Madagascar Unlocks $101 million IMF Loan
Madagascar has unlocked $101 million loans from the International Monetary Fund (IMF) after the conclusion of Article IV consultation yesterday. In a statement, IMF said its Executive Board also completed the First Reviews under the 36-month Extended Credit Facility (ECF) arrangement and under the Resilience and Sustainability Facility (RSF) arrangement.
Recall that the ECF and RSF arrangements were approved by the IMF Executive Board in June 2024. The completion of the reviews allows for the immediate disbursement of SDR 36.7 million or about US$48 million under the ECF arrangement and of SDR 40.7 million which is about US$53 million under the RSF arrangement.
In the statement, IMF said Madagascar’s growth is estimated to have stabilized in 2024, while inflation pressures have persisted.
The fiscal balance improved, supported by a settlement of fuel distributors’ tax arrears following an agreement reached in December and despite continued high transfers to JIRAMA.
The current account deficit widened, owing primarily to a decline in exports. The country’s medium-term growth prospects appear favorable, bolstered by the reforms supported by the RSF and the ECF, including government programs aimed at boosting agricultural productivity, increasing access to electricity, and improving road infrastructure.
IMF expressed that risks to the outlook are tilted to the downside, amid uncertain domestic and global environments, saying Madagascar remains very vulnerable to climate shocks.
Discussions under the 2024 Article IV consultation focused on anchoring the country’s fiscal sustainability by increasing domestic revenue, reducing fiscal risks, building buffers to enhance resilience to shocks.
The review aims at strengthening fiscal institutions and public financial management, governance and the fight against corruption, consolidating monetary and financial stability, fostering stronger and more inclusive growth, and bolstering resilience to climate change.
Mr. Nigel Clarke, Deputy Managing Director, and Acting Chair, of the IMF executive boards said, “Madagascar continues to face important development needs amid its high poverty rate and vulnerability to climate shocks.
“A faster pace of reform is needed to spur growth, which remains well below its medium-term potential. Program performance at end-June 2024 was broadly assessed as mixed, stressing the need for continued strong political ownership to support program implementation.
“The continued implementation of the automatic fuel pricing mechanism will help contain fiscal risks and create space for more public investment and social spending.
“In addition, further efforts are needed to continue improving domestic revenue mobilization and firmly secure the financial recovery of JIRAMA.
“Reinforcing public financial and investment management processes is critical to improve budget execution and traceability. Better cash flow projections and management should facilitate spending and limit the accumulation of arrears.
“Continued improvements in governance, building on the ongoing Governance Diagnostic Assessment, and the implementation of the newly published Anti-Corruption Strategy for 2025-30 will support efforts to fight corruption and promote transparency.
“The central bank (BFM) should stand ready to raise its policy rates to keep inflation on a downward path. Further improvements in the liquidity management framework and better communication about monetary policy decisions would bolster BFM’s credibility.
“Further building adaptation and resilience to climate shocks as well as mobilizing climate finance should continue to be a key priority.
“The new decree on environmental and social impact assessments provides a framework to evaluate and select investment projects, which should be applied to new investments, including road projects”. #Madagascar Unlocks $101 million IMF Loan#
