Macroeconomic Policy Development in Benin

Image: Getty, Peeterv
Image: Getty, Peeterv

This document outlines the economic impact of the COVID-19 pandemic in Benin. We focus on the monetary and fiscal policy implemented by the government of Benin and the Central Bank of West African States (BCEAO).

Summary:

  • We found that the government and the central bank acted rapidly to contain the spread of the virus to minimise any adverse economic consequences.
  • Fiscal policy took the form of cash transfers and subsidies for households and firms. Monetary policy expanded liquidity through banking and microfinance institutions.
  • A portion of liquidity was specifically allocated to the agricultural sector to ensure food security.
  • The expansion in liquidity increased consumer prices, which increased the cost of living and could potentially increase poverty.
  • Future fiscal policy should better target those households most impacted by the price increase.

3 Dec 2021