The International Monetary Fund (IMF) Executive Board has completed the first reviews under the Extended Credit Facility (ECF) and the Resilience and Sustainability Facility (RSF) with Madagascar. These arrangements, initially approved in June 2024, allow for an immediate disbursement of SDR 36.7 million (approximately US$48 million) under the ECF and SDR 40.7 million (around US$53 million) under the RSF.
Nigel Clarke, Deputy Managing Director and Acting Chair, commented on Madagascar's ongoing challenges: "Madagascar continues to face important development needs amid its high poverty rate and vulnerability to climate shocks. A faster pace of reform is needed to spur growth, which remains well below its medium-term potential."
Clarke emphasized the necessity for strong political support to implement these programs effectively: "Program performance at end-June 2024 was broadly assessed as mixed, stressing the need for continued strong political ownership to support program implementation."
He also highlighted key areas requiring attention: "The continued implementation of the automatic fuel pricing mechanism will help contain fiscal risks and create space for more public investment and social spending. In addition, further efforts are needed to continue improving domestic revenue mobilization and firmly secure the financial recovery of JIRAMA."
To enhance budget management, Clarke noted: "Reinforcing public financial and investment management processes is critical to improve budget execution and traceability. Better cash flow projections and management should facilitate spending and limit the accumulation of arrears."
On governance improvements, he stated: "Continued improvements in governance, building on the ongoing Governance Diagnostic Assessment, and the implementation of the newly published Anti-Corruption Strategy for 2025-30 will support efforts to fight corruption and promote transparency."
Regarding monetary policy, Clarke advised: "The central bank (BFM) should stand ready to raise its policy rates to keep inflation on a downward path. Further improvements in the liquidity management framework and better communication about monetary policy decisions would bolster BFM’s credibility."
Finally, addressing environmental concerns, he remarked: "Further building adaptation and resilience to climate shocks as well as mobilizing climate finance should continue to be a key priority. The new decree on environmental and social impact assessments provides a framework to evaluate and select investment projects, which should be applied to new investments including road projects."