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15SUSTAINABILITY4.14 Likely. There was no reversal in policies. Moreover, the initial steps taken underSAC-I permitted to arrive at a consensus on the content of SAC-II. From then on, itbecame clear that it would have been very difficult for any government to backtrack onreforms.BANK PERFORMANCE4.15 Satisfactory. The key conditions for opening the economy were well identifiedand prioritized. In that sense, quality at entry was satisfactory, but, at preparation, theBank overestimated GOM’s commitment, a shortcoming which affected also thePAIGEP and the PATESP. The Bank correctly made the processing of the projectconditional on actual progress, given the country’s prior record. It was also right, afterdisbursement, to insist on pursuing the agenda before launching the appraisal of SAC-II.This period provided the Bank with the necessary insight into GOM’s priorities andconstraints and thus helped clarify the content of SAC-II. However, the Bank did notseize the opportunity to deepen the dialogue on the conditions amenable to widening thetax base, raising revenue, and redirecting resources to the social sectors. It became tooabsorbed by the privatization of the large PEs.BORROWER PERFORMANCE4.16 Moderately Satisfactory. Performance varied according to components anddegrees of commitment and ownership. Discipline was demonstrated in macro-economicmanagement and in curbing inflation and there was some commitment to liberalize thePSD framework. But GOM was unable to overcome the obstacles to privatization and toinitiate a program to improve public services and start tackling poverty reduction.5. The Private Sector Development and Capacity BuildingProject (PATESP)BACKGROUND5.1 The project had its origin in the economic and sector work by the Bank and IFC inthe early 1990s, 13 which had identified the obstacles to private sector-led growth andhighlighted the need to improve the general business environment and strengthen themanagerial, technical, and financial capacity of existing enterprises. Also, in 1994-95,the private sector had become increasingly vocal in demanding reforms and progress inprivatization. With the new leadership in place in mid-1996, the stage was set to design aproject aimed at supporting the PSD components of the reform program. The newclimate had allowed setting clearer objectives for PSD under SAC-I. 1413 Madagascar: New horizons – Building a Strategy for Private Sector, Export-led Growth. A Private SectorAssessment, Report No. 14385-MAG, May 31, 1995.14 SAC-I and the PATESP were approved by the Bank Board two months apart in March and May 1997.