In March 2003, the World Bank and International Monetary Fund (IMF) agreed to support a comprehensive debt reduction package for Benin under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. Debt relief under HIPC amounts to approximately $460 million. Benin received $27.1 million in 2002 and received $32.9 million in 2003. HIPC will reduce Benin's debt-to-export ratio, freeing up considerable resources for education, health, and other anti-poverty programs.

Despite its growth, the economy of Benin still remains underdeveloped and dependent on subsistence agriculture, cotton production, and regional trade. Inflation has subsided over the past several years. Growth in real output averaged a sound 5% from 1996 to 2003, but a rapid population rise offset much of this growth on a per capita basis. Real economic growth for 2004 was estimated at 5%. Commercial and transport activities, which make up a large part of GDP, are vulnerable to developments in Nigeria, including fuel shortages. Recent heightened enforcement of Nigerian customs regulations, an unfavorable exchange rate with the Naira and difficulties at Cotonouís port have contributed to the economic downturn.