An International Monetary Fund (IMF) mission visited Cotonou during January 13–21, 2011 to continue discussions on the first review of a program supported by the Extended Credit Facility, which was approved by the IMF Executive Board on June 14, 2010. The mission followed an earlier mission in September-October 2010 (see Press Release No. 10/377) and discussions in Washington in October and December. The mission met with H.E. Dr. Boni Yayi, President of Benin; Mr. Pascal Koupaki, Minister of Planning, Development, Public Policy Evaluation, and Coordination of Government Action; Mr. Idriss Daouda, Minister of Economy and Finance; and other senior officials. The mission also held discussions with representatives of the National Assembly and the donor community.

At the conclusion of the mission, Mr. Mario de Zamaróczy, mission chief for Benin, issued the following statement:

“The adverse effects of the global economic crisis continued in Benin during 2010 and were compounded by the worst flooding in 50 years. Exceptionally severe floods in September and October spurred a major humanitarian crisis. The inundations affected about two-thirds of the country and resulted in loss of life. The immediate relief costs amounted to about 1 percent of current expenditure in 2010. The international donor community also provided emergency relief assistance. Preliminary estimates indicate substantial destruction and losses, especially in the agricultural sector.

“As a result of the continuation of subdued economic activity and of the impact of the floods, preliminary growth estimates for 2010 were revised slightly downward to 2.5 percent. It is expected that the economy will start to recover in 2011 with growth at 3.4 percent, in line with previous projections. Inflation remained under control in 2010, below the convergence criterion of the West African Economic and Monetary Union (WAEMU). The external current account deficit, excluding grants, improved, reflecting in part a rebound in exports.

“Revenue performance in 2010 fell short of program expectations. Revenue was below program objectives, owing largely to the effects of the global crisis and a sharp drop in imports for domestic consumption. To offset this underperformance, the authorities reined in non-priority current spending and domestically financed capital expenditure. As a result, all of the program’s quantitative criteria were met at end-June 2010, with the exception of that on net domestic financing, which was driven up, among others, by loans to public enterprises. During the second half of the year, the authorities made vigorous efforts to strengthen customs and tax administration capacities and controls to improve revenue collection. Their efforts were, however, stymied by the floods and recurrent strikes at the Ministry of Finance.

“The mission observed that the 2011 budget adopted by the National Assembly in December broadly supports a stable macroeconomic environment, conducive to growth and poverty reduction. Objectives therein include an increase in the revenue-to-GDP ratio to create fiscal space for capital investment and priority social spending, which the authorities undertook to monitor closely.

“The mission noted progress in structural reforms, in particular the advancement of the one-stop-window at the Port of Cotonou. It recommended, however, to accelerate the completion of other reforms included in the program.

“The mission would like to thank the authorities for their warm welcome, and close cooperation.”