The Macroeconomic Policy Response to COVID-19 in Benin

This policy brief analyzes the macroeconomic response of the government of Benin and the Central Bank of West African States (BCEAO) to the COVID-19 pandemic, focusing on the use of expansionary monetary and fiscal policies to mitigate economic decline and ensure food security.

• The COVID-19 pandemic caused a significant decline in Benin's GDP growth, which dropped from 6.9% in 2019 to 3.9% in 2020, before rebounding to 6% in 2021. The service sector, the country's largest at 54.5% of GDP in 2019, saw its growth rate fall from 5.1% to 3.4% during 2019/2020.
• Benin's trade experienced severe contractions during the pandemic, with the export growth rate falling from 8.6% in 2018/2019 to -25% in 2019/2020, and import growth decreasing from 3.4% to -19.8%. Both recovered in 2020/2021, with exports growing by 17.9% and imports by 15%.
• The government implemented a fiscal stimulus totaling FCFA 244.5 billion ($434.1 million) in 2020. This included FCFA 5.76 billion ($10 million) for direct cash transfers and subsidies for water and electricity, as well as FCFA 4.1 billion ($7.5 million) to cover electricity bills for travel agencies and hotels for three months.
• Monetary policy was expansionary, with broad money supply increasing by 14% between January 2020 and January 2021. While this increased consumer price inflation and the cost of living, food price inflation remained relatively low due to targeted policies supporting the agricultural sector.
• To support the agricultural sector and SMMEs, the government established a FCFA 30 billion ($55 million) subsidy fund to support a FCFA 100 billion ($185 million) interest-free financing line. Additionally, the government guaranteed 50% of new credit issued, valued at FCFA 78.6 billion ($145 million), and capped SMME interest rates at 12%.
• The Central Bank of West African States (BCEAO) increased liquidity for banks through a full allotment strategy at a fixed rate of 2.5% and expanded the collateral framework to include bank loans for 1,700 prequalified private companies.
• The document recommends that future fiscal policy better target vulnerable households to maximize the fiscal multiplier effect and minimize leakages into imports and savings. It also suggests implementing contractionary monetary policy during periods of economic growth to combat inflation and prevent debt defaults.

APA

South African Institute of International Affairs (2022). The Macroeconomic Policy Response to COVID-19 in Benin. https://saiia.org.za/research/the-macroeconomic-policy-response-to-covid-19-in-benin/

Chicago

South African Institute of International Affairs. The Macroeconomic Policy Response to COVID-19 in Benin. 2022. https://saiia.org.za/research/the-macroeconomic-policy-response-to-covid-19-in-benin/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=The Macroeconomic Policy Response to COVID-19 in Benin |date=23 February 2022 |url=https://saiia.org.za/research/the-macroeconomic-policy-response-to-covid-19-in-benin/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2022macroeconomic, author = {{South African Institute of International Affairs}}, title = {{The Macroeconomic Policy Response to COVID-19 in Benin}}, institution = {South African Institute of International Affairs}, year = {2022}, month = feb, url = {https://saiia.org.za/research/the-macroeconomic-policy-response-to-covid-19-in-benin/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }