Benin’s efforts to promote macroeconomic stability and economic growth gets World Bank support

The World Bank approved a $40 million (about FCFA22 billion) International Development Association (IDA) credit to boost the Government of Benin’s efforts to maintain fiscal sustainability and promote economic growth.

The Fiscal Reform and Growth Development Policy Financing (FRG1) is the first in a series of two operations aimed at supporting the Government’s reform program. The new operation will enhance macroeconomic stability by supporting the implementation of reforms to strengthen fiscal management. It will also help promote economic growth by endorsing measures to increase agricultural productivity and competitiveness and consolidating the financial viability and production capacity of the power sector.

“This development policy operation is timely for Benin as the country’s medium-term growth prospects are favorable, underpinned by a continued strength in agricultural production, sustained public and private investments, and by the strong government’s commitment to create fiscal space and improve the efficiency of public spending,” said Pierre Laporte, World Bank Country Director for Benin.

Benin’s comparative advantage in agriculture remains largely unexploited and the unpredictable power supply is a key constraint to private sector growth, economic formalization and productivity increase. In the agricultural sector, the new program will prioritize the sector’s policy and governance framework while in the power sector, it will help to strengthen its financial viability, and to attract private sector participation to increase production capacity, including in renewables.

Key reforms agreed under the FRG1 contribute to improving transparency and tax compliance so as to increase domestic resources mobilization, increasing the efficiency of public expenditures in order to create fiscal space, promoting the development of agricultural value chains, quality of agricultural products, and access to finance in the agricultural sector to increase agricultural productivity and competitiveness; and strengthening the financial viability of the power sector and its production capacity.

The new budget support program is consistent with Benin’s Government Action Plan (GAP) aimed at consolidating democracy and governance, promoting a structural transformation of the national economy, and improving the living conditions of the populations. It also aligns with the World Bank Group’s twin goals of poverty reduction and shared prosperity and the World Bank’s Partnership Strategy for Benin.

The FRG1 will be released in a single tranche.

Original source: World Bank
Published on 28 November 2017