Annex I. The Authorities’ Response
The authorities broadly shared the conclusions and recommendations of the report.8 They thought that, overall, the report adequately reflected developments in Benin during the period under review. They had the following observations on specific points:
On structural reforms, they noted that Benin had three major elections during 2006–08, which complicated the implementation of reforms. They stressed the progress made starting 2008 in disinvesting from public companies, including the completion of the privatization of the cotton ginning company, and the disengagement from the Continental Bank, two hotels, a cement company and a wood-processing company. They considered that this progress, together with that made on revenue measures, do not support the view that the authorities lacked ownership of the structural agenda.
On growth and competitiveness, they noted that, in addition to the factors noted in the report, the Beninese economy suffered from insufficient private investment and from a fall in imports of electricity. The Central Bank also noted that, going forward, the discussion of competiveness should be framed in the context of the intended move toward a currency union in the Economic Community of West African States (ECOWAS). 9
On fiscal issues, they stressed that measures were taken on the authorities’ own initiative in 2009 to limit the use of exceptional spending procedures, and that these measures were later incorporated into the new program with the Fund.
Because the program was interrupted for more than six months during the period under review, this EPA is of the longer form (see Ex Post Assessment of Members with a Longer-Term Program Engagement—Revised Guidance Note, paragraph 8).
The program defined the narrow primary balance as the difference between total revenue and expenditure excluding interests, foreign-financed investment, and net lending.
The fall in Benin’s ranking reflects slower progress than in other countries and a deterioration in absolute terms in a number of categories, including the time and cost to obtain a construction permit, export, or close a business.
The staff report for the third review noted that “relevant legal provisions on minimum time for bids preparation and submission were not observed, and there were allegations of insider trading and favoritism.”
The Community of Sahel-Saharan States (CEN-SAD) groups 28 African governments. Its 10th Summit took place in Cotonou in June 2008. The Beninese authorities launched a major program of public works to accommodate the Summit. These expenditures were not authorized in the 2008 initial budget and were partly processed through exceptional procedures (“ordres de paiement au Trésor”) in July and August 2008. A report on the preparation of the CEN-SAD Summit prepared by the Inspection Générate d’Etat (internal audit unit attached to the President) was submitted to the Council of Ministers in July 2009. According to the Beninese press, this report underscored delays in the achievement of the works, quality problems, financial overruns and irregularities both regarding public procurement and public expenditure management.
In particular, the program includes measures to improve the information systems of the tax and customs administration, the implementation of a one-stop window in the Port of Cotonou, the introduction of a personal income tax. The government is also expected to adopt a regulatory framework governing the energy sector.
A draft report was discussed with the authorities during a mission to Cotonou in November 11–15, 2010.
ECOWAS comprises Benin, Burkina Faso, Cape Verde, Cote d’Ivoire, the Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.