WASHINGTON, June 16 (Xinhua) -- The International Monetary Fund(IMF) will increase financial assistance to Benin by 150 percent and approved 16.4 million U.S. dollars on Monday to mitigate the impact of the high food and fuel prices, according to the IMF website.

    The Executive Board of the IMF agreed to augment the original aid of 6.19 million SDR (10 million U.S. dollars) to 9.29 million SDR (15 million U.S. dollars) under the IMF's Poverty Reduction and Growth Facility (PRGF) arrangement. A total of 10.17 million SDR (16.4 million U.S. dollars) in aid will be disbursed to Benin after the board completed the 4th review of Benin's economic performance.

    Murilo Portugal, IMF Deputy Managing Director and Acting Chair said Benin's economic growth and poverty reduction task is likely to be jeopardized in an increasingly unfavorable external environment, although an upturn in economic growth and its low inflation show it is benefiting from its prudent fiscal policies and external debt relief.

    He said rising food and fuel prices have worsened Benin's terms of trade, sharply pushing up inflation and adversely impacting vulnerable social groups.

    "Preservation of fiscal and debt sustainability will require continued prudent debt management relying on concessional external financing," Murilo said, "therefore the IMF is increasing the aid available to help Benin's authorities consolidate recent gains in macroeconomic stability and facilitate adjustment."

    He noted that Benin's authorities have already taken measures to increase revenue and contain expenditure, such as its efforts to improve governance in revenue agencies and to strengthen tax and customs administration.

    Reforms in key sectors were also encouraged to reduce core economic vulnerabilities, including a strategy change in the cotton sector, restructuring of state-owned telecommunications andelectricity companies, and judicial and land tenure systems reform,facilitating credit for small- and medium-sized enterprises, Murilo said.