Updated: February 27, 2021
The executive board of the International Monetary Fund (IMF) has approved the disbursement of $125.1 million to the West African country of Benin to respond to COVID-19 crisis.
Benin had secured a loan from the IMF under an Extended Credit Facility (ECF) arrangement. An ECF allows the borrowing country to take out money over an extended period of time rather than reapplying for a loan each time it needs money.
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The latest approval brings total disbursements to Benin under the ECF arrangement to $ 254.8 million.
Benin’s three-year loan of $151.5 million, 90 percent of Benin’s quota at the IMF, was approved on April 7, 2017. However, on Friday, also increased the loan for an additional $103.3 million, bringing the total to $254.8 million.
“In completing the sixth review, the Executive Board also approved the authorities’ request for an augmentation of access under the ECF arrangement of 61.4 percent of Benin’s quota (SDR 76.013 million or about US$103.3 million) to address the urgent financing needs stemming from the authorities’ efforts to control the spread of COVID-19 and mitigate its economic and social impacts,” the IMF said in a statement.
Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting IMF Chair, Benin’s strong growth momentum has been halted by the COVID-19 pandemic and border closure with Nigeria.
“Growth is projected to decelerate, and the outlook is subject to a high degree of uncertainty,” Furusawa said.
Amid COVID-19, the IMF Furusawa said “sound and transparent public financial management will be paramount with the sizeable reprioritization of spending.”
“Careful monitoring and ex-post audit of the execution of the new measures will strengthen accountability and ensure that the additional funds are spent as intended.
“Once the shocks wear off, the authorities expect to revert to their medium-term fiscal path by maintaining the deficit within the regional ceiling to safeguard fiscal sustainability. On the economic reform front, the authorities’ efforts to modernize the Beninese economy should be pursued, in particular by diversifying the economic structure, improving the business environment, and strengthening the banking sector,” he added.