A $40 million credit is approved to help strengthen fiscal management, the financial viability and production capacity of the power sector and increase agricultural productivity and competitiveness
WASHINGTON, November 28, 2017--The World Bank today 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 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 (i) improving transparency and tax compliance so as to increase domestic resources mobilization, (ii) increasing the efficiency of public expenditures in order to create fiscal space, (iii) 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 (iv) 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.
* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 75 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.5 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have averaged about $18 billion over the last three years, with about 54 percent going to Africa.