Solid macroeconomic fundamentals helped Benin weather Covid-19

Solid macroeconomic fundamentals helped Benin weather Covid-19

After an Extended Credit Facility (ECF) agreement that ended in May 2020, Benin is negotiating a new financing program with the IMF. As part of these negotiations, the institution has sent a mission to the country to discuss recent economic developments.

The IMF Mission found that Benin’s economy has proven resilient to the covid-19 pandemic, thanks to its solid macroeconomic fundamentals. Benin’s strong macroeconomic fundamentals provided the country with “with much-needed fiscal space and continuous access to financing,” IMF said. This flexibility, coupled with $178 million in emergency financing from the IMF, has allowed the West African country to contain the economic impact of the crisis.

Benin is one of the few countries in the world to have maintained positive growth in 2020. Although down from 2019, when the economy grew by 6.9%, the 3.8% in 2020 was one of the strongest in Africa.

Since 2016, the West African nation has, as part of its government action program (PAG), begun a development strategy that has enabled it to have an average growth of 5.6% until 2019. The budget deficit dropped (0.5% in 2019) and the government’s debt management strategy has allowed it to stabilize at around 41% since 2018 after a gradual increase from 2016, according to the IMF. “The government responded swiftly to the pandemic, designing a package of mitigating health-related and economic support measures to the tune of 4.5% of GDP extending over 2020–22,” said Constant Lonkeng, IMF mission chief in the country.

“The mission discussed recent economic developments and the outlook, including the impact of the COVID-19 pandemic, and inquired about budget execution under 2021 supplementary and the assumptions underpinning the 2022 budget, as well as the authorities’ policy priorities going forward. These facts will inform the upcoming Article IV consultation and discussions on a possible Fund-supported program for Benin, expected to take place early next year,” he added.

To date, only 1.27% of the population in Benin has been fully vaccinated against covid-19, according to the latest figures from Africa CDC. However, the government plan a mass vaccination campaign in the coming months to reach herd immunity.

By Moutiou Adjibi Nourou