The IMF Executive Board has completed the First Reviews under the ECF and RSF arrangements for Madagascar, leading to a disbursement of US$101 million. Reforms, particularly in automatic fuel pricing and JIRAMA, are critical for enhancing social spending and investment. The need for governance improvement and adaptation to climate shocks remains pronounced as Madagascar seeks to stimulate economic growth.
On November 1, 2024, the International Monetary Fund (IMF) Executive Board finalized its First Reviews under the Extended Credit Facility (ECF) and Resilience and Sustainability Facility (RSF) arrangements for Madagascar. This review enables the disbursement of US$101 million to bolster the nation’s finances. While Madagascar’s performance in these programs has been deemed adequate, uneven implementation necessitates attention for improvement.
The adoption of an automatic fuel price adjustment mechanism was highlighted as a necessary reform to enhance fiscal space, thereby allowing for increased social spending and investment opportunities. The ongoing reform efforts of the national electricity company, JIRAMA, are emphasized as a critical priority in this context.
Mr. Nigel Clarke, Deputy Managing Director and Acting Chair of the IMF, stated that Madagascar faces significant developmental challenges, particularly due to high poverty rates and vulnerability to climate-related shocks. He remarked that accelerating reform is essential to stimulate economic growth, which remains below its potential, and emphasized the necessity for strong political commitment to support successful program implementation.
Further measures are required for sharper domestic revenue mobilization and to stabilize JIRAMA’s financial recovery. Strengthening public financial management processes is essential for improved budget execution and spending efficiency, while ongoing anti-corruption strategies will enhance transparency and governance in resource allocation.
The central bank (BFM) is advised to be prepared to adjust its policy rates to maintain downward pressure on inflation, while enhanced liquidity management and clear communication regarding monetary policies may enhance the BFM’s credibility. Climate adaptation, resilience bolstering, and mobilization of climate finance remain pivotal priorities for Madagascar’s sustainable development. The recent decree on environmental and social impact assessments is to be applied to new investment projects, ensuring comprehensive evaluations are in place throughout the process.
The IMF has completed its First Reviews for Madagascar under the ECF and RSF arrangements, permitting a disbursement of US$101 million. The reviews underscored the necessity for accelerated reforms and strengthened governance to address developmental challenges, enhance public financial management, and mitigate climate vulnerabilities. Continued political ownership and robust financial strategies are required to realize Madagascar’s growth potential while ensuring fiscal sustainability.
Original Source: www.miragenews.com
