.2 | |||||||
| In percent of exports | … | … | 101.3 | 95.3 | 94.0 | 90.5 | 90.2 | 89.9 | 87.9 | 72.2 | 50.8 | |||||||
| PV of PPG external debt | … | … | 15.2 | 14.3 | 14.4 | 14.3 | 14.2 | 14.2 | 14.3 | 13.6 | 12.2 | |||||||
| In percent of exports | … | … | 101.3 | 95.3 | 94.0 | 90.5 | 90.2 | 89.9 | 87.9 | 72.2 | 50.8 | |||||||
| In percent of government revenues | … | … | 86.3 | 75.9 | 75.5 | 72.3 | 71.5 | 71.2 | 65.8 | 62.5 | 56.1 | |||||||
| Debt service-to-exports ratio (in percent) | 3.4 | 3.6 | 5.0 | 6.0 | 6.0 | 6.3 | 6.4 | 6.1 | 5.7 | 3.5 | 2.5 | |||||||
| PPG debt service-to-exports ratio (in percent) | 3.4 | 3.6 | 5.0 | 6.0 | 6.0 | 6.3 | 6.4 | 6.1 | 5.7 | 3.5 | 2.5 | |||||||
| PPG debt service-to-revenue ratio (in percent) | 3.1 | 4.0 | 4.3 | 4.8 | 4.8 | 5.0 | 5.1 | 4.8 | 4.2 | 3.0 | 2.7 | |||||||
| Total gross financing need (Millions of U.S. dollars) | 0.5 | 0.3 | 0.6 | 0.5 | 0.6 | 0.5 | 0.5 | 0.5 | 0.6 | 0.8 | 0.8 | |||||||
| Non-interest current account deficit that stabilizes debt ratio | 9.5 | 4.8 | 10.0 | 9.6 | 8.5 | 8.0 | 7.4 | 7.1 | 6.8 | 7.1 | 4.4 | |||||||
| Key macroeconomic assumptions | ||||||||||||||||||
| Real GDP growth (in percent) | 2.7 | 2.6 | 3.5 | 3.6 | 0.9 | 3.5 | 3.8 | 4.1 | 4.3 | 4.5 | 4.8 | 4.2 | 5.1 | 5.1 | 5.0 | |||
| GDP deflator in US dollar terms (change in percent) | -3.3 | -2.9 | 7.5 | 7.6 | 7.7 | -0.2 | 3.2 | 2.6 | 2.5 | 2.3 | 3.0 | 2.2 | 3.0 | 3.0 | 3.0 | |||
| Effective interest rate (percent) 5/ | 1.7 | 1.5 | 1.4 | 2.9 | 4.7 | 2.0 | 2.1 | 2.4 | 2.5 | 2.6 | 2.8 | 2.4 | 1.6 | 1.7 | 1.7 | |||
| Growth of exports of G&S (US dollar terms, in percent) | -8.1 | 24.4 | -18.9 | 13.0 | 20.2 | 3.9 | 8.9 | 10.1 | 6.8 | 7.0 | 11.2 | 8.0 | 11.2 | 10.9 | 11.0 | |||
| Growth of imports of G&S (US dollar terms, in percent) | -4.8 | 3.8 | -1.2 | 13.2 | 17.9 | 3.7 | 7.9 | 5.4 | 4.9 | 6.0 | 9.5 | 6.2 | 9.5 | 9.2 | 9.3 | |||
| Grant element of new public sector borrowing (in percent) | … | … | … | … | … | 47.2 | 43.5 | 40.4 | 38.8 | 38.4 | 37.2 | 40.9 | 37.6 | 34.5 | 36.3 | |||
| Government revenues (excluding grants, in percent of GDP) | 18.5 | 18.6 | 17.6 | 18.9 | 19.1 | 19.7 | 19.9 | 19.9 | 21.7 | 21.7 | 21.7 | 21.7 | ||||||
| Aid flows (in Millions of US dollars) 7/ | 0.2 | 0.1 | 0.2 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.4 | 0.7 | |||||||
| o/w Grants | 0.2 | 0.1 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.3 | 0.6 | |||||||
| o/w Concessional loans | 0.0 | 0.0 | 0.0 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 78.5 | 78.5 | |||||||
| Grant-equivalent financing (in percent of GDP) 8/ | … | … | … | 3.8 | 3.2 | 3.0 | 2.9 | 2.8 | 2.7 | 2.4 | 2.3 | 2.4 | ||||||
| Grant-equivalent financing (in percent of external financing) 8/ | … | … | … | 78.7 | 70.6 | 70.7 | 68.3 | 67.8 | 63.9 | 71.4 | 71.2 | 70.0 | ||||||
| Memorandum items: | ||||||||||||||||||
| Nominal GDP (Millions of US dollars) | 6.6 | 6.6 | 7.3 | 7.5 | 8.1 | 8.6 | 9.2 | 9.9 | 10.6 | 15.7 | 34.6 | |||||||
| Nominal dollar GDP growth | -0.7 | -0.4 | 11.3 | 3.3 | 7.1 | 6.8 | 6.9 | 6.9 | 7.9 | 6.5 | 8.3 | 8.3 | 8.2 | |||||
| PV of PPG external debt (in Millions of US dollars) | 1.0 | 1.1 | 1.2 | 1.2 | 1.3 | 1.4 | 1.5 | 2.1 | 4.2 | |||||||||
| (PVt-PVt-1)/GDPt-1 (in percent) | 0.7 | 1.0 | 0.8 | 0.9 | 0.9 | 1.2 | 0.9 | 0.9 | 0.8 | 0.9 | ||||||||
| Gross workers’ remittances (Millions of US dollars) | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.2 | 0.2 | 0.2 | 0.2 | 0.3 | 0.8 | |||||||
| PV of PPG external debt (in percent of GDP + remittances) | … | … | 14.9 | 14.1 | 14.2 | 14.0 | 14.0 | 13.9 | 14.0 | 13.3 | 11.9 | |||||||
| PV of PPG external debt (in percent of exports + remittances) | … | … | 89.7 | 85.8 | 84.6 | 81.5 | 81.0 | 80.6 | 78.8 | 65.2 | 46.6 | |||||||
| Debt service of PPG external debt (in percent of exports + remittances) | … | … | 4.4 | 5.4 | 5.4 | 5.6 | 5.8 | 5.5 | 5.1 | 3.2 | 2.3 | |||||||
Includes both public and private sector external debt. Some debt series may not be directly comparable to those presented in Table 1 of the staff report owing to different exchange rate and interest rate forecasts at the time of the preparation of this document.
Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.
Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; capital grants; and valuation adjustments. For projections also includes contribution from price and exchange rate changes.
Assumes that PV of private sector debt is equivalent to its face value.
