BENIN'S CREDITWORTHINESS AS SEEN BY MOODY'S RATING AGENCY

Creditworthiness is a rating agency's assessment of the risk that an issuer's debt will not be repaid. The latter may be a country, a public entity, a commercial or industrial company or a financial institution. This credit quality is established after rigorous analyses of qualitative and quantitative parameters.

Already in June 2019, without having been solicited by the State, Moody's Investors Service (known more simply as "Moody's") awarded the Government of Benin a first rating (B2) of issuer in local and foreign currency, with a positive outlook.

This Moody's "highly speculative" rating was based on the following factors:

1. a "Low" level of economic strength;

2. institutional strength "Weak";

3. A "very low" level of public financial strength with a relatively high public debt; 

4. a "Moderate (-)" exposure to event risk.

The "positive outlook" was based on the anticipated continuation of fiscal consolidation and stronger GDP growth thanks to the successful implementation of the "Government Action Program" (PAG), which is likely to lead to a faster decline in public debt, financing needs and liquidity risks than in the scenario currently retained by Moody's.

On March 9, 2021, Moody's raised the long-term issuer and senior unsecured debt ratings of the Government of Benin by one notch, from B2 to B1 with a stable outlook, and still in the "highly speculative" category.

According to Moody's, this upgrade of Benin's rating is due to :

1. solid results in fiscal consolidation and improvement of the debt structure, supported by good public financial management;

2. increasing economic resilience, with robust growth prospects supported by ongoing structural reforms.

The stable outlook reflects Moody's mixed expectations that the economy will return to robust growth; and that Benin's fiscal and debt parameters will stabilize and improve comparatively over the medium term.

Finally, it should be noted that this latest Moody's rating is at the same level of appreciation of Benin's creditworthiness as the B+ rating with stable outlook assigned by Standard & Poor's in June 2020.