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IMF approves US$ 151.03 million credit facility for Benin

11.04.2017

The credit facility focuses on enhancing financial intermediation and preserving macroeconomic stability in Benin

The International Monetary Fund's (IMF) Executive Board has approved US$ 151.03 million for Benin to enhance the nation's economic and financial reform initiatives.

The financial package which comes under the Extended Credit Facility (ECF) is a three-year arrangement designed to propel official and private financing, operation of credit bureau and their efforts to promote financial inclusion, preservation of macroeconomic stability, alleviate the impediments to inclusive growth and creation of fiscal space for investment among others.

According to the deputy managing director and acting chair of IMF, Tao Zhang, "despite negative spillovers from neighbouring countries, Benin's economy rebounded in 2016 and its outlook is favourable. Inflation remained subdued and the fiscal deficit narrowed, reflecting the authorities' efforts to contain expenditure in the face of continued weak revenue performance."

The authorities' goal is to strengthen domestic revenue mobilization and improve the quality of spending to create fiscal space for infrastructure and priority social spending while preserving debt sustainability.

The authorities' measures to enhance financial intermediation-including operationalizing the credit bureau-and their efforts to promote financial inclusion will help sustain healthy credit expansion and support private sector-led economic growth. Implementing the new harmonized regional resolution framework and strengthening the supervisory body for microfinance institutions will be critical to strengthen financial sector supervision.

With the decision of the IMF executive board, $21.58 million will be disbursed immediately while the remaining amounts will be phased over the span of the program, subject to semi-annual reviews.