Benin - Joint World Bank–IMF Debt Sustainability Analysis

Overview & Synopsis

Benin’s overall and external public debt remain at moderate risk of debt distress, unchanged from the previous DSA (June 2025) following a recent upgrade in Benin’s Debt Carrying Capacity from moderate to strong due to a higher Composite Index score. Public debt was adjusted upwards for 2021-2024 to include external debt, totaling about 5.3 percent of GDP at end-2024, that was on-lent to SOEs but previously excluded from the central government debt’s perimeter, leading to higher levels of debt indicators. All projected external debt burden indicators remain below high-risk thresholds under the baseline scenario, except for a temporary breach to the debt service-to-revenue and debt service-to-exports ratios in 2025 due to a debt management operation (DMO) and early repayment of a Eurobond maturing in 2032. External debt burden indicators breach high-risk thresholds in selected stress tests, particularly for export and depreciation shocks. A high debt service-to-revenue ratio leaves debt susceptible to revenue underperformance or a tightening of market conditions that would increase rollover costs. Fiscal discipline, sustained revenue mobilization efforts, alongside continued improvement in debt coverage and a proactive debt management approach and a borrowing strategy that prioritizes concessional terms, would mitigate the risk of debt distress.