Current-year interest payments divided by previous period debt stock.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Defined as grants, concessional loans, and debt relief.
Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).
Benin: External Debt Sustainability Framework, Baseline Scenario, 2009-2032 1/
(In percent of GDP, unless otherwise indicated)
| Actual | Historical Average | Standard Deviation | Projections | 2012-2017 Average | 2018-2032 Average | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | Average | 2022 | 2032 | Average | ||||||
| External debt (nominal) 1/ | 15.7 | 17.9 | 17.7 | 17.3 | 18.0 | 18.3 | 18.8 | 19.2 | 19.8 | 19.5 | 17.3 | |||||||
| o/w public and publicly guaranteed (PPG) | 15.7 | 17.9 | 17.7 | 17.3 | 18.0 | 18.3 | 18.8 | 19.2 | 19.8 | 19.5 | 17.3 | |||||||
| Change in external debt | -0.8 | 2.3 | -0.2 | -0.4 | 0.7 | 0.4 | 0.4 | 0.4 | 0.6 | -0.4 | -0.2 | |||||||
| Identified net debt-creating flows | 7.5 | 4.4 | 5.2 | 5.9 | 5.8 | 4.7 | 4.0 | 3.6 | 4.2 | 3.6 | 1.1 | |||||||
| Non-interest current account deficit | 8.7 | 7.0 | 9.7 | 7.5 | 1.5 | 9.2 | 9.2 | 8.3 | 7.8 | 7.5 | 7.3 | 6.8 | 4.2 | 6.0 | ||||
| Deficit in balance of goods and services | 13.4 | 10.6 | 12.7 | 12.7 | 12.6 | 11.8 | 11.3 | 11.1 | 11.0 | 10.3 | 7.9 | |||||||
| Exports | 16.5 | 20.6 | 15.0 | 15.1 | 15.3 | 15.8 | 15.8 | 15.8 | 16.3 | 18.8 | 24.0 | |||||||
| Imports | 29.8 | 31.1 | 27.6 | 27.7 | 27.9 | 27.6 | 27.0 | 26.8 | 27.2 | 29.1 | 31.8 | |||||||
| Net current transfers (negative = inflow) | -5.0 | -4.1 | -3.2 | -5.0 | 1.0 | -3.7 | -3.6 | -3.6 | -3.5 | -3.6 | -3.6 | -3.8 | -3.9 | -3.8 | ||||
| o/w official | -3.9 | -3.0 | -1.8 | -2.3 | -2.1 | -2.0 | -1.9 | -1.9 | -1.9 | -1.9 | -1.9 | |||||||
| Other current account flows (negative = net inflow) | 0.2 | 0.6 | 0.3 | 0.2 | 0.2 | 0.1 | 0.1 | 0.0 | 0.0 | 0.2 | 0.2 | |||||||
| Net FDI (negative = inflow) | -1.6 | -3.0 | -2.9 | -2.1 | 1.3 | -3.0 | -3.2 | -3.3 | -3.5 | -3.6 | -2.8 | -2.5 | -2.5 | -2.6 | ||||
| Endogenous debt dynamics 2/ | 0.4 | 0.3 | -1.6 | -0.3 | -0.3 | -0.3 | -0.3 | -0.3 | -0.4 | -0.6 | -0.6 | |||||||
| Contribution from nominal interest rate | 0.3 | 0.2 | 0.2 | 0.3 | 0.3 | 0.4 | 0.4 | 0.5 | 0.5 | 0.3 | 0.3 | |||||||
| Contribution from real GDP growth | -0.4 | -0.4 | -0.6 | -0.6 | -0.6 | -0.7 | -0.7 | -0.8 | -0.9 | -0.9 | -0.8 | |||||||
| Contribution from price and exchange rate changes | 0.6 | 0.5 | -1.3 | … | … | … | … | … | … | … | … | |||||||
| Residual (3-4) 3/ | -8.3 | -2.1 | -5.5 | -6.3 | -5.1 | -4.4 | -3.6 | -3.1 | -3.6 | -4.0 | -1.4 | |||||||
| o/w exceptional financing | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
| PV of external debt 4/ | … | … | 15.2 | 14.3 | 14.4 | 14.3 | 14.2 | 14.2 | 14.3 | 13.6 | 12.2 | |||||||
| In percent of exports | … | … | 101.3 | 95.3 | 94.0 | 90.5 | 90.2 | 89.9 | 87.9 | 72.2 | 50.8 | |||||||
| PV of PPG external debt | … | … | 15.2 | 14.3 | 14.4 | 14.3 | 14.2 | 14.2 | 14.3 | 13.6 | 12.2 | |||||||
| In percent of exports | … | … | 101.3 | 95.3 | 94.0 | 90.5 | 90.2 | 89.9 | 87.9 | 72.2 | 50.8 | |||||||
| In percent of government revenues | … | … | 86.3 | 75.9 | 75.5 | 72.3 | 71.5 | 71.2 | 65.8 | 62.5 | 56.1 | |||||||
| Debt service-to-exports ratio (in percent) | 3.4 | 3.6 | 5.0 | 6.0 | 6.0 | 6.3 | 6.4 | 6.1 | 5.7 | 3.5 | 2.5 | |||||||
| PPG debt service-to-exports ratio (in percent) | 3.4 | 3.6 | 5.0 | 6.0 | 6.0 | 6.3 | 6.4 | 6.1 | 5.7 | 3.5 | 2.5 | |||||||
| PPG debt service-to-revenue ratio (in percent) | 3.1 | 4.0 | 4.3 | 4.8 | 4.8 | 5.0 | 5.1 | 4.8 | 4.2 | 3.0 | 2.7 | |||||||
| Total gross financing need (Millions of U.S. dollars) | 0.5 | 0.3 | 0.6 | 0.5 | 0.6 | 0.5 | 0.5 | 0.5 | 0.6 | 0.8 | 0.8 | |||||||
| Non-interest current account deficit that stabilizes debt ratio | 9.5 | 4.8 | 10.0 | 9.6 | 8.5 | 8.0 | 7.4 | 7.1 | 6.8 | 7.1 | 4.4 | |||||||
| Key macroeconomic assumptions | ||||||||||||||||||
| Real GDP growth (in percent) | 2.7 | 2.6 | 3.5 | 3.6 | 0.9 | 3.5 | 3.8 | 4.1 | 4.3 | 4.5 | 4.8 | 4.2 | 5.1 | 5.1 | 5.0 | |||
| GDP deflator in US dollar terms (change in percent) | -3.3 | -2.9 | 7.5 | 7.6 | 7.7 | -0.2 | 3.2 | 2.6 | 2.5 | 2.3 | 3.0 | 2.2 | 3.0 | 3.0 | 3.0 | |||
| Effective interest rate (percent) 5/ | 1.7 | 1.5 | 1.4 | 2.9 | 4.7 | 2.0 | 2.1 | 2.4 | 2.5 | 2.6 | 2.8 | 2.4 | 1.6 | 1.7 | 1.7 | |||
| Growth of exports of G&S (US dollar terms, in percent) | -8.1 | 24.4 | -18.9 | 13.0 | 20.2 | 3.9 | 8.9 | 10.1 | 6.8 | 7.0 | 11.2 | 8.0 | 11.2 | 10.9 | 11.0 | |||
| Growth of imports of G&S (US dollar terms, in percent) | -4.8 | 3.8 | -1.2 | 13.2 | 17.9 | 3.7 | 7.9 | 5.4 | 4.9 | 6.0 | 9.5 | 6.2 | 9.5 | 9.2 | 9.3 | |||
| Grant element of new public sector borrowing (in percent) | … | … | … | … | … | 47.2 | 43.5 | 40.4 | 38.8 | 38.4 | 37.2 | 40.9 | 37.6 | 34.5 | 36.3 | |||
| Government revenues (excluding grants, in percent of GDP) | 18.5 | 18.6 | 17.6 | 18.9 | 19.1 | 19.7 | 19.9 | 19.9 | 21.7 | 21.7 | 21.7 | 21.7 | ||||||
| Aid flows (in Millions of US dollars) 7/ | 0.2 | 0.1 | 0.2 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.4 | 0.7 | |||||||
| o/w Grants | 0.2 | 0.1 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.3 | 0.6 | |||||||
| o/w Concessional loans | 0.0 | 0.0 | 0.0 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 78.5 | 78.5 | |||||||
| Grant-equivalent financing (in percent of GDP) 8/ | … | … | … | 3.8 | 3.2 | 3.0 | 2.9 | 2.8 | 2.7 | 2.4 | 2.3 | 2.4 | ||||||
| Grant-equivalent financing (in percent of external financing) 8/ | … | … | … | 78.7 | 70.6 | 70.7 | 68.3 | 67.8 | 63.9 | 71.4 | 71.2 | 70.0 | ||||||
| Memorandum items: | ||||||||||||||||||
| Nominal GDP (Millions of US dollars) | 6.6 | 6.6 | 7.3 | 7.5 | 8.1 | 8.6 | 9.2 | 9.9 | 10.6 | 15.7 | 34.6 | |||||||
| Nominal dollar GDP growth | -0.7 | -0.4 | 11.3 | 3.3 | 7.1 | 6.8 | 6.9 | 6.9 | 7.9 | 6.5 | 8.3 | 8.3 | 8.2 | |||||
