The Beninese economy is facing headwinds after next-door neighbour Nigeria scrapped petrol subsidy, followed by political unrest in Niger Republic, the International Monetary Fund has said.
Benin depends on Nigeria for most of its export and its economy is primarily based on informal trade with Nigeria.
The Beninese economy grew 6.3% in the first half of 2023. But smuggled petrol from Nigeria, a mainstay for the country, has risen 60% since Nigeria removed fuel subsidy in May, exerting inflationary pressure on the country’s economy.
“After strong performance in the first half of the year, the Beninese economy faces headwinds from Niger border closure amidst regional sanctions after the recent coup and higher prices of gasoline following pump price hikes in Nigeria,” said Constant Lonkeng who led an IMF team to the West African nation last week.
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Benin is undergoing fiscal consolidation, underpinned by tax collection, to respond to the new developments. Budget support to Benin from development partners is expected to be larger than programmed this year.
The government has also requested IMF support under the new Resilience Sustainability Fund (RSF). In this context, the IMF team—joined by experts from the Global Center on Adaptation (GCA)—explored the authorities’ climate agenda during the visit.
The mission met with Senior Minister of Economy and Finance Wadagni, Senior Minister of Development and Coordination of the Governmental Action Bio Tchané, Minister of Justice and Legislation, Detchenou, Minister of Social Affairs and Microfinance Tognifode, National Director of the Central Bank of West African States (BCEAO) Assilamehoo, and other senior government officials.
The team also met with the donor community, the banking association, the civil society, private sector representatives and the women business association.
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