Numbers & Statistics

IMF Staff Completes Program Review Mission to Madagascar

By  | 

Via IMF (Den Internationale Valutafond)

IMF Staff Completes Program Review Mission to Madagascar







June 11, 2019







End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.





  • Economic growth is expected to exceed 5 percent again this year, reflecting higher public investment spending and intensified private sector activity.
  • The authorities’ plans to boost public investment and social spending critically depend on continued effort to raise revenue and reduce lower priority spending, especially subsidies in the fuel and electricity sectors.
  • The authorities and staff agreed to continue improving governance and the business climate, including by stepping up the fight against corruption.

A team from the International Monetary Fund (IMF) led by Charalambos Tsangarides, Mission Chief for
Madagascar, visited Antananarivo on May 29-June 11, 2019. The team held
discussions with the authorities on the fifth review of Madagascar’s
economic reform program supported by the IMF’s Extended Credit Facility
(ECF).

[1]

At the end of the mission, Mr. Tsangarides issued the following statement:

“The discussions made good progress and are continuing, with a view to
bringing the review to the Executive Board of the IMF for consideration in
the coming weeks.

“Economic conditions continue to improve, and the macroeconomic outlook
remains favorable. In 2018, growth reached 5.2 percent driven by a rebound
in agricultural production and investment. Despite higher oil prices, the
current account recorded a surplus, thanks to strong vanilla and mining
exports. After peaking in late 2017, inflation steadily decelerated to 6.1
percent at end-2018. For 2019, economic prospects remain positive, with
growth expected to stabilize above 5 percent supported by investment,
exports, improvement in the energy sector, and construction.


The implementation of the ECF-supported program has remained
satisfactory through 2018 and is expected to remain on track in 2019
. The authorities met all the end-2018 performance criteria, despite a
shortfall in domestic revenue collection. However, the indicative target on
domestically financed priority social spending was missed. The central bank
successfully accumulated record levels of foreign exchange reserves. The
authorities made good progress on the structural reform agenda, albeit at a
slower pace than envisaged. However, delays in adjusting fuel pump prices
in a context of high world oil prices led to increased liabilities to
distributors which could weigh negatively on the budget.

“Staff welcomed the authorities’ commitment, in line with the General
Policy Program of the State (Politique Generale de l’Etat) to
accelerate economic reforms, improve governance, and step up the fight
against poverty, including through the ECF-supported program. Addressing
these priorities will critically depend on improving domestic revenue
collection, including by revising tax expenditures and exemption regimes,
as well as containing lower priority public spending, such as subsidies in
the fuel and electricity sectors. While budget execution has been low so
far in 2019, the recently adopted revised finance law improves the quality
of spending with more budgetary space allocated to infrastructure, health,
and education expenditures. Given the associated limited deterioration of
the overall fiscal balance, a strict prioritization of investment projects
and monitoring of debt sustainability will be critical to sustain economic
growth.

“Staff urges the continuation of the ongoing discussions between the
authorities and the operators to implement the plan on fuel pricing;
setting a new fuel price structure is an essential step before settling
existing liabilities with distributors. To avoid the recurrence of arrears
to the distributors in the future, staff urged authorities to adopt a
pricing mechanism that aligns pump prices with costs, reflecting world
price developments, along with targeted social measures to protect the most
vulnerable from the impact of potential future price adjustments. Improving
the financial situation of the public utility JIRAMA to ensure it does not
weigh on the budget will require continued efforts to raise revenues and
improve governance, including by intensifying the fight against fraud.
Staff also support cost-cutting measures that could be achieved through the
ongoing renegotiation of contracts with electricity and fuel suppliers.


The authorities and staff agreed to continue improving governance and
the business climate, including by stepping up the fight against
corruption
, a key objective of the new government and the ECF-supported program. In
this respect, the adoption of the draft law on illicit asset recovery has
become an urgent priority to complete the legal framework to fight
corruption. Staff also commended the authorities for structural reforms
undertaken at the central bank to strengthen the monetary policy framework
and boost financial sector development, and at the Ministry of Economy and
Finance to better manage fiscal risks and strengthen public procurement
procedures.”

“The mission met with Prime Minister Christian Ntsay, Minister of Economy
and Finance Richard Randriamandrato, Minister of Energy, Water, and
Hydrocarbons Vonjy Andriamanga, Central Bank of Madagascar Governor Alain
Rasolofondraibe, senior officials, and development partners.”

“The mission thanks the Malagasy authorities for their strong cooperation
and the constructive discussions.”




[1]

Madagascar’s ECF-supported program was approved by the IMF
Executive Board in July 2016. The

ECF

is a lending arrangement that provides sustained program engagement
over the medium to long term in case of protracted balance of
payments problems.


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Lucie Mboto Fouda

Phone: +1 202 623-7100Email: MEDIA@IMF.org






Print Friendly, PDF & Email

Hold dit netværk orienteret

READ ALSO  Six Charts on How Elevated Global Uncertainty Is Creating Challenges for Sub-Saharan Africa