Information about Sub-Saharan Africa África subsahariana
Journal Issue
Share
Article

Benin: Fifth Review Under the Three–Year Poverty Reduction and Growth Facility Arrangement

Author(s):
International Monetary Fund
Published Date:
December 2008
Share
  • ShareShare
Information about Sub-Saharan Africa África subsahariana
Show Summary Details

I. Relations with the Fund

(As of October 31, 2008)

I. Membership Status: Joined: July 10, 1963; Article VIII

II. General Resources Account:

SDR Million%Quota
Quota61.90100.00
Fund holdings of currency59.7296.48
Reserve Position2.193.53
Holdings Exchange Rate

III. SDR Department:

SDR Million%Allocation
Net cumulative allocation9.41100.00
Holdings0.090.98

IV. Outstanding Purchases and Loans:

SDR Million%Quota
PRGF Arrangements13.6922.12

V. Latest Financial Arrangements:

TypeDate of

Arrangement
Expiration

Date
Amount Approved

(SDR Million)
Amount Drawn

(SDR Million)
PRGFAug 05, 2005Aug 04, 200915.4813.69
PRGFJul 17, 2000Mar 31, 200427.0027.00
PRGFAug 28, 1996Jul 16, 200027.1816.31

VI. Projected Payments to Fund 1/

(SDR Million; based on existing use of resources and present holdings of SDRs):

Forthcoming
20082009201020112012
Principal0.180.44
Charges/Interest0.100.250.250.250.25
Total0.100.250.250.420.69

When a member has overdue financial obligations outstanding for more than three months; the amount of such arrears will be shown in this section.

When a member has overdue financial obligations outstanding for more than three months; the amount of such arrears will be shown in this section.

VII. Implementation of HIPC Initiative:

Enhanced
I. Commitment of HIPC assistanceFramework
Decision point dateJul 2000
Assistance committed by all creditors (US$ Million) 1/265.00
Of which: IMF assistance (US$ million)24.30
(SDR equivalent in millions)18.40
Completion point dateMar 2003
II. Disbursement of IMF assistance (SDR Million)
Assistance disbursed to the member18.40
Interim assistance11.04
Completion point balance7.36
Additional disbursement of interest income 2/1.66
Total disbursements20.06

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts can not be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts can not be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI):

I. MDRI–eligible debt (SDR Million) 1/36.06
Financed by: MDRI Trust34.11
Remaining HIPC resources1.95
II. Debt Relief by Facility (SDR Million)
Eligible Debt
Delivery DateGRAPRGFTotal
January 2006N/A36.0636.06

The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end–2004 that remains outstanding at the time the member qualifies for such debt relief.

The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end–2004 that remains outstanding at the time the member qualifies for such debt relief.

Decision point-point at which the IMF and the World Bank determine whether a country qualifies for assistance under the HIPC Initiative and decide on the amount of assistance to be committed.

Interim assistance - amount disbursed to a country during the period between decision and completion points, up to 20 percent annually and 60 percent in total of the assistance committed at the decision point (or 25 percent and 75 percent, respectively, in exceptional circumstances).

  • Completion point - point at which a country receives the remaining balance of its assistance committed at the decision point, together with an additional disbursement of interest income as defined in footnote 2 above. The timing of the completion point is linked to the implementation of pre–agreed key structural reforms (i.e., floating completion point).

IX. Safeguards Assessments:

The Central Bank of West African States (BCEAO) is the common central bank of the countries of the West African Economic and Monetary Union, which includes Benin. The most recent safeguards assessment of the BCEAO was completed on November 4, 2005. The assessment indicated progress has been made in strengthening the bank’s safeguards framework since the 2002 assessment and identified some areas where further steps would help solidify it.

The BCEAO now publishes a full set of audited financial statements and improvements have been made to move financial reporting closer to International Financial Reporting Standards (IFRS). Furthermore, an internal audit charter has been put in place, mechanisms for improving risk management have been established, and follow–up on internal and external audit recommendations has been strengthened.

The results of continuous safeguards monitoring indicate that while certain vulnerabilities remain in internal control systems and legal structure, there has been some progress in other areas, including through: (i) improving the external audit process by adopting a multi–year audit program; (ii) establishing an audit committee; (iii) expanding disclosures on financial positions of WAEMU countries with the Fund in the notes to the annual financial statements; and (iv) further strengthening of the effectiveness of the internal audit function.

