Via IMF (Den Internationale Valutafond)

IMF Executive Board Approves a US$ 165.99 Million Disbursement to the Republic of Madagascar to Address the Covid-19 Pandemic

April 3, 2020

Washington, DC – The Executive Board of the International Monetary Fund (IMF) today approved
a disbursement under the Rapid Credit Facility (RCF) equivalent to SDR
122.2 million (about US$ 165.99million at today’s US$/SDR exchange rate, or
50 percent of the quota) to help the country meet the urgent balance of
payment needs stemming from the outbreak of the COVID-19 pandemic.

The Covid-19 pandemic is having a severe impact on Madagascar’s economy.
Tourism is facing a dramatic decline, and disruptions are occurring to
mining and manufacturing exports, as well as in trade and investment.

To mitigate the shock of the pandemic, the government is taking appropriate
immediate actions including immediate fiscal measures to strengthen social
protection and support the most vulnerable such as through government
donations of staple foods; suspending fees and social contributions to
support the private sector; and providing liquidity to preserve the
stability of the financial sector. However, the weakened macroeconomic
outlook and deteriorating fiscal situation have created urgent external and
fiscal financing needs. The IMF support will make a substantial
contribution to filling immediate external needs and preserving fiscal
space for essential COVID-19-related health expenditure. It is also
expected to help catalyze additional donor support.

Following the Executive Board discussion. Mr. Mitsuhiro Furusawa, Deputy
Managing Director and Chair, made the following statement:

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“The Covid-19 pandemic is having a severe impact on Madagascar’s economy.
Due to dramatic declines in tourism and disruptions to manufacturing and
extractive industry exports, as well as transport, communications, and
services, real GDP growth is likely to decline sharply. The fiscal
situation is also deteriorating rapidly with additional health and social
spending outlays and a significant shortfall in tax revenue. Fund support
under the Rapid Credit Facility will help the authorities meet the urgent
fiscal and external financing needs to mitigate the impact of the pandemic.

“The authorities are taking immediate measures to address the human and
economic impact of the pandemic, while preserving macroeconomic stability.
These include increases in health spending, help to the most vulnerable,
support to the private sector, and actions to preserve the stability of the
financial sector and maintain the flexible exchange rate regime.

While the risks to the outlook are substantial, given the high degree of
uncertainty, Madagascar continues to be assessed at low risk of external
debt distress. Beyond the immediate response, the authorities remain
committed to economic policies that will ensure sustained and inclusive
growth over the medium-term.

“Additional donor support, beyond that which was already committed before
the outbreak of the pandemic, is needed to close the remaining balance of
payments gap and ease the fiscal situation.”

IMF Communications Department


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