Benin report - Institut Africain de la Gouvernance

CHAPTER FOUR: ECONOMIC GOVERNANCE AND MANAGEMENT__________________________________________________________________________Continue developing and modernising the statistics system for thedissemination of prudential data in the financial sector, and for its speedydissemination to Parliament and to the public in general.Encourage the disclosure of information on the budget process to enablecitizens, and particularly civil society, to participate in budget preparationand in the monitoring of its implementation.Develop the capacities of the organs concerned, so as to ensure theeffective monitoring of existing measures and laws.4.3 Assessment of APR objectivesObjective 1:Promote macroeconomic policies that supportsustainable developmenti. Summary of the CSAR370. Macroeconomic context and quality of development. The CSAR indicatesthat the performance of Benin‟s economy has varied over the previous fiveyears. However, 2006 showed economic recovery, with a GDP growth rate of4.5% as against 2.9% in 2005. This recovery was sustained by improvementsin trade with Nigeria and a 26% increase in the port traffic.371. The economy remains vulnerable because of: (i) trade restrictions imposed byNigeria; (ii) competition from Lome Port, which increased after a decline inthe performance of Cotonou Port; (iii) cotton production below projections;and (iii) appreciation of the euro in comparison to the US dollar, whichimpacted negatively on economic activity, and particularly on cotton exportsto the Asian market. Production remains undiversified and cotton continues tobe Benin‟s major export product. Even though the inflation rate was containedwithin the limits of the community standard between 2003 and 2004, generalprice levels started rising from 2005 to almost 5% against a target of 3%.372. The government has pursued public finance reform but the results need to beconsolidated. The overall budget deficit increased from 3.3% of GDP in 2004to 4.3% of GDP in 2005. This was caused by a significant decline in revenueand an increase in total expenditure and net loans. This deficit was reduced toless than 3% in 2006.373. Public debt has become sustainable. Public debt started declining, particularlyin 2003, when Benin benefited from the HIPC Initiative. Indeed, the debtservice/revenue ratio started declining from 2004, thereby reflecting theoverall efforts made by the country to remain below the 15% level defined asthe international standard for outstanding payments. The ratio has beenreducing significantly since 2001 because of debts cancelled under the HIPC138