On July 5, 2018, S&P Global Ratings assigned its 'B+/B' long- and short-term foreign and local currency sovereign credit ratings to Benin. The outlook is stable.
The transfer and convertibility (T&C) assessment is 'BBB-'. Benin is the 132nd sovereign rated by S&P Global Ratings.
The stable outlook balances our expectation of strong economic growth and fiscal consolidation against risks of weaker reform delivery than we currently anticipate.
We could raise the ratings if the pace of Benin's economic growth is materially stronger than we currently forecast, or if external and fiscal deficits and net government debt as a share of GDP fall substantially.
Conversely, we could lower the ratings on Benin if economic and fiscal reform slackens, leading for example to sluggish real GDP growth or to a slippage of fiscal performance. Rating pressures could also emerge if the general government debt and interest burden increase significantly.
The ratings on Benin are supported by our expectation that the country's economic activity, as well as its external and fiscal positions, will gradually strengthen in the coming years, spurred by Benin's program of pro-growth reforms.
The ratings are constrained by Benin's low per-capita income, high external financing needs, and rapidly increasing public debt. Although we consider that Benin's membership in the West African Economic and Monetary Union (WAEMU) limits its monetary flexibility, it also lessens external risks and successfully anchors low inflation.