| PV of PPG external debt (in Millions of US dollars) | 1.0 | 1.1 | 1.2 | 1.2 | 1.3 | 1.4 | 1.5 | 2.1 | 4.2 | |||||||||
| (PVt-PVt-1)/GDPt-1 (in percent) | 0.7 | 1.0 | 0.8 | 0.9 | 0.9 | 1.2 | 0.9 | 0.9 | 0.8 | 0.9 | ||||||||
| Gross workers’ remittances (Millions of US dollars) | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.2 | 0.2 | 0.2 | 0.2 | 0.3 | 0.8 | |||||||
| PV of PPG external debt (in percent of GDP + remittances) | … | … | 14.9 | 14.1 | 14.2 | 14.0 | 14.0 | 13.9 | 14.0 | 13.3 | 11.9 | |||||||
| PV of PPG external debt (in percent of exports + remittances) | … | … | 89.7 | 85.8 | 84.6 | 81.5 | 81.0 | 80.6 | 78.8 | 65.2 | 46.6 | |||||||
| Debt service of PPG external debt (in percent of exports + remittances) | … | … | 4.4 | 5.4 | 5.4 | 5.6 | 5.8 | 5.5 | 5.1 | 3.2 | 2.3 | |||||||
Includes both public and private sector external debt. Some debt series may not be directly comparable to those presented in Table 1 of the staff report owing to different exchange rate and interest rate forecasts at the time of the preparation of this document.
Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms.
Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; capital grants; and valuation adjustments. For projections also includes contribution from price and exchange rate changes.
Assumes that PV of private sector debt is equivalent to its face value.
Current-year interest payments divided by previous period debt stock.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Defined as grants, concessional loans, and debt relief.
Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt).
Benin: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2012-2032
(In percent)
Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.
Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly assuming an offsetting adjustment in import levels).
Includes official and private transfers and FDI.
Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.
Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.
Benin: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2012-2032
(In percent)
| Projections | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2022 | 2032 | |
| PV of debt-to-GDP ratio | ||||||||
| Baseline | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 12 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2012-2032 1/ | 14 | 13 | 13 | 13 | 14 | 14 | 15 | 23 |
| A2. New public sector loans on less favorable terms in 2012-2032 2 | 14 | 15 | 15 | 16 | 17 | 17 | 19 | 19 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 | 14 | 15 | 15 | 15 | 14 | 15 | 14 | 12 |
| B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ | 14 | 15 | 17 | 17 | 17 | 17 | 16 | 13 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 | 14 | 15 | 15 | 15 | 15 | 15 | 14 | 13 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ | 14 | 16 | 17 | 17 | 16 | 16 | 15 | 13 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 14 | 15 | 17 | 17 | 17 | 17 | 15 | 13 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ | 14 | 20 | 20 | 20 | 20 | 20 | 19 | 17 |
| PV of debt-to-exports ratio | ||||||||
| Baseline | 95 | 94 | 90 | 90 | 90 | 88 | 72 | 51 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2012-2032 1/ | 95 | 88 | 84 | 85 | 88 | 88 | 81 | 95 |
| A2. New public sector loans on less favorable terms in 2012-2032 2 | 95 | 98 | 98 | 101 | 105 | 106 | 100 | 81 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 | 95 | 94 | 90 | 90 | 90 | 88 | 72 | 51 |
| B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ | 95 | 113 | 139 | 138 | 137 | 132 | 106 | 69 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 | 95 | 94 | 90 | 90 | 90 | 88 | 72 | 51 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ | 95 | 102 | 106 | 105 | 105 | 101 | 81 | 54 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 95 | 107 | 122 | 121 | 120 | 117 | 94 | 61 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ | 95 | 94 | 90 | 90 | 90 | 88 | 72 | 51 |
| PV of debt-to-revenue ratio | ||||||||
| Baseline | 76 | 76 | 72 | 72 | 71 | 66 | 62 | 56 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2012-2032 1/ | 76 | 71 | 67 | 67 | 70 | 66 | 70 | 105 |
| A2. New public sector loans on less favorable terms in 2012-2032 2 | 76 | 79 | 78 | 80 | 83 | 80 | 86 | 90 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 | 76 | 76 | 74 | 73 | 73 | 67 | 64 | 57 |
| B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ | 76 | 81 | 88 | 87 | 86 | 78 | 72 | 60 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 | 76 | 78 | 77 | 76 | 75 | 70 | 66 | 59 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ | 76 | 82 | 85 | 84 | 83 | 76 | 70 | 59 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 76 | 81 | 86 | 85 | 84 | 77 | 71 | 59 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ | 76 | 106 | 102 | 101 | 100 | 93 | 88 | 79 |
| Debt service-to-exports ratio | ||||||||
| Baseline | 6 | 6 | 6 | 6 | 6 | 6 | 4 | 2 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2012-2032 1/ | 6 | 6 | 6 | 6 | 5 | 5 | 3 | 3 |
| A2. New public sector loans on less favorable terms in 2012-2032 2 | 6 | 6 | 6 | 7 | 7 | 6 | 5 | 4 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 | 6 | 6 | 6 | 6 | 6 | 6 | 4 | 2 |
| B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ | 6 | 7 | 8 | 9 | 8 | 8 | 5 | 3 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 | 6 | 6 | 6 | 6 | 6 | 6 | 4 | 2 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ | 6 | 6 | 6 | 7 | 6 | 6 | 4 | 3 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 6 | 6 | 7 | 8 | 7 | 7 | 4 | 3 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ | 6 | 6 | 6 | 6 | 6 | 6 | 4 | 2 |
| Debt service-to-revenue ratio | ||||||||
| Baseline | 5 | 5 | 5 | 5 | 5 | 4 | 3 | 3 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2012-2032 1/ | 5 | 5 | 5 | 4 | 4 | 4 | 3 | 3 |
