Macroeconomic Policy Development in Benin

The document analyzes Benin's macroeconomic response to COVID-19, noting that while stringent health measures and high citizen compliance kept infection rates low, the economy suffered a GDP growth decline from 6.5% in 2019 to 4.8% in 2020. The government and BCEAO deployed expansionary monetary policies to increase liquidity and fiscal measures including cash transfers and subsidies. While these actions supported the agricultural sector and prevented food price inflation, the overall expansion of the money supply contributed to higher consumer prices, potentially increasing poverty risks for vulnerable households.

• Benin's GDP growth rate declined from 6.5% in 2019 to 4.8% in 2020, with investment growth falling to -9.3% and exports decreasing from -3.5% to -24.1% during the same period.
• The government implemented a stringent health response and citizens showed high compliance with lockdown orders, resulting in relatively low COVID-19 mortality: 101 deaths as of May 2021, or 0.87 deaths per hundred thousand people.
• Fiscal policy focused on stimulating demand and alleviating poverty through 5.76 billion FCFA ($10 million) in cash transfers and subsidies for electricity and water, alongside targeted support for businesses, such as covering 70% of gross salaries for three months.
• Monetary policy, led by the BCEAO, expanded liquidity by adopting a full allotment strategy at a fixed rate of 2.5% and extending the collateral framework to include loans to 1,700 prequalified private companies.
• The government established specific financial mechanisms to support the agricultural sector and MSMEs, including a 30 billion FCFA ($55 million) subsidy fund to support a 100 billion FCFA ($185 million) interest-free financing line.
• Expansionary monetary policy led to a 14% increase in broad money supply from January 2020 to January 2021, which drove up the consumer price index (CPI) and increased the cost of living, though food prices remained relatively stable due to agricultural support.

APA

Heffernan, I. (n.d.). Macroeconomic Policy Development in Benin. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2021/12/CoMPRA-10-heffernan.pdf

Chicago

Heffernan, Ian. Macroeconomic Policy Development in Benin. South African Institute of International Affairs, n.d. https://saiia.org.za/wp-content/uploads/2021/12/CoMPRA-10-heffernan.pdf.

Wikipedia

{{cite report |last1=Heffernan |first1=Ian |title=Macroeconomic Policy Development in Benin |publisher=South African Institute of International Affairs |url=https://saiia.org.za/wp-content/uploads/2021/12/CoMPRA-10-heffernan.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{heffernanndmacroeconomic, author = {Heffernan, Ian}, title = {{Macroeconomic Policy Development in Benin}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2021/12/CoMPRA-10-heffernan.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }