CHAPTER FOUR: ECONOMIC GOVERNANCE AND MANAGEMENT __________________________________________________________________________ 391. However, it is important to note that the exchanges with stakeholders showed that they perceive this privatisation more as a condition imposed by multilateral development banks than as meeting a real need for economic management. The level of ownership of the structural reforms has remained low. 392. Admittedly, public financial management has made some progress, particularly in results-based management and in the preparation of MTEFs. However, there are still some major constraints in the auditing of public expenditure. A new strategy is being finalised to reform the public service. With regard to good governance in this area, a national strategic plan for the fight against corruption was adopted in 2002 and the new authorities have confirmed their intention to conduct a new survey on corruption. 393. Basis for macroeconomic forecasts. Macroeconomic forecasts are based on the Harrod Domar projection model. The macroeconomic forecast model is used for preparing the budgetary framework and indicates the maximum resources for each sector at the time of preparing the MTEFs. This static model needs to be improved to take into account programme budget requirements, and needs to be made more exhaustive to cover all sectors of activity. Furthermore, the government should have dynamic models to facilitate behaviour analysis and to assess the impacts of implementation policies. 394. Sectoral and microeconomic policies. The efforts made to improve the macroeconomic framework are indisputable. However, the expected results could not achieve a sustainable increase in market output – which is mainly based on cotton – nor reduce the level of poverty significantly. 395. In the agriculture and forestry sector, the implementation of the programme budget for the agricultural sector encountered difficulties with regard to mobilising resources, and stakeholders have not mastered budgetary procedures. This alarming situation also exists in the social sectors of health and education, which are priority areas for poverty reduction. Public expenditure in the social sectors remains low. However, decisions taken for the 2007-2008 financial year (see Chapter Six on socioeconomic development) open prospects for new hope. 396. In the industrial sector, administrative sluggishness and obstacles to investment contribute greatly to increases in operational costs and to the risks facing the formal sector. More than 80% of the 400 formal enterprises interviewed in the World Bank survey on investment climates consider corruption in Benin, the functioning of the justice system, as well as customs and fiscal procedures as being very serious obstacles to their development. Similarly, delays in the implementation of the privatisation process in the electricity sector reduce the competitiveness of enterprises because of frequent outages and the high cost of electricity. 397. Benin has a good image with its development partners. However, the progress made at the macroeconomic level has not significantly reduced poverty, which 146