Press Release No. <a name="P16_75"></a>05/279

Statement by IMF Staff Mission to Madagascar

Mr. Brian Ames, Mission Chief for Madagascar at the International Monetary Fund (IMF), issued the following statement today at the conclusion of discussions between a visiting IMF mission and the Republic of Madagascar's Minister of Finance and Budget, Benjamin Radavidson, and Governor of Central Bank of Madagascar, Gaston Ravelojaona:

"Over the past week, I held very constructive discussions with Minister Radavidson, Governor Ravelojaona, and other senior officials of the Government of the Republic of Madagascar. These discussions followed on the meeting last month in Washington between Minister Radavidson and IMF First Deputy Managing Director, Ms. Anne O. Krueger. The purpose of the visit was to review recent developments and to reach understandings on the macroeconomic framework and set of policy measures that could underpin the authorities' economic program for 2006-08 and which could be supported under the IMF's Poverty Reduction and Growth Facility (PRGF).¹"

"I welcome the progress that the authorities have made since the staff visit to Madagascar last October, particularly with regard to addressing the sizeable tax and customs revenue shortfalls that occurred earlier in the year. The turnaround in customs revenues during the third quarter of the year appears to have continued in October and November. Moreover, the recent actions taken at the tax administration seem to be taking hold, and domestic tax revenues in the early part of the fourth quarter have been in line with expectations. I am also pleased to note the progress that the authorities, in close cooperation with donors, have been making in developing an action plan to address the severe financial and structural problems facing the public utility company (JIRAMA). Constructive discussions were also held on the recently approved Finance Law and its implications for macroeconomic stability in the country."

"The IMF staff will return to Madagascar in mid-February 2006 to assess progress in the fourth quarter of 2005, particularly with regard to revenue collection, the finalization of the JIRAMA action plan, and the implementation of the 2006 Finance Law in light of existing financing assurances. IMF Executive Board discussion on a new PRGF arrangement could take place soon thereafter."

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¹ The PRGF is the IMF's concessional lending facility for low-income countries. PRGF loans carry an annual interest rate of 0.5 percent, and are re-payable over 10 years with a 5½ -year grace period on principal payments.