Attachment—Letter from Economy and Finance Minister Daouda dated December 1, 2009

(Translated from the French Original)

Cotonou, Benin

Date: December 1, 2009

Antoinette Sayeh

Director of African Department

International Monetary Fund

Washington, DC

Subject: Mission of Benin delegation to the IMF, November 23–24, 2009

Dear Ms. Sayeh,

I would like to thank you for the arrangements made by your staff to facilitate discussions with the delegation that I led on November 23–24, 2009 in Washington. These discussions helped both parties reach an agreement on fiscal policy stance in 2010.

With respect to 2010, the government of Benin is committed to prudent fiscal management aimed at putting public finances on a viable path for maintaining microeconomic stability and debt sustainability. It was agreed upon with IMF staff to base 2010 budget execution on prudent forecasts of revenue and financing. Total revenue is projected at CFAF 686.7 billion, and financing (including grants) at CFAF 163.8 billion. Out of total financing, 35 billion is estimated in the form of concessional budget support (grants or loans with a grant element of at least 35 percent). An additional CFAF 50 billion in financing is needed, the sources of which have not yet been identified and which the government expects to mobilize during the course of the year in the form of additional concessional budgetary support from it technical and financial partners.

Based on these estimates, the government is committed to not exceeding the ceiling of CFAF 883.2 billion in expenditure execution, including approximately 50 billion in expenditure carried forward from fiscal year 2009. In addition, the government is committed to paying, within this ceiling, any outstanding amounts payable that may be accumulated in 2009. However, expenditure may be higher if revenue or additional concessional financing (beyond the 50 billion financing requirement mentioned above) are mobilized.

This prudent management will help avoid a new accumulation of outstanding payables as well as credit carryovers to the following fiscal year. The basic primary deficit is thus projected at CFAF 12.4 billion (0.4 percent of GDP), and the overall cash-basis deficit (excluding grants) at CFAF 213.9 billion (6.5 percent of GDP), an improvement over the results expected for 2009.

In support of this fiscal program, the government is also committed to accelerating the implementation of structural reforms aimed at improving fiscal management, enhancing revenue mobilization, increasing the competitiveness of the economy, and encouraging private investment. These reforms will include (but will not be limited to): (i) expanding the ASYCUDA++ information technology system by 12 additional stations at regional directorates by end-August 2010; (ii) adopting a master computerization plan for the Directorate General of Taxes and Property (DGID) after it is audited, aimed at making the Single Taxpayer Identification Number (IFU) operational by end-September 2010; and (iii) implementing the one-stop facility for the customs office and port of Cotonou by end-June 2010, based on a timetable that will be forwarded to IMF staff by end-2009.

In this connection, it would be helpful if the IMF could send an assessment letter to our technical and financial partners at the earliest possible date, to reassure them concerning the efforts made by Benin to consolidate public finances and pursue structural reforms. The government authorizes the IMF to publish this letter along with the assessment letter.

Sincerely yours,

/s/

Idriss L. Daouda