| A2. New public sector loans on less favorable terms in 2012-2032 2 | 5 | 5 | 5 | 5 | 5 | 5 | 4 | 5 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 | 5 | 5 | 5 | 5 | 5 | 4 | 3 | 3 |
| B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ | 5 | 5 | 5 | 5 | 5 | 5 | 3 | 3 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 | 5 | 5 | 5 | 5 | 5 | 4 | 3 | 3 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ | 5 | 5 | 5 | 5 | 5 | 4 | 3 | 3 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 5 | 5 | 5 | 5 | 5 | 4 | 3 | 3 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ | 5 | 7 | 7 | 7 | 7 | 6 | 4 | 4 |
| Memorandum item: | ||||||||
| Grant element assumed on residual financing (i.e., financing required above baseline) 6/ | 36 | 36 | 36 | 36 | 36 | 36 | 36 | 36 |
Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.
Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly assuming an offsetting adjustment in import levels).
Includes official and private transfers and FDI.
Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.
Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.
Benin: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2012-2032
(In percent)
| Projections | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2022 | 2032 | |
| PV of debt-to-GDP ratio | ||||||||
| Baseline | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 12 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2012-2032 1/ | 14 | 13 | 13 | 13 | 14 | 14 | 15 | 23 |
| A2. New public sector loans on less favorable terms in 2012-2032 2 | 14 | 15 | 15 | 16 | 17 | 17 | 19 | 19 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 | 14 | 15 | 15 | 15 | 14 | 15 | 14 | 12 |
| B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ | 14 | 15 | 17 | 17 | 17 | 17 | 16 | 13 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 | 14 | 15 | 15 | 15 | 15 | 15 | 14 | 13 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ | 14 | 16 | 17 | 17 | 16 | 16 | 15 | 13 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 14 | 15 | 17 | 17 | 17 | 17 | 15 | 13 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ | 14 | 20 | 20 | 20 | 20 | 20 | 19 | 17 |
| PV of debt-to-exports ratio | ||||||||
| Baseline | 95 | 94 | 90 | 90 | 90 | 88 | 72 | 51 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2012-2032 1/ | 95 | 88 | 84 | 85 | 88 | 88 | 81 | 95 |
| A2. New public sector loans on less favorable terms in 2012-2032 2 | 95 | 98 | 98 | 101 | 105 | 106 | 100 | 81 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 | 95 | 94 | 90 | 90 | 90 | 88 | 72 | 51 |
| B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ | 95 | 113 | 139 | 138 | 137 | 132 | 106 | 69 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 | 95 | 94 | 90 | 90 | 90 | 88 | 72 | 51 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ | 95 | 102 | 106 | 105 | 105 | 101 | 81 | 54 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 95 | 107 | 122 | 121 | 120 | 117 | 94 | 61 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ | 95 | 94 | 90 | 90 | 90 | 88 | 72 | 51 |
| PV of debt-to-revenue ratio | ||||||||
| Baseline | 76 | 76 | 72 | 72 | 71 | 66 | 62 | 56 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2012-2032 1/ | 76 | 71 | 67 | 67 | 70 | 66 | 70 | 105 |
| A2. New public sector loans on less favorable terms in 2012-2032 2 | 76 | 79 | 78 | 80 | 83 | 80 | 86 | 90 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 | 76 | 76 | 74 | 73 | 73 | 67 | 64 | 57 |
| B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ | 76 | 81 | 88 | 87 | 86 | 78 | 72 | 60 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 | 76 | 78 | 77 | 76 | 75 | 70 | 66 | 59 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ | 76 | 82 | 85 | 84 | 83 | 76 | 70 | 59 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 76 | 81 | 86 | 85 | 84 | 77 | 71 | 59 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ | 76 | 106 | 102 | 101 | 100 | 93 | 88 | 79 |
| Debt service-to-exports ratio | ||||||||
| Baseline | 6 | 6 | 6 | 6 | 6 | 6 | 4 | 2 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2012-2032 1/ | 6 | 6 | 6 | 6 | 5 | 5 | 3 | 3 |
| A2. New public sector loans on less favorable terms in 2012-2032 2 | 6 | 6 | 6 | 7 | 7 | 6 | 5 | 4 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 | 6 | 6 | 6 | 6 | 6 | 6 | 4 | 2 |
| B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ | 6 | 7 | 8 | 9 | 8 | 8 | 5 | 3 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 | 6 | 6 | 6 | 6 | 6 | 6 | 4 | 2 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ | 6 | 6 | 6 | 7 | 6 | 6 | 4 | 3 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 6 | 6 | 7 | 8 | 7 | 7 | 4 | 3 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ | 6 | 6 | 6 | 6 | 6 | 6 | 4 | 2 |
| Debt service-to-revenue ratio | ||||||||
| Baseline | 5 | 5 | 5 | 5 | 5 | 4 | 3 | 3 |
| A. Alternative Scenarios | ||||||||
| A1. Key variables at their historical averages in 2012-2032 1/ | 5 | 5 | 5 | 4 | 4 | 4 | 3 | 3 |
| A2. New public sector loans on less favorable terms in 2012-2032 2 | 5 | 5 | 5 | 5 | 5 | 5 | 4 | 5 |
| B. Bound Tests | ||||||||
| B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 | 5 | 5 | 5 | 5 | 5 | 4 | 3 | 3 |
| B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ | 5 | 5 | 5 | 5 | 5 | 5 | 3 | 3 |
| B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 | 5 | 5 | 5 | 5 | 5 | 4 | 3 | 3 |
| B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ | 5 | 5 | 5 | 5 | 5 | 4 | 3 | 3 |
| B5. Combination of B1-B4 using one-half standard deviation shocks | 5 | 5 | 5 | 5 | 5 | 4 | 3 | 3 |
| B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ | 5 | 7 | 7 | 7 | 7 | 6 | 4 | 4 |
| Memorandum item: | ||||||||
| Grant element assumed on residual financing (i.e., financing required above baseline) 6/ | 36 | 36 | 36 | 36 | 36 | 36 | 36 | 36 |
Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline.
Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly assuming an offsetting adjustment in import levels).
Includes official and private transfers and FDI.
Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent.
Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2.
B. Public Debt Sustainability Analysis
5. Total (external and domestic) debt is projected to decline gradually, owing to the authorities’ strategy to repay securitized wage arrears and to continue relying on external concessional financing (Figure 2, Table 3). Debt indicators are vulnerable to the most extreme shock, calibrated as a significant increase in other debt-creating flows (Table 4). All debt ratios are sensitive to lower GDP growth and primary fiscal balance assumptions.7
Benin: Indicators of Public Debt Under Alternative Scenarios, 2012-2032 1/
Citation: IMF Staff Country Reports 2013, 009; 10.5089/9781475592917.002.A003
Sources: Beninese authorities; IMF and World Bank staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio in 2022.2/ Revenues are defined inclusive of grants.Benin: Indicators of Public Debt Under Alternative Scenarios, 2012-2032 1/
Citation: IMF Staff Country Reports 2013, 009; 10.5089/9781475592917.002.A003
Sources: Beninese authorities; IMF and World Bank staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio in 2022.2/ Revenues are defined inclusive of grants.Benin: Indicators of Public Debt Under Alternative Scenarios, 2012-2032 1/
Citation: IMF Staff Country Reports 2013, 009; 10.5089/9781475592917.002.A003
Sources: Beninese authorities; IMF and World Bank staff estimates and projections.1/ The most extreme stress test is the test that yields the highest ratio in 2022.2/ Revenues are defined inclusive of grants.Benin: Public Sector Debt Sustainability Framework, Baseline Scenario, 2009-2032
(In percent of GDP, unless otherwise indicated)
Some debt series may not be directly comparable to those presented in Table 1 of the staff report owing to different exchange rate and interest rate forecasts at the time of the preparation of this document.
Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.
Revenues excluding grants.
Debt service is defined as the sum of interest and amortization of medium and long-term debt.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Benin: Public Sector Debt Sustainability Framework, Baseline Scenario, 2009-2032
(In percent of GDP, unless otherwise indicated)
| Actual | Average | Standard | Projections | 2012-17 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2009 | 2010 | 2011 | 5/ Deviation 5/ | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | Average | 2022 | 2032 | 2018-32 Average | ||||
| Public sector debt 1/ | 27.5 | 30.0 | 31.5 | 32.8 | 29.1 | 28.1 | 27.3 | 26.4 | 25.4 | 23.3 | 19.9 | ||||||
| o/w foreign-currency denominated | 15.7 | 17.9 | 17.7 | 17.3 | 18.0 | 18.3 | 18.8 | 19.2 | 19.8 | 19.5 | 17.3 | ||||||
| Change in public sector debt | 1.0 | 2.5 | 1.5 | 1.2 | -3.7 | -0.9 | -0.8 | -0.9 | -1.1 | -0.5 | -0.3 | ||||||
| Identified debt-creating flows | 2.0 | 1.0 | 0.7 | -2.2 | -0.9 | -1.6 | -1.8 | -1.7 | 0.1 | -0.1 | 0.1 | ||||||
| Primary deficit | 3.8 | 1.0 | 1.4 | 1.4 | 1.7 | 0.1 | 0.6 | -0.4 | -0.6 | -0.7 | 1.3 | 0.0 | 1.3 | 1.3 | 1.3 | ||
| Revenue and grants | 21.7 | 20.0 | 20.1 | 21.8 | 21.3 | 21.9 | 21.9 | 21.9 | 23.5 | 23.5 | 23.5 | ||||||
| of which: grants | 3.2 | 1.5 | 2.5 | 2.9 | 2.2 | 2.1 | 2.0 | 2.0 | 1.8 | 1.8 | 1.8 | ||||||
| Primary (noninterest) expenditure | 25.5 | 21.1 | 21.5 | 21.8 | 21.9 | 21.5 | 21.3 | 21.2 | 24.8 | 24.8 | 24.8 | ||||||
| Automatic debt dynamics | -1.2 | 0.5 | -0.7 | -2.3 | -1.5 | -1.2 | -1.1 | -1.0 | -1.1 | -1.3 | -1.1 | ||||||
| Contribution from interest rate/growth differential | 0.2 | 0.1 | -2.1 | -1.1 | -1.5 | -1.2 | -1.1 | -1.0 | -1.1 | -1.3 | -1.1 | ||||||
| of which: contribution from average real interest rate | 0.9 | 0.8 | -1.1 | 0.0 | -0.3 | 0.0 | 0.0 | 0.1 | 0.1 | -0.2 | -0.2 | ||||||
| of which: contribution from real GDP growth | -0.7 | -0.7 | -1.0 | -1.1 | -1.2 | -1.1 | -1.2 | -1.2 | -1.2 | -1.2 | -1.0 | ||||||
| Contribution from real exchange rate depreciation | -1.4 | 0.4 | 1.4 | -1.2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||
| Other identified debt-creating flows | -0.6 | -0.5 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
| Privatization receipts (negative) | -0.6 | -0.5 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
| Recognition of implicit or contingent liabilities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
| Debt relief (HIPC and other) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
| Other (specify, e.g. bank recapitalization) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
| Residual, including asset changes | -1.0 | 1.5 | 0.8 | 3.5 | -2.8 | 0.7 | 0.9 | 0.8 | -1.2 | -0.4 | -0.4 | ||||||
| Other Sustainability Indicators | |||||||||||||||||
| PV of public sector debt | … | 12.1 | 29.0 | 29.8 | 25.5 | 24.1 | 22.8 | 21.4 | 19.8 | 17.4 | 14.8 | ||||||
| o/w foreign-currency denominated | … | 0.0 | 15.2 | 14.3 | 14.4 | 14.3 | 14.2 | 14.2 | 14.3 | 13.6 | 12.2 | ||||||
| o/w external | … | … | 15.2 | 14.3 | 14.4 | 14.3 | 14.2 | 14.2 | 14.3 | 13.6 | 12.2 | ||||||
| PV of contingent liabilities (not included in public sector debt) | … | … | … | … | … | … | … | … | … | … | … | ||||||
| Gross financing need 2/ | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
