The IMF Executive Board finalized its first reviews of Madagascar’s ECF and RSF arrangements, approving immediate disbursements totaling US$101 million. Madagascar’s program performance is seen as adequate but uneven, with a focus on fiscal reforms to increase social spending. The need for reform acceleration, improved governance, and climate resilience is emphasized to address the country’s challenges.
The International Monetary Fund (IMF) Executive Board has completed its first reviews of the Extended Credit Facility (ECF) and the Resilience and Sustainability Facility (RSF) arrangements for Madagascar. This outcome facilitates an immediate disbursement of approximately US$101 million, comprising SDR 36.7 million (about US$48 million) from the ECF and SDR 40.7 million (about US$53 million) from the RSF,
which were both approved in June 2024.
While Madagascar’s performance under these programs has been described as adequate, it has been uneven. The implementation of an automatic fuel price adjustment mechanism is seen as vital for creating fiscal space for increased social spending and investments. Additionally, revitalizing the state-owned utility company JIRAMA remains a priority for the government.
Mr. Nigel Clarke, Deputy Managing Director of the IMF, emphasized the ongoing development needs within Madagascar against a backdrop of significant poverty and climate vulnerabilities. He stated that enhancing growth requires a more rapid pace of reforms, particularly as current growth trajectories are lagging behind medium-term potential.
Mr. Clarke remarked, “A faster pace of reform is needed to spur growth, which remains well below its medium-term potential”. He also highlighted the importance of continued implementation of fiscal adjustments to support public investment and social initiatives, as well as bolstering revenue mobilization efforts.
Furthermore, enhancing public financial management is essential for improved budget execution. This includes better cash flow projections to prevent the accumulation of arrears and ongoing improvements in governance to combat corruption. There is also a call for the central bank to remain vigilant in adjusting policy rates to manage inflation effectively.
The emphasis on climate resilience is critical, with new decrees on environmental and social impact assessments designed to guide investment project evaluations. This approach will ensure that upcoming initiatives, particularly in infrastructure, align with sustainability goals.
The IMF has recognized Madagascar’s developmental challenges and underscored the necessity for reforms to stimulate economic growth. The approved disbursements under the ECF and RSF will aid in addressing fiscal risks and promoting investments, especially in social sectors. The country’s strategy must prioritize stronger governance, improved financial management, and resilience to climate challenges to achieve sustainable progress.
Original Source: www.miragenews.com
