Benin saw its local currency rating raised from A- to A by the Bloomfield Investment Corporation agency. Benin is with Côte d’Ivoire and Senegal the three countries of the West African Economic and Monetary Union (UEMOA) rated A, which reflects good management of public accounts and a negligible risk of default in national currency.
In the long term, Benin’s credit quality is high. “The protective factors are good. However, the risk factors are more variable and more important in times of economic pressure, ”explains Bloomfield.
In the short term, the certainty of timely repayment is good. “The liquidity factors and the fundamentals of companies are healthy. Although ongoing financing needs may increase total financing requirements, access to capital markets is good. The risk factors are minimal, ”explains the agency based in Abidjan.
Benin’s rating is based on the following positive factors:
▪ A strong mobilization of budgetary resources compared to forecasts, despite the double shock of the economic and health crisis;
▪ The establishment of a free trade area with Nigeria underway after the reopening of land borders in December 2020;
▪ A viable public debt with a moderate risk of debt distress;
▪New projects in current development plans, the socio-economic benefits of which should lead to a balanced budget for the State;
▪ A relatively stable political environment;
The main factors contributing to the fragility of Benin’s credit quality are as follows:
▪ An increase in the budget deficit in 2020;
▪ Delays in the implementation of certain
flagship projects of the 2016-2021 PAG;
▪ A terrorist threat still present throughout the region.