The IMF Executive Board completed the First Reviews for Madagascar under the ECF and RSF arrangements, leading to a US$101 million disbursement. The review highlights mixed program performance, the necessity for reform, and the importance of fiscal strategy and governance improvements. Recommendations focus on enhancing public financial management, combating corruption, and addressing climate vulnerability.
The Executive Board of the International Monetary Fund (IMF) has successfully conducted the First Reviews under the Extended Credit Facility (ECF) and the Resilience and Sustainability Facility (RSF) arrangements for Madagascar. This review results in an immediate disbursement of approximately US$101 million, facilitating urgent fiscal needs. Both arrangements were sanctioned in June 2024, aiming to enhance the country’s economic stability.
Despite the mixed performance under the ECF and RSF programs, a structured mechanism for automatic fuel price adjustments is expected to bolster fiscal space for essential social investments. Continued reforms to the JIRAMA utility remain a critical focus area for the program. The need for urgent economic reforms aligns with the country’s pressing development challenges, including high levels of poverty and climate vulnerability.
In a statement issued by Mr. Nigel Clarke, the Deputy Managing Director and Acting Chair of the IMF, the necessity of rapid reforms to energize growth was emphasized. It was noted that Madagascar’s economic growth lags behind its medium-term potential. “A faster pace of reform is needed to spur growth, which remains well below its medium-term potential.” – IMF Executive Board Statement.
Effective management of public finances and investment processes is essential for improving budget execution. Establishing precise cash flow management is expected to reduce arrears. Progress in governance and the adoption of the new Anti-Corruption Strategy for 2025-30 would promote accountability and transparency, integral in combating corruption.
The Bank of Madagascar (BFM) must remain prepared to adjust policy rates to manage inflation effectively. Enhanced communication regarding monetary policy would strengthen the BFM’s credibility. Furthermore, advancing climate resilience is essential; the new regulations for environmental assessments should guide future investments, particularly in road infrastructure and sustainability initiatives.
The IMF’s First Reviews for Madagascar under the ECF and RSF arrangements mark a significant step towards economic recovery and development. The focus on reforms, public financial management, and climate resilience is crucial for addressing Madagascar’s challenges. Continued commitment to these initiatives will be essential in fostering economic growth and stability in the region.
Original Source: www.miragenews.com
