Located in West Africa, Benin is a natural corridor between Nigeria and countries of the West African Economic and Monetary Union (WAEMU). In light of the country’s stable political environment and commitment to key economic policy measures, Benin is expected to exhibit strong growth in the medium term, while keeping inflation low and the fiscal position strong. Since 2016, the Government has worked to launch the structural transformation of the economy, with an ambitious government action program dubbed "Revealing Benin" which is centered around three main pillars: (i) strengthening democracy, the rule of law, and consolidating governance; (ii) pursuing the structural transformation of the economy, in particular the integration of national and regional value chains (supported by measures to enhance the business environment); and (iii) improving the well-being of the population. The Government concluded on July 8, 2022, a 42-month IMF-supported program under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF), with a financial package to the tune of nearly US$650 million. The program seeks to help address pressing financing needs, support the country’s National Development Plan centered on achieving Sustainable Development Goals (SDGs) and catalyze donor support. In addition, building on Benin’s strong legal and institutional foundations for climate action, a staff-level agreement was reached on October 26, 2023 on a new two-year program under the IMF Resilience and Sustainability Facility (RSF) and the completion of the Third EFF/ECF review (contingent on approval by IMF Management and Executive Board). Reform measures under the RSF aims to support reform in four areas: 1) mainstreaming climate considerations in policymaking; 2) enhancing adaptation to climate change, including resilience building at the community level and climate-proof social safety nets; 3) mitigating transition risks, notably through a comprehensive energy subsidy reform; and 4) mobilizing private climate finance via the development of a climate financial information architecture.
