Updated: February 26, 2021
· The Executive Board of the IMF approved US$ 177.96 million in emergency assistance to Benin under the Rapid Financing Instrument (RFI) and the Rapid Credit Facility (RCF). Today’s disbursement supplements the augmentation of US$103.3 million approved under the ECF in May 2020.
· Weaker external demand and the deepening of the economic impact of the COVID-19 pandemic have worsened external and fiscal positions.
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· Additional resources under the RCF/RFI will help scale up the government’s COVID-19 response and catalyze additional donor resources.
· The authorities have committed to further enhance the transparency of the COVID-19 spending, to ensure that the financing provided is spent on addressing the crisis.
Washington, DC – December 21, 2020: The Executive Board of the International Monetary Fund (IMF) approved a disbursement under the Rapid Credit Facility (RCF) equivalent to SDR 41.30 million (US$ 59.35 million, 33.33 percent of quota) and a purchase under the Rapid Financing Instrument (RFI) equivalent to SDR 82.54 million (US$ 118.61 million, 66.67 percent of quota) to address the urgent fiscal and balance of payment needs emerging from efforts to tackle the persistent impact of the COVID-19 pandemic.
This is the second IMF emergency assistance since the outbreak of the pandemic: on May 15, 2020, the IMF Executive Board approved an augmentation of access under the 2017-20 ECF arrangement of US$ 103.3 million (see IMF Press Release No 20/216). Today’s additional financing brings the total IMF loan assistance provided to Benin to address COVID-10 pandemic to US$ 281.26 million.
The COVID-19 pandemic has had a more severe impact on economic activity than anticipated, affecting almost all sectors of the economy. Economic prospects have further deteriorated with the worsening of the fiscal and current account deficits. The IMF emergency support will finance the scaling up of the health and economic relief, shore up confidence, and help catalyze donor support. To ensure that the financing provided is spent as intended in addressing the crisis, the authorities have committed to further enhancing the transparency of the procurement process.
Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, made the following statement:
“Benin’s macroeconomic outlook has further deteriorated since the completion in May 2020 of the sixth and final review under the ECF-supported arrangement. Economic growth is projected to decelerate to 2 percent in 2020, from nearly 7 percent in 2019, as a result of containment and mitigation measures, the global economic slowdown, and the prolonged border closure with Nigeria. While Benin’s pandemic response has been effective in curbing the spread of the COVID-19, the economic shock has created urgent fiscal pressures and balance of payment needs.
“The authorities are taking actions to address the human and economic implications of the COVID-19 pandemic while safeguarding their hard-won fiscal achievements. The pandemic is expected to curb previously improving socioeconomic trends and to be detrimental to inclusiveness. The authorities are implementing a plan aimed at raising healthcare spending and providing assistance to vulnerable households and support to impacted businesses.
“The authorities have reiterated their commitment to sound and transparent public financial management, which they see as paramount to ensure that the funds are spent as intended. They have published key information on the main contracts procured in the context of their fight against the pandemic and are committed to undergo ex-post audits of the pandemic spending.
“Once conditions permit, the authorities are committed to reverting to their medium-term fiscal path, by maintaining the fiscal deficit below the regional ceiling. Raising domestic revenue closer to the regional target should remain a primary fiscal objective, as this would strengthen debt sustainability, ensure that the COVID-19 shock does not jeopardize fiscal sustainability, and allow Benin to finance its medium-term economic development plan and reduce poverty.”