X. Exchange Arrangement:

Benin is a member of the West African Economic and Monetary Union (WAEMU) and has no separate legal tender. The union’s common currency, the CFA franc, is pegged to the Euro at a rate of CFAF 655.957 = EUR 1, consistent with the official conversions rate of the French franc to the Euro and the previous fixed rate of the CFA franc to the French franc of CFAF 100= F 1. On April 28, 2006, the rate of the CFA franc in terms of SDR was CFAF 769.68 = SDR 1.0. Effective January 1, 2007, the exchange arrangement of the WAEMU countries has been reclassified to the category of conventional pegged arrangement from the category of exchange arrangement with no separate legal tender. The new classification is based on the behavior of the common currency, whereas the previous classification was based on the lack of a separate legal tender. The new classification thus only reflects a definitional change, and is not based on a judgment that there has been a substantive change in the exchange regime or other policies of the currency union or its members. The exchange system common to all member countries of the WAMU is free of restrictions on payments and transfers for current international transactions subject to Fund jurisdiction.

XI. Article IV Consultations:

The last Article IV consultation discussions were held in Cotonou during March 3–17, 2008. The staff report (Country Report No. 08/230)) and selected issues paper were discussed by the Executive Board, and the 2008 Article IV consultation concluded, on June 16, 2008.

XII. ROSC Assessment:

An FAD mission conducted the fiscal module of a Report on Observance of Standards and Codes (ROSC) in May 2001. The mission recommended the adoption of a three–year action plan containing measures to improve expenditure management. The mission also identified a list of actions to be taken quickly to ensure that the authorities were able to monitor budget execution. The ROSC fiscal transparency module for Benin was circulated to the Board on June 6, 2002 (Country Report No. 02/158).

XIII. Technical Assistance for the last five years

A.Headquarters
DepartmentType of AssistanceTime of DeliveryPurpose
FADTechnical assistanceAugust 23–September 3, 2003Evaluating public expenditure management reforms and monitoring capacity of poverty–reducing expenditures.
FADTechnical assistanceOctober 22–November 5, 2003Evaluating the implementation of the action plan to strengthen domestic revenue and customs administrations
STATechnical assistanceNovember 11–24, 2004Assessing the quality of balance of payment statistics.
LEGTechnical assistanceApril 24–26, 2006Providing in–depth training on the AML/CFT framework
FADTechnical assistanceOctober 10–23, 2006Review of status of implementation of reforms to modernize the tax and customs administrations
FADTechnical assistanceOctober 30–November 13, 2006PFM diagnostic and preparation of a reform action plan
FADTechnical assistanceJune 16–30, 2008Diagnostic of the Tax System and preparation of a tax policy reform.
B. AFRITAC West
FADTechnical assistance2006,2007Customs Administration
FADTechnical assistance2006,2007Public Expenditure Management
FADTechnical assistance2006,2007,2008Tax Administration
MCMTechnical assistance2006,2007Bank Supervision and Regulation
MCMTechnical assistance2007, 2008Public Debt and Debt Sustainability
STATechnical assistance2006Government Finance Statistics
STATechnical assistance2007, 2008Multisector Statistics
STATechnical assistance2006National Accounts Statistics
STATechnical assistance2006, 2008Real Sector Statistics

XIV. Resident Representative:

Mr. Yao has been the Resident Representative since September 26, 2005.

II. Joint World Bank–IMF Work Program, 2008–09

TitleProductsProvisional timing of missionExpected delivery date
A. Mutual information on relevant work programs
Bank work program in next 12 months1. Country Assistance StrategySeptember 2008January 2009
2. Country Economic Memorandum (CEM)October 2008June 2009
3. Competitiveness and Growth Opportunity ProjectSeptember 2008March 2009
4. PRSC VSeptember 2008January 2009
IMF work program in next 12 months1. Fifth PRGF ReviewSeptember 2008December 2008
2. Sixth PRGF reviewMarch 2009June 2009
3. Discussion on a possible successor arrangement to the PRG FSeptember 2009December 2008
B. Requests for work program inputs
Fund request to Bank1. Policy note on the financial situation of SBEEDecember 2008
Bank request to Fund1. Review of the tax regime and conditions for a business friendly tax systemJune 2009
C. Agreement on joint products and missions
Joint products in next 12 monthsDSADecember 2008
FSAPJune 2009

III. Statistical Issues

1. Data provision has some shortcomings, but is broadly adequate for surveillance. Weaknesses exist in the areas of national accounts, public finance, monetary statistics, and balance of payments. Benin has participated in the General Data Dissemination System (GDDS) since 2001.

Real sector statistics

2. The country participates in WAEMU’s harmonization of statistical methodologies currently seeking regional improvements in the area of national accounts. Benin participates in the GDDS project for AFRITAC West countries to implement the 1993 SNA, a statistical register and an industrial production index are being developed. Implementation is not advancing as expected and the August 2008 West AFRITAC mission discussed with the authorities the necessary steps to accelerate the compilation of the revised accounts. and disseminate them by end–2008. Consumer prices are measured using the WAEMU harmonized consumer price index.