| PV of public sector debt-to-revenue and grants ratio (in percent) | … | 60.3 | 144.1 | 136.8 | 119.8 | 110.0 | 104.0 | 97.8 | 84.4 | 74.1 | 63.1 | ||||||
| PV of public sector debt-to-revenue ratio (in percent) | … | 65.1 | 164.9 | 157.8 | 133.6 | 122.0 | 114.6 | 107.4 | 91.4 | 80.2 | 68.3 | ||||||
| o/w external 3/ | … | … | 86.3 | 75.9 | 75.5 | 72.3 | 71.5 | 71.2 | 65.8 | 62.5 | 56.1 | ||||||
| Debt service-to-revenue and grants ratio (in percent) 4/ | 6.0 | 7.2 | 8.9 | 10.0 | 10.0 | 9.7 | 9.6 | 9.1 | 5.5 | 3.7 | 3.4 | 3.1 | |||||
| Debt service-to-revenue ratio (in percent) 4/ | 7.1 | 7.8 | 10.2 | 11.5 | 11.1 | 10.8 | 10.5 | 10.0 | 5.9 | 4.0 | 3.4 | ||||||
| Primary deficit that stabilizes the debt-to-GDP ratio | 2.8 | -1.5 | -0.1 | -1.2 | 4.3 | 0.5 | 0.2 | 0.2 | 2.3 | 1.8 | 1.6 | ||||||
| Key macroeconomic and fiscal assumptions | |||||||||||||||||
| Real GDP growth (in percent) | 2.7 | 2.6 | 3.5 | 3.6 | 0.9 | 3.5 | 3.8 | 4.1 | 4.3 | 0.0 | 4.8 | 3.4 | 5.1 | 5.1 | 5.0 | ||
| Average nominal interest rate on forex debt (in percent) | 1.7 | 1.5 | 1.4 | 2.9 | 4.7 | 2.0 | 2.1 | 2.4 | 2.5 | 2.6 | 2.8 | 2.4 | 1.6 | 1.7 | 1.7 | ||
| Average real interest rate on domestic debt (in percent) | 0.5 | 0.7 | -0.6 | -1.0 | 2.5 | -2.7 | -1.0 | -0.1 | 0.4 | 1.0 | 1.9 | -0.1 | 1.9 | 1.9 | 1.9 | ||
| Real exchange rate depreciation (in percent, + indicates depreciation) | -8.4 | 2.8 | 8.4 | 1.0 | 9.4 | -7.0 | … | … | … | … | … | … | … | … | … | ||
| Inflation rate (GDP deflator, in percent) | 2.0 | 1.9 | 2.4 | 2.8 | 1.9 | 5.5 | 3.1 | 3.0 | 2.9 | 2.8 | 3.5 | 3.5 | 3.5 | 3.5 | 3.5 | ||
| Growth of real primary spending (deflated by GDP deflator, in percent) | 0.2 | -0.2 | 0.1 | 0.0 | 0.1 | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.2 | 0.1 | 0.1 | 0.1 | 0.1 | ||
| Grant element of new external borrowing (in percent) | … | … | … | … | … | 47.2 | 43.5 | 40.4 | 38.8 | 38.4 | 37.2 | 40.9 | 37.6 | 34.5 | … | ||
Some debt series may not be directly comparable to those presented in Table 1 of the staff report owing to different exchange rate and interest rate forecasts at the time of the preparation of this document.
Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.
Revenues excluding grants.
Debt service is defined as the sum of interest and amortization of medium and long-term debt.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Benin: Public Sector Debt Sustainability Framework, Baseline Scenario, 2009-2032
(In percent of GDP, unless otherwise indicated)
| Actual | Average | Standard | Projections | 2012-17 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2009 | 2010 | 2011 | 5/ Deviation 5/ | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | Average | 2022 | 2032 | 2018-32 Average | ||||
| Public sector debt 1/ | 27.5 | 30.0 | 31.5 | 32.8 | 29.1 | 28.1 | 27.3 | 26.4 | 25.4 | 23.3 | 19.9 | ||||||
| o/w foreign-currency denominated | 15.7 | 17.9 | 17.7 | 17.3 | 18.0 | 18.3 | 18.8 | 19.2 | 19.8 | 19.5 | 17.3 | ||||||
| Change in public sector debt | 1.0 | 2.5 | 1.5 | 1.2 | -3.7 | -0.9 | -0.8 | -0.9 | -1.1 | -0.5 | -0.3 | ||||||
| Identified debt-creating flows | 2.0 | 1.0 | 0.7 | -2.2 | -0.9 | -1.6 | -1.8 | -1.7 | 0.1 | -0.1 | 0.1 | ||||||
| Primary deficit | 3.8 | 1.0 | 1.4 | 1.4 | 1.7 | 0.1 | 0.6 | -0.4 | -0.6 | -0.7 | 1.3 | 0.0 | 1.3 | 1.3 | 1.3 | ||
| Revenue and grants | 21.7 | 20.0 | 20.1 | 21.8 | 21.3 | 21.9 | 21.9 | 21.9 | 23.5 | 23.5 | 23.5 | ||||||
| of which: grants | 3.2 | 1.5 | 2.5 | 2.9 | 2.2 | 2.1 | 2.0 | 2.0 | 1.8 | 1.8 | 1.8 | ||||||
| Primary (noninterest) expenditure | 25.5 | 21.1 | 21.5 | 21.8 | 21.9 | 21.5 | 21.3 | 21.2 | 24.8 | 24.8 | 24.8 | ||||||
| Automatic debt dynamics | -1.2 | 0.5 | -0.7 | -2.3 | -1.5 | -1.2 | -1.1 | -1.0 | -1.1 | -1.3 | -1.1 | ||||||
| Contribution from interest rate/growth differential | 0.2 | 0.1 | -2.1 | -1.1 | -1.5 | -1.2 | -1.1 | -1.0 | -1.1 | -1.3 | -1.1 | ||||||
| of which: contribution from average real interest rate | 0.9 | 0.8 | -1.1 | 0.0 | -0.3 | 0.0 | 0.0 | 0.1 | 0.1 | -0.2 | -0.2 | ||||||
| of which: contribution from real GDP growth | -0.7 | -0.7 | -1.0 | -1.1 | -1.2 | -1.1 | -1.2 | -1.2 | -1.2 | -1.2 | -1.0 | ||||||
| Contribution from real exchange rate depreciation | -1.4 | 0.4 | 1.4 | -1.2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||
| Other identified debt-creating flows | -0.6 | -0.5 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
| Privatization receipts (negative) | -0.6 | -0.5 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
| Recognition of implicit or contingent liabilities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
| Debt relief (HIPC and other) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
| Other (specify, e.g. bank recapitalization) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
| Residual, including asset changes | -1.0 | 1.5 | 0.8 | 3.5 | -2.8 | 0.7 | 0.9 | 0.8 | -1.2 | -0.4 | -0.4 | ||||||
| Other Sustainability Indicators | |||||||||||||||||
| PV of public sector debt | … | 12.1 | 29.0 | 29.8 | 25.5 | 24.1 | 22.8 | 21.4 | 19.8 | 17.4 | 14.8 | ||||||
| o/w foreign-currency denominated | … | 0.0 | 15.2 | 14.3 | 14.4 | 14.3 | 14.2 | 14.2 | 14.3 | 13.6 | 12.2 | ||||||
| o/w external | … | … | 15.2 | 14.3 | 14.4 | 14.3 | 14.2 | 14.2 | 14.3 | 13.6 | 12.2 | ||||||
| PV of contingent liabilities (not included in public sector debt) | … | … | … | … | … | … | … | … | … | … | … | ||||||
