Country Report Benin April 2008

Summary

Outlook for 2008-09

The president, Boni Yayi, will remain in power over the forecast period. His position has been strengthened by the March 2007 legislative election, in which his coalition, Force cauris pour un Bénin émergent (FCBE), secured the largest number of seats and negotiated a pro-government majority in the National Assembly. This is expected to facilitate the implementation of Mr Yayi's reform programme. Meanwhile, the main traditional parties, whose decline has been confirmed by their poor scoring in the legislative poll and their exclusion from the government, will remain weak. Mr Yayi and his government will remain broadly on track with the economic reforms agreed under Benin's poverty reduction and growth facility (PRGF), although they could face popular opposition to structural reforms. Real GDP growth is forecast to rise to 5% in 2008 and 5.5% in 2009, owing mainly to a recovery in re-export activity and cotton production and strong growth in construction.

The political scene

In March the four main opposition parties in the National Assembly announced a list of criticisms of Mr Yayi's government. Local and municipal elections were delayed again from February and are now to take place on April 20th. The elections have been plagued by funding and logistical problems. A technical commission charged with proposing changes to the constitution was established in February, after the idea had first been mooted in October 2007.

Economic policy

In mid-March the IMF's fourth review of Benin's PRGF commended the government's performance in improving fiscal management. Standard & Poor's Sovereign Ratings Service confirmed Benin's B-ratings for both long-term and short-term credit in mid-December 2007. The Ministry of Finance has highlighted a lack of institutional capacity as a major cause of underspending. In a setback to the government's privatisation programme the national oil marketing company, Société nationale de commercialisation des produits pétroliers (SONACOP), was renationalised in January.

The domestic economy

The government has ordered the purchase of buffer food stocks to help offset food price inflation. Positive developments have continued in the agricultural sector, but poultry suffered from an outbreak of bird flu in early 2008. New investments in cement production have been announced. Substantial investments to improve Cotonou's international airport and sea port have been announced.

Foreign trade and payments

According to World Bank figures, Benin's stock of external debt fell to just US$824m at the end of 2006, from US$1.86bn at the end of 2005-a result of debt relief received under the multilateral debt relief initiative (MDRI) in 2006.

© 2008 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
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