Country Report Benin April 2008

Economic policy: Capacity constraints lead to underspending

A key to the government's strong fiscal performance has been strong revenue collection and restrained government spending. However, government investment has been slowed by the implementation of extremely cautious fiscal allocation procedures. The 2008 budget (January 2008, Economic policy), proposes spending of CFAfr1trn (US$2.2bn), an increase of 17.2% on the budget for 2007. The budget was passed by parliament without significant changes on December 29th 2007. The minister of finance has argued that the weak spending level of the government comes from a lack of institutional capacity in line ministries, which hinders the disbursement of funds. For example, out of an allocation of CFAfr700bn in the 2007 budget, the Ministry of Primary Education only spent 58%, while other ministries recorded disbursement levels as low as 9%. As a result, there are serious doubts about the ability of the various ministries to use up the increased funding levels provided for in the 2008 budget.

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