- The International Monetary Fund (IMF) has approved Benin's request for waivers that will allow the country to draw an amount equivalent to US$1.3 million under the Poverty Reduction and Growth Facility (PRGF) arrangement.
The waivers, according to the IMF were as a result of the non-observance of two performance criteria pertaining to net domestic financing and to the contracting of new non-concessional external debt.
The Executive Board of the IMF has also completed the fifth review of Benin's economic performance under the $23.1 million Poverty Reduction and Growth Facility (PRGF) arrangement which was approved on August 5, 2005, and subsequently extended to August 4, 2009. The arrangement was in June this year further augmented by 150 percent in order to help the country deal with rising food and oil prices.
Following the IMF's Executive Board discussion, Deputy Managing Director and Acting Chair, Murilo Portugal stated that Benin needed further structural reforms to free the country's growth potential, also mentioning recent privatisations, including of the Continental Bank-Benin as a step in the right direction to strengthening Benin's competitiveness.
"The authorities are encouraged to complete the comprehensive reform strategy for the cotton sector, restructure the state-owned telecommunications and electricity companies, and enhance the competitiveness of the port of Cotonou. These reforms are critical to improving the delivery of public services, lowering production costs, and alleviating capacity constraints," Mr Portugal said.
The IMF chief also said observed that the country would require a continued prudent public debt management, reliance on highly concessional external financing, and limited recourse to nonconcessional financing in the regional financial market if it was to preserve its fiscal and public debt sustainability.
"Supported by prudent fiscal policies, economic growth in Benin continues to strengthen, while the inflationary impact of higher international food and fuel prices is subsiding. The authorities are cognizant of the need to keep the momentum on fiscal consolidation and structural reforms, in order to preserve macroeconomic stability and to raise growth further to help reduce poverty. These efforts have become more crucial with the weakening of the global economy," he said.
The IMF said having allowed full pass-through of international prices, accompanied by well-targeted safety net measures, Benin authorities would further need to persevere in their efforts to improving governance in the revenue agencies and strengthen tax and customs administration. Mr Portugal added that it would also be critical for the country to improve public expenditure management and bolster civil service reform. "These reforms will create increased fiscal space for poverty reduction and growth-supporting expenditures," he said.
The West African country is considered among the poorest countries in the world, ranking 163 out of 177 on the United Nation’s Human Development Index in 2006.
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