News Brief No. 99/49

News Brief: IMF Completes Review and Approves US$ 5.1 Million Credit Tranche for Benin

August 23, 1999

Stanley Fischer, Deputy Managing Director of the International Monetary Fund (IMF), said : "The Executive Board of the IMF today completed the first review under the second annual arrangement under the Enhanced Structural Adjustment Facility for Benin. As a result, Benin will now be able to access SDR 3.624 million (about US$5.1 million) from the IMF.

"Directors welcomed the authorities' commitment to maintain a stable macroeconomic framework, implement structural reforms, improve social services, and reduce poverty. These were the key determinants of Benin's economic performance in 1998 and early 1999, when real per capita GDP growth remained robust, inflation continued to be moderate, and fiscal performance was satisfactory, despite difficulties in the cotton sector.

"Directors welcomed the authorities' efforts to improve the efficiency of the public sector by strengthening tax administration and budget procedures, as well as by adopting a performance-based compensation system for the civil service. These measures would allow for adequate levels of expenditure on the social sectors and public investment.

"Directors, however, expressed concern about the worsening situation in the cotton sector following the recent sharp drop in production and world prices, and the broad repercussions that this was expected to have on the rest of the economy. They urged the authorities to act promptly to ensure the sector's long run competitiveness by resolving financial problems and by adhering to the timetable for its full liberalization.

"Directors regretted delays in implementing structural policies and stressed the need to accelerate the pace of reform. In the period ahead, Directors urged the authorities to complete the civil service reform and open all sectors to private investment so as to broaden and strengthen Benin's economic base. They were encouraged by the improvement in social policies and outcomes but stressed that stronger budget management was required to ensure an adequate level of social spending and public investment," Fischer said.