Country Report Benin April 2008

Outlook for 2008-09: Policy trends

Over the forecast period economic policy will continue to be guided by the current three-year poverty reduction and growth facility (PRGF) with the IMF, which was originally set to expire in August 2008 and was recently extended until August 2009. It will focus on fiscal consolidation by strengthening revenue-generation and restraining recurrent budgetary expenditure in order to release more funds for priority sectors, and on improving the business environment in order to attract further private investment. Priority-sector spending will be guided by the government's new poverty reduction strategy paper (PRSP) for 2006-09. Its main aims are improving literacy and access to basic education; healthcare and safe drinking water; combating HIV/AIDS and malaria; fighting corruption; consolidating democracy and decentralisation; creating employment; giving the poor better access to revenue-producing activities; and developing sound policies on land management.

The government's privatisation programme is expected to continue to move ahead slowly over the forecast period. Problems have been highlighted following delays to various privatisation initiatives affecting the cotton sector, the port of Cotonou (Port autonome de Cotonou, or PAC), and the electricity and telecommunications parastatals. The privatisation of the cotton parastatal, Société nationale pour la promotion agricole (SONAPRA), which had been expected to be completed by the end of September, met with financial irregularities, requiring the process to begin anew at the end of 2007. Another serious setback occurred in January 2008, when the national oil marketing company, Société nationale de commercialisation des produits pétroliers (SONACOP), was renationalised, following a contract dispute over payments to the government. The divestiture of the state-owned Bénin Télécoms and of the water and electricity utility, Société béninoise d'électricité et d'eau (SBEE), scheduled for the end of June and September 2008, is not expected to take place as planned. Although the existence of a pro-government majority in the National Assembly should help to push forward unpopular measures, there are concerns that the trade unions could delay the whole privatisation process. The privatisation of SONAPRA and the SBEE are particularly controversial and could be politically, economically and socially disruptive. Over the forecast period the government will also push ahead with large infrastructure projects, including the upgrading of new ports and airports.

© 2008 The Economist lntelligence Unit Ltd. All rights reserved
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