Moody’s upgrades Benin’s sovereign rating to Ba3 as economic growth accelerates

Saturday 08 August 2026 - 14:00

By: Azzat Manal

Moody’s upgrades Benin’s sovereign rating to Ba3 as economic growth accelerates

Moody’s Ratings has upgraded Benin’s long-term sovereign credit rating from B1 to Ba3, while changing the outlook from positive to stable. The decision reflects what the agency describes as a gradual strengthening of the West African country’s credit profile, supported by robust economic growth, improved revenue collection and continued public-sector reforms.

Benin’s economic performance was a major factor behind the upgrade. The country recorded growth of around 8.1% in 2025, marking its strongest expansion since 1990. The economy has also maintained relatively strong growth over recent years despite external shocks affecting global and regional markets.

Moody’s expects annual economic growth to remain in the range of 6% to 7% over the medium term. Investment, industrial development and the structural transformation of the economy are expected to remain key drivers of this expansion.

The government is also seeking to increase domestic processing of raw materials and strengthen productive capacity, with the aim of creating greater value within the national economy.

Public finances have improved alongside economic activity. Benin’s central government deficit fell to approximately 3% of gross domestic product in 2025, compared with about 7% in 2021. The figure is now broadly aligned with the convergence threshold established by the West African Economic and Monetary Union.

The country has also made progress in increasing tax revenues. Government revenue has risen by several percentage points of GDP since 2021, although Moody’s notes that overall public revenue remains relatively low compared with other countries carrying Ba-level ratings.

Benin has simultaneously worked to diversify its debt-financing strategy. The country has accessed both regional and international capital markets and has increasingly used different financial instruments to broaden its investor base and extend debt maturities.

Recent operations have included a sustainability-linked bond and Benin’s first international dollar-denominated bond. In 2026, the country also completed its first Sukuk issuance, opening an additional channel for attracting investors.

Public debt is expected to continue declining after reaching a relatively high level in 2023. Moody’s projections indicate that the debt-to-GDP ratio could fall to approximately 55% by 2028 if the current fiscal trajectory is maintained.

Despite the rating upgrade, Benin remains below investment-grade status. Moody’s investment-grade category begins at Baa3, meaning that Ba3 is still three levels below the threshold separating speculative-grade debt from investment-grade securities.

The stable outlook indicates that Moody’s does not currently anticipate a major change in the rating in the near term. Continued economic reforms and consistent fiscal policies are expected to support the country’s gradual improvement.

However, several challenges remain. Benin continues to face relatively low income per capita and limited public revenues, while security risks in the wider Sahel region represent an additional vulnerability.

Climate-related risks could also affect the country's economic performance, particularly through their potential impact on agriculture, infrastructure and public finances. Maintaining strong growth while continuing fiscal consolidation and improving governance will therefore remain essential.

The upgrade nevertheless represents a positive signal for Benin’s international financial standing. Improved creditworthiness could help strengthen investor confidence and potentially support better financing conditions over time.

For the government in Cotonou, the next challenge will be to translate the improved sovereign rating into sustainable economic and financial gains while maintaining reforms, controlling debt and preserving the momentum of economic growth.