Government finance statistics

3. A key shortcoming is insufficient institutional coverage. Data provided for publication in the 2006, 2007, and 2008 (forthcoming) issues of the Government Finance Statistics Yearbook are limited to the “Budgetary Central Government,” covering only the principal ministries and some of the other units of central government. Data on general government is not available.

Monetary and financial statistics

4. Monetary and financial statistics are compiled and disseminated by the regional Central Bank of West African States (BCEAO). While institutional coverage of monetary statistics is comprehensive, accuracy is hampered by the use of 1990 sorting coefficients to estimate cross border amounts of banknotes among BCEAO countries, which in turn, are used to estimate currency in circulation and to adjust the net foreign assets of each member country. In August 2006, the BCEAO reported to STA monetary data for June 2006 for all its member countries using Standardized Report Forms., which are in line to Monetary and Financial Statistical Manual (MFSM), but has yet to implement SRF based reporting on a regular basis.

Balance of payments

5. Despite recent improvement in compiling balance of payments data in line with the Balance of Payments Manual, Fifth Edition, external statistics continue to be affected by shortcomings. A November 2004 STA technical assistance mission found: insufficient human resources devoted to balance of payments statistics by the national agency of the BCEAO; untested hypotheses and reference bases on trade and informal transactions; underestimation of transportation services; and overestimation of current transfers; limited coverage of direct investment; and a backlog of unsorted banknotes that impact the compilation of net external assets and international investment position. In addition, balance of payments statistics are disseminated with a lag of more than one year and the international investment position data with a lag of 18–month

6. Regarding trade data, the ASYCUDA customs computer system is now installed in all main border customs houses; ASYCUDA ++ is installed in the port and at the airport. The interconnection between the computer systems of the main departments of Customs has not been completed yet and the monitoring of import data needs to be improved.

7. Further improvement in the data for services and transfers (especially remittances) will depend on the intensification of the contacts with reporting bodies. The authorities are encouraged to enhance human and technical resources.

8. Concerning the financial account, the coverage of foreign assets of the private no banking sector is incomplete as the surveys of residents’ foreign assets remain very partial, and no use is made of an existing data source, viz. BIS statistics. The organization of an annual survey of foreign direct investment transactions is still at a very preliminary stage. The BCEAO has recently updated the compilation of commercial bank data on payments involving nonresidents; however these data are not used to produce annual balance of payments estimates, but rather to assess existing information.

9. The Caisse Autonome d’Amortissements (CAA) is responsible for signing international loan agreements, maintaining the debt database, and servicing the government’s external debt obligations. Since 1995, the CAA has been using the Commonwealth Secretariat Debt Recording and Management System. For the majority of creditors, the CAA’s database is fairly comprehensive and up–to–date, and contains accurate stock data, and produces projected debt–service flows on a loan–by–loan basis. For a small number of creditors, however, regular statements are not received.

Poverty data

10. Major methodological weaknesses remain regarding poverty data. In particular, the methodology used in household surveys raises concerns about the treatment of the nonfood expenditure share in the calculation of the poverty line, the division of the country into 12 agro-ecological zones, and the comparability of poverty statistics across urban and rural areas and across time. The authorities are implementing an action plan to address these methodological issues. The authorities have completed a modular survey of household living conditions to update the poverty profile in the context of the preparation of the second PRSP.

Benin: Table of Common Indicators Required for Surveillance(As of November 7, 2008)
Date of latest observationDate receivedFrequency of Data 7Frequency of Reporting 7Frequency of publication 7
Exchange RatesCurrentCurrentDDM
International Reserve Assets and Reserve Liabilities of the Monetary Authorities 107/0710/07MMM
Reserve/Base Money7/0810/08MMM
Broad Money7/0810/08MMM
Central Bank Balance Sheet7/0810/08MMM
Consolidated Balance Sheet of the Banking System7/0810/08MMM
Interest Rates 29/0810/08MMM
Consumer Price Index8/0810/08MMM
Revenue, Expenditure, Balance and Composition of Financing 3–General Government 4NANANANANA
Revenue, Expenditure, Balance and Composition of Financing 3–Central Government12/063/07MMA
Stocks of Central Government and Central Government–Guaranteed Debt 5NANANANANA
External Current Account Balance200612/07AAA
Exports and Imports of Goods and Services200612/07AQA
GDP/GNP200706/08AAA
Gross External Debt200603/08AIA
International Investment Position 6200610/08

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market–based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign domestic bank and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability position vis–à–vis nonresidents.

Daily (D); Weekly (W); Monthly (M); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market–based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign domestic bank and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability position vis–à–vis nonresidents.

Daily (D); Weekly (W); Monthly (M); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).

Other Resources Citing This Publication