| Gross financing need 2/ | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
| PV of public sector debt-to-revenue and grants ratio (in percent) | … | 60.3 | 144.1 | 136.8 | 119.8 | 110.0 | 104.0 | 97.8 | 84.4 | 74.1 | 63.1 | ||||||
| PV of public sector debt-to-revenue ratio (in percent) | … | 65.1 | 164.9 | 157.8 | 133.6 | 122.0 | 114.6 | 107.4 | 91.4 | 80.2 | 68.3 | ||||||
| o/w external 3/ | … | … | 86.3 | 75.9 | 75.5 | 72.3 | 71.5 | 71.2 | 65.8 | 62.5 | 56.1 | ||||||
| Debt service-to-revenue and grants ratio (in percent) 4/ | 6.0 | 7.2 | 8.9 | 10.0 | 10.0 | 9.7 | 9.6 | 9.1 | 5.5 | 3.7 | 3.4 | 3.1 | |||||
| Debt service-to-revenue ratio (in percent) 4/ | 7.1 | 7.8 | 10.2 | 11.5 | 11.1 | 10.8 | 10.5 | 10.0 | 5.9 | 4.0 | 3.4 | ||||||
| Primary deficit that stabilizes the debt-to-GDP ratio | 2.8 | -1.5 | -0.1 | -1.2 | 4.3 | 0.5 | 0.2 | 0.2 | 2.3 | 1.8 | 1.6 | ||||||
| Key macroeconomic and fiscal assumptions | |||||||||||||||||
| Real GDP growth (in percent) | 2.7 | 2.6 | 3.5 | 3.6 | 0.9 | 3.5 | 3.8 | 4.1 | 4.3 | 0.0 | 4.8 | 3.4 | 5.1 | 5.1 | 5.0 | ||
| Average nominal interest rate on forex debt (in percent) | 1.7 | 1.5 | 1.4 | 2.9 | 4.7 | 2.0 | 2.1 | 2.4 | 2.5 | 2.6 | 2.8 | 2.4 | 1.6 | 1.7 | 1.7 | ||
| Average real interest rate on domestic debt (in percent) | 0.5 | 0.7 | -0.6 | -1.0 | 2.5 | -2.7 | -1.0 | -0.1 | 0.4 | 1.0 | 1.9 | -0.1 | 1.9 | 1.9 | 1.9 | ||
| Real exchange rate depreciation (in percent, + indicates depreciation) | -8.4 | 2.8 | 8.4 | 1.0 | 9.4 | -7.0 | … | … | … | … | … | … | … | … | … | ||
| Inflation rate (GDP deflator, in percent) | 2.0 | 1.9 | 2.4 | 2.8 | 1.9 | 5.5 | 3.1 | 3.0 | 2.9 | 2.8 | 3.5 | 3.5 | 3.5 | 3.5 | 3.5 | ||
| Growth of real primary spending (deflated by GDP deflator, in percent) | 0.2 | -0.2 | 0.1 | 0.0 | 0.1 | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.2 | 0.1 | 0.1 | 0.1 | 0.1 | ||
| Grant element of new external borrowing (in percent) | … | … | … | … | … | 47.2 | 43.5 | 40.4 | 38.8 | 38.4 | 37.2 | 40.9 | 37.6 | 34.5 | … | ||
Some debt series may not be directly comparable to those presented in Table 1 of the staff report owing to different exchange rate and interest rate forecasts at the time of the preparation of this document.
Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period.
Revenues excluding grants.
Debt service is defined as the sum of interest and amortization of medium and long-term debt.
Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability.
Benin: Sensitivity Analysis for Key Indicators of Public Debt 2012-2032
Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.
Revenues are defined inclusive of grants.
Benin: Sensitivity Analysis for Key Indicators of Public Debt 2012-2032
| Projections | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2022 | 2032 | |
| PV of Debt-to-GDP Ratio | ||||||||
| Baseline | 30 | 25 | 24 | 23 | 21 | 20 | 17 | 15 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 30 | 26 | 26 | 26 | 26 | 24 | 22 | 20 |
| A2. Primary balance is unchanged from 2012 | 30 | 26 | 25 | 24 | 23 | 20 | 14 | 7 |
| A3. Permanently lower GDP growth 1/ | 30 | 26 | 24 | 23 | 22 | 20 | 18 | 15 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2013-2014 | 30 | 26 | 25 | 23 | 22 | 20 | 18 | 15 |
| B2. Primary balance is at historical average minus one standard deviations in 2013-2014 | 30 | 27 | 28 | 26 | 25 | 23 | 20 | 16 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 30 | 27 | 27 | 26 | 24 | 22 | 19 | 16 |
| B4. One-time 30 percent real depreciation in 2013 | 30 | 57 | 29 | 27 | 25 | 23 | 19 | 15 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2013 | 30 | 32 | 30 | 28 | 27 | 25 | 21 | 17 |
| PV of Debt-to-Revenue Ratio 2/ | ||||||||
| Baseline | 137 | 120 | 110 | 104 | 98 | 84 | 74 | 63 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 137 | 122 | 118 | 118 | 118 | 103 | 94 | 83 |
| A2. Primary balance is unchanged from 2012 | 137 | 121 | 112 | 108 | 104 | 86 | 61 | 32 |
| A3. Permanently lower GDP growth 1/ | 137 | 120 | 110 | 105 | 99 | 85 | 75 | 65 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2013-2014 | 137 | 121 | 113 | 107 | 100 | 87 | 76 | 64 |
| B2. Primary balance is at historical average minus one standard deviations in 2013-2014 | 137 | 127 | 127 | 120 | 113 | 98 | 84 | 68 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 137 | 126 | 124 | 117 | 110 | 96 | 82 | 67 |
| B4. One-time 30 percent real depreciation in 2013 | 137 | 267 | 132 | 123 | 115 | 98 | 81 | 64 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2013 | 137 | 150 | 137 | 130 | 123 | 106 | 90 | 72 |
| Debt Service-to-Revenue Ratio 2/ | ||||||||
| Baseline | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 10 | 10 | 10 | 10 | 9 | 6 | 4 | 4 |
| A2. Primary balance is unchanged from 2012 | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
| A3. Permanently lower GDP growth 1/ | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2013-2014 | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
| B2. Primary balance is at historical average minus one standard deviations in 2013-2014 | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
| B4. One-time 30 percent real depreciation in 2013 | 10 | 11 | 12 | 12 | 11 | 7 | 5 | 4 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2013 | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.
