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Economic performance of The Republic of Benin remains strong despite a less supportive external environment and the border closure with Nigeria, the International Monetary Fund has said.
The Brenton Woods institutions made this known on Friday after its Executive Board’s Fifth Review Under the Extended Credit Facility Arrangement with that country.
Though Benin’s real GDP is expected to slow down to 6.4 percent in 2019, growth should bounce back in 2020 and remain sustained over the medium term, buttressed by vigorous cotton production, construction, and port activity, it said.
The IMF assessment of the Francophone country shows the nation’s program implementation “continues to be very satisfactory,” as Benin also met all “end-June 2019 QPCs and the September 2019 structural benchmark.”
According to IMF, “The macroeconomic and structural policies outlined by the authorities are adequate to pursue the program’s objectives, and risks to program implementation are deemed manageable.”
Nigeria launched a partial border closure with its West African neighbours in August to tackle smuggling of rice and other goods and in November announced that all trade via land borders had been stopped indefinitely.
Benin Republic to the west and Niger Republic to the north had served as entreports into Nigeria for consumer goods such as automobiles, rice, vegetable oil, textile materials and others from Europe.
The joint communique from a recent meeting in Nigeria’s capital, Abuja, said the Benin and Niger delegations had appealed for the immediate re-opening of Nigeria’s borders.
The IMF review, however, showed that Benin’s draft budget targets a fiscal deficit of 1.8 percent of GDP, with a fiscal adjustment of ¼ percent of GDP relative to 2019, expected to protect capital and social spending.
This is as the institution cautioned that significant increase in the share of external debt in total debt in the past two years should be checked.
“The recent debt reprofiling operation and the Eurobond issuance have contributed to lowering borrowing costs, diversifying the financing structure, and extending debt maturity. However, these operations can also generate new vulnerabilities that will need to be mitigated,” IMF noted.
