IMF says Benin pru­dent fis­cal pol­icy kept fis­cal deficits at man­age­able lev­els

The Pak Banker - - Front Page -


To­day the Ex­ec­u­tive Board of the In­ter­na­tional Mon­e­tary Fund (IMF) con­cluded the Ar­ti­cle IV con­sul­ta­tion with Benin.1 The Board also ap­proved the fourth re­view un­der the Ex­tended Credit Fa­cil­ity (ECF) ar­range­ment dur­ing the same meet­ing. Benin has con­sol­i­dated and re­in­forced re­cent gains in macroe­co­nomic man­age­ment, but sig­nif­i­cant chal­lenges re­main in ac­cel­er­at­ing eco­nomic growth and re­duc­ing poverty. Pru­dent fis­cal pol­icy has kept fis­cal deficits at man­age­able lev­els and has av­er­aged a ba­sic pri­mary sur­plus over the pe­riod 2010–June 2012. This pol­icy, com­bined with the ben­e­fits of the Heav­ily In­debted Poor Coun­tries (HIPC) and the Mul­ti­lat­eral Debt Re­duc­tion Ini­tia­tives (MDRI), has kept pub­lic debt low, at about 32 per­cent of GDP.

Real growth re­bounded af­ter the 2010 floods, to about 3½ per­cent in 2011 and is an­tic­i­pated to main­tain this rate through 2012. Au­thor­i­ties have made some progress on struc­tural re­forms and sig­nif­i­cantly im­proved dis­burse­ments of pri­or­ity so­cial ex­pen­di­ture. Chal­lenges re­main in achiev­ing pub­lic in­vest­ment tar­gets, in­fra­struc­ture devel­op­ment, and pro­mo­tion of pri­vate sec­tor ac­tiv­ity. Ap­pro­pri­ate mon­e­tary pol­icy by the Cen­tral Bank of West African States (BCEAO) has helped keep in­fla­tion low at about 2½ per­cent in 2010-11. A sig­nif­i­cant in­crease in fuel prices im­ported from Nigeria in Jan­uary 2012 re­sulted in a jump in the con­sumer price in­dex, but does not ap­pear to have a per­sis­tent in­fla­tion­ary im­pact. The re­cent spike in in­ter­na­tional food prices has not had a no­table im­pact in Benin, given the coun­try’s abil­ity to sup­ply ba­sic sta­ples with domestic pro­duc­tion.

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