Revenues are defined inclusive of grants.
Benin: Sensitivity Analysis for Key Indicators of Public Debt 2012-2032
| Projections | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2022 | 2032 | |
| PV of Debt-to-GDP Ratio | ||||||||
| Baseline | 30 | 25 | 24 | 23 | 21 | 20 | 17 | 15 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 30 | 26 | 26 | 26 | 26 | 24 | 22 | 20 |
| A2. Primary balance is unchanged from 2012 | 30 | 26 | 25 | 24 | 23 | 20 | 14 | 7 |
| A3. Permanently lower GDP growth 1/ | 30 | 26 | 24 | 23 | 22 | 20 | 18 | 15 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2013-2014 | 30 | 26 | 25 | 23 | 22 | 20 | 18 | 15 |
| B2. Primary balance is at historical average minus one standard deviations in 2013-2014 | 30 | 27 | 28 | 26 | 25 | 23 | 20 | 16 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 30 | 27 | 27 | 26 | 24 | 22 | 19 | 16 |
| B4. One-time 30 percent real depreciation in 2013 | 30 | 57 | 29 | 27 | 25 | 23 | 19 | 15 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2013 | 30 | 32 | 30 | 28 | 27 | 25 | 21 | 17 |
| PV of Debt-to-Revenue Ratio 2/ | ||||||||
| Baseline | 137 | 120 | 110 | 104 | 98 | 84 | 74 | 63 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 137 | 122 | 118 | 118 | 118 | 103 | 94 | 83 |
| A2. Primary balance is unchanged from 2012 | 137 | 121 | 112 | 108 | 104 | 86 | 61 | 32 |
| A3. Permanently lower GDP growth 1/ | 137 | 120 | 110 | 105 | 99 | 85 | 75 | 65 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2013-2014 | 137 | 121 | 113 | 107 | 100 | 87 | 76 | 64 |
| B2. Primary balance is at historical average minus one standard deviations in 2013-2014 | 137 | 127 | 127 | 120 | 113 | 98 | 84 | 68 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 137 | 126 | 124 | 117 | 110 | 96 | 82 | 67 |
| B4. One-time 30 percent real depreciation in 2013 | 137 | 267 | 132 | 123 | 115 | 98 | 81 | 64 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2013 | 137 | 150 | 137 | 130 | 123 | 106 | 90 | 72 |
| Debt Service-to-Revenue Ratio 2/ | ||||||||
| Baseline | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
| A. Alternative scenarios | ||||||||
| A1. Real GDP growth and primary balance are at historical averages | 10 | 10 | 10 | 10 | 9 | 6 | 4 | 4 |
| A2. Primary balance is unchanged from 2012 | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
| A3. Permanently lower GDP growth 1/ | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
| B. Bound tests | ||||||||
| B1. Real GDP growth is at historical average minus one standard deviations in 2013-2014 | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
| B2. Primary balance is at historical average minus one standard deviations in 2013-2014 | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
| B3. Combination of B1-B2 using one half standard deviation shocks | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
| B4. One-time 30 percent real depreciation in 2013 | 10 | 11 | 12 | 12 | 11 | 7 | 5 | 4 |
| B5. 10 percent of GDP increase in other debt-creating flows in 2013 | 10 | 10 | 10 | 10 | 9 | 5 | 4 | 3 |
Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period.
Revenues are defined inclusive of grants.
Conclusion
6. The updated DSA confirms that Benin faces a low risk of debt distress under the assumptions of prudent macroeconomic policies and timely, efficiency-enhancing structural reforms. It is noteworthy that the updated DSA presents a moderately worse debt outlook than the previous DSA. The baseline and alternative stress test scenarios continue to indicate that external debt positions present low vulnerabilities to shocks. The inclusion of domestic public debt in the analysis confirms the conclusions of the external DSA.
7. The authorities agree with the staff’s conclusions. They concur that debt sustainability will depend crucially on improvements in economic diversification, sustained growth, fiscal consolidation, and a continuation of a prudent borrowing strategy relying mainly on grants and external concessional financing.
Prepared in collaboration with the Beninese authorities. The fiscal year for Benin is January 1–December 31. The previous DSA update was performed in August 2011 (IMF Country Report No. 11/243).
The primary fiscal deficit is computed as revenue and grants minus primary (non-interest) expenditure.
The Beninese economy is becoming less dependent on the cotton sector. For instance, the weight of cotton in exports has steadily declined over the last two decades, from 83 percent of exports in 1999 to just 17 percent in 2011. This evolution confirms that the risk related to cotton price volatility and financing of cotton activities is relatively moderate.
The most extreme test shock is calibrated as an export shock equal to the historical average (2001–10) of export growth plus one standard deviation (in the same period), or a one-time, 30-percent nominal currency depreciation. The shock is assumed to take place in 2013-14. The average export growth is computed for 2001–10 to avoid the end-of-the-sample bias resulting from a substantial negative shock to exports that occurred in 2011. Temporary disruptions at the port of Cotonou contributed to a major decline in export activity, 34 percent below the 2001-10 average export growth. This temporary shock is not representative of past and future shocks.
Debt sustainability thresholds are determined by the three-year average the Country Policy and Institutional Assessment (CPIA) rating (3.5), which classifies Benin as having medium-quality policies and institutional frameworks.
Under this scenario, the key variables are held constant at their 10-year average. In particular, real GDP growth is assumed to be 3.6 percent; GDP deflator growth (in U.S. dollar terms) 7.6 percent; the non-interest external current account deficit 7.5 percent of GDP; and net foreign direct investment flows 2.1 percent of GDP.
Real GDP growth and primary fiscal balance (in percent of GDP) are projected to remain at their 10-year average, i.e., at 3.6 percent and -1.4 percent, respectively.
