The International Monetary Fund (IMF) has approved a significant funding package for Madagascar, totaling $658 million.
This comprises a $337 million Extended Credit Facility (ECF) and a $321 million Resilience and Sustainability Facility (RSF) arrangement.
The funding aims to bolster Madagascar’s economic resilience, foster inclusive growth, and support the country’s objectives outlined in its new General State Policy (PGE).
The RSF arrangement will specifically support reforms focused on climate change adaptation, natural disaster resilience, ecosystem protection, and green private sector investment.
The funding will also help stabilize debt below 60% of GDP and reduce the primary deficit to around 3% of GDP.
The authorities plan to achieve this through revenue measures, reducing transfers to the energy sector, and phasing out fuel subsidies.
Madagascar’s growth slowed to 3.8% in 2023, while inflation pressures eased. The current account deficit narrowed due to a decline in imports.
The authorities are committed to strengthening governance, transparency, and the fight against corruption, as well as implementing monetary policy reforms and building resilience through social safety nets.
Medium-term growth prospects appear favorable, driven by reforms supported by the RSF and ECF.
However, risks to the outlook are tilted to the downside due to an uncertain global environment and vulnerability to climate shocks.
The IMF’s Deputy Managing Director and Acting Chair, Antoinette Sayeh, emphasized the importance of addressing these challenges and implementing measures to create fiscal space for social spending and investment.
