Moody’s Upgrades Benin Credit Rating to Ba3 on Growth, Debt Gains

BREAKING NEWSAugust 10, 2026 at 11:56 AM UTC

TLDR

Moody's upgraded Benin's sovereign rating to Ba3 from B1, citing growth, fiscal management, and progress on public debt.
Benin's economy expanded by 8.1% in 2025, with Moody's expecting annual growth of 6.5% to 7% through 2030.
Benin improved measures across various fronts, but challenges remain in government revenue and debt sustainability.

Moody’s Ratings upgraded Benin’s sovereign rating to Ba3 from B1 and changed the outlook to stable from positive, citing growth, fiscal management and progress on public debt. The change applies to Benin’s local- and foreign-currency issuer ratings and to debt issued by Benin Sukuk SA. Ba3 remains 3 notches below investment grade.

Benin’s economy expanded 8.1% in 2025, its fastest growth since 1990, after averaging 6.6% a year since 2018. Moody’s expects annual growth of 6.5% to 7% through 2030. A rebasing of national accounts to 2023 from 2015 increased measured nominal GDP by about 25% to $29 billion.

The government deficit fell to about 3% of GDP in 2025 from 7% in 2021, while tax revenue increased by 2.9 percentage points of GDP. Public debt, which peaked at 61% of GDP in 2023 under Moody’s old GDP base, is projected to fall to about 55% by 2028. The average cost of government debt was 3.4% at the end of 2025, with an average maturity of almost 9 years.

Benin has also changed how it raises money. The government issued an SDG-linked Eurobond in 2021, a 14-year dollar bond in 2024 and its first sovereign sukuk in 2026. External debt accounts for 77% of total debt, though 85% of the debt stock is in euros or CFA francs, limiting currency risk because the CFA franc is pegged to the euro.

Risks remain. Government revenue, including grants, was 15.8% of GDP in 2025, against a 27.2% median for Ba-rated sovereigns. Moody’s also cited low income, security risks from the Sahel and climate exposure. A reclassification of loans to state companies added 7 percentage points to the reported debt ratio, showing gaps in past debt reporting.

Points clés à retenir

The upgrade gives Benin more room in debt markets, but it does not put the country near investment grade. Ba3 is still 3 notches below Baa3, so investors will continue to price in credit risk. The change matters because Benin has improved several measures at the same time: growth has stayed above 6% for years, the fiscal deficit has returned to the 3% WAEMU limit, debt maturities have increased and the government has added new funding instruments. Its IMF programme, which ended in February, met all quantitative criteria and 23 structural benchmarks, supporting the case for policy continuity. The main constraint is revenue. At 15.8% of GDP, government revenue remains below the level of countries with similar ratings, limiting the cash available to service debt and fund investment. The 77% share of external debt is another point to watch, even though euro and CFA franc borrowing limits part of the currency risk. A higher rating can lower borrowing costs if investors demand a smaller risk premium, but the effect will depend on global rates and market conditions. Another upgrade will require Benin to raise income and revenue, widen its export base and keep debt reporting and fiscal policy on track.

Benin