··-~ 86565 CONFIDENTIAL EDS200 1-0031 January 22, 2001 Statement by Matthias Meyer Date ofMeeting: January 23,2001 Benin: Interim Country Assistance Strategy We thank the staff for the candid assessment of Benin's development context. It highlights macro-economic achievements as well as better social indicators. It also stresses some weaknesses. Poverty stagnates and in some areas worsens. The agenda for work on socio-economic development and poverty reduction is full. Now, Benin must address the more difficult structural challenges to diversify its economy, build effective public institutions and promote gender equality. In the past, the Government and the Bank did not pay sufficient attention to poverty reduction. We like the main function of this Interim CAS, as Benin will receive support to strengthen its · ins~tutions and human capacities to elaborate a participatory PRSP which will then provide the material for a longer term country strategy. We welcome the Bimk•s intention to move toward comprehensive program support fostering local coordination and comprehensive sector programs. A main accent should be to build capacities to manage public expenditures, particularly at local government levels. This could pave the way for a progressive shift toward budget support. However, considering the scarce capacities and sometimes missing political will to carry out reforms, the road ahead is still very rocky. Therefore, budget support needs to be introduced cautiously. It should only be considered after successful institutional strengthening and in line with an acceptable PRSP. It should, in particular, not contribute to reinforcing centralized management, but rather to promoting local autonomy. The next CAS has to analyze and justify such a change. On the Interim CAS: • The Public Expenditure Reform Adjustment Credit (PERAC) is a prerequisite to achieving the objectives of this Interim CAS, since it will help to strengthen processes and skills for public financial management. • To achieve coherent fmandal management, comprehensive financial management and accounting systems will have to be introduced at the central as well as at local levels. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without the consent of the Executive Director concerned. 2 These systems will have to embrace the entire budgeting cycle, including transparent public expenditure reviews and medium term expenditure frameworks at the sector level. • An adequate devolution of authority to local officials will be essential to make public services more demand-driven and more accessible to the rural population. Such a move has been under consideration for a long time. • Although school enrollment has improved over the years, it is still substantially lower than in other Sub-Saharan countries. Special efforts will have to be made to bridge the gap between female and male enrollment. This is only one element in addressing the persisting gender inequality -- much more needs to be done and has to be covered in the PRSP. • · The fight against HIV I AIDS needs to be intensified. • Considering the snail's pace of sector reforms, we welcome the candid statements on the cotton sector. This sector is essential for exports but also ensures rural employment. We understand that PERAC has been postponed mainly because of poor progress on agreed reforms in this sector. We would like to hear more from .the staff about the events which led to the postponement of the Board's discussion on PERAC. What is now requested from the Benin authorities to get this Program approved and what is staff's assessment of the time involved? As mentioned at the beginning of this statement, the PERAC is essential for the support of capacity building and assistance in advancing the reforms necessary for a successful implementation of a PRSP. With respect to the elaboration of a fully participatory PRSP according to plans in the Interim PRSP, we urge the Government not to rush things but to adequately involve the different parties of civil society and to allow sufficient time for the important participatory process. For the follow-up and monitoring of the implementation of the PRSP, it is equally important to define transparent mechanisms in which civil society will need to be adequately involved. Considering ownership, the approach of the Bank and other development partners needs to be flexible and supportive. The lead shall clearly remain with the Benin Authorities, and we hope that the forthcoming presidential elections will have no negative effects on this process. Following the presentation of Government's plans to further elaborate on the PRSP, we request the Bank to inform us and other development partners about how and in which areas the Bank intends to support and assist Benin with the PRSP. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without the consent of the Executive Director concerned.