IMF Executive Board Completes First Review of the Extended Credit Facility Arrangement for the Republic of Madagascar, and Approves $67.5 Million Disbursement
IMF News, March 7, 2022
Source details
- Canonical URL
- IMF Executive Board Completes First Review of the Extended Credit Facility Arrangement for the Republic of Madagascar, and Approves $67.5 Million Disbursement
Other formats
Bibliographic details
- Published: March 7, 2022
Key decision and disbursement
- The Executive Board completed the first review of Madagascar’s economic program under the Extended Credit Facility (ECF) arrangement.
- The completion enables the immediate disbursement of SDR 48.88 million (about US$ 67.5 million) to cover external and fiscal financing needs.
- Total disbursements under the arrangement now amount to SDR 97.96 (about US$ 135 million).
Program background and financing history
- The 40-month ECF arrangement was approved by the IMF Executive Board on March 29, 2021, with total access of SDR 219.96 million (about US$312.4 at the time, or 90 percent of quota).
- The arrangement aims to support Madagascar’s recovery from the pandemic and revive reform momentum to raise and sustain growth and reduce poverty.
- Since the onset of COVID-19, Madagascar received:
- Two IMF Rapid Credit Facility (RCF) disbursements of SDR 122.2 million (about US$ 165.99 million or 50 percent of quota) in April 2020 and SDR 122.2 million (about US$ 171.9 million or 50 percent of quota) in July 2020.
- An SDR allocation of SDR 234.2 million (about US$ 322 million) in August 2021.
Macroeconomic outlook and risks
- Recent performance and shocks:
- GDP contracted by 7.1 percent in 2020.
- Growth was estimated at 3.5 percent in 2021, reflecting a delayed reopening.
- Growth is projected to rebound to 5.4 percent in 2022.
- Downside risks highlighted:
- COVID-19 vaccination rates remain low.
- Madagascar is vulnerable to severe natural disasters and is experiencing a severe cyclone season.
Executive Board and IMF recommendations / priorities
- Fiscal policy and revenue:
- Raise revenue and actively manage fiscal risks to create fiscal space for social spending and investment.
- The 2022 Budget includes measures to increase domestic revenue mobilization and create fiscal space for growth-enhancing spending.
- The authorities are implementing a gradual fiscal consolidation while boosting social and investment spending.
- Debt management:
- Given Madagascar’s moderate risk of debt distress, follow a prudent debt management strategy that relies on grants and concessional financing for scaling-up investment.
- Public financial management, transparency, and governance:
- Strengthen budget transparency and reporting.
- Address findings from four audit reports by the Cour des Comptes on the response to the COVID-19 pandemic.
- Prompt publication of an independent third-party audit of COVID-19-related public procurement contracts is important.
- Effective enforcement of the anti-corruption legal framework is necessary.
- Social protection and fuel pricing:
- Prepare a timetable for the transition toward an automatic fuel pricing mechanism.
- Develop adequate social safety nets to protect the most vulnerable groups.
- Public utilities and disaster risk management:
- Improve the financial situation of the public utility JIRAMA.
- Strengthen the disaster risk management system to address climate-related risks with technical assistance from the Fund.
- Monetary and financial sector:
- Continue enhancing the monetary policy framework, protecting central bank autonomy, and fostering financial sector development and financial inclusion.
Selected economic indicators, 2019–24 (from Table 1)
- National account and prices (percent change; unless otherwise indicated)
- GDP at constant prices: 2019: 4.4; 2020: -7.1; 2021 Est.: 3.5; 2022 Proj.: 5.4; 2023 Proj.: 5.1; 2024 Proj.: 5.0
- GDP deflator: 2019: 6.5; 2020: 6.1; 2021: 6.9; 2022: 5.6
- Consumer prices (end of period): 2019: 4.0; 2020: 4.6; 2021: 6.2; 2022: 6.3; 2023: 5.9
- Money and credit
- Broad money (M3) growth: 2019: 7.3; 2020: 12.1; 2021: 19.0; 2022: 16.5; 2023: 10.7; 2024: 13.3
- Net foreign assets (growth in percent of beginning-of-period money stock (M3)): 2019: -2.6; 2020: 2.1; 2021: 1.4; 2022: 7.9; 2023: -1.0; 2024: 3.8
- Net domestic assets: 2019: 9.9; 2020: 10.0; 2021: 17.6; 2022: 8.6; 2023: 11.7; 2024: 9.4
- Credit to the private sector: 2019: 10.3; 2020: 8.3; 2021: 8.1; 2022: 7.2
- Public finance (percent of GDP)
- Total revenue (excluding grants): 2019: 10.8; 2020: 11.9; 2021: 12.5; 2022: 12.9
- Tax revenue: 2019: 10.6; 2020: 9.5; 2021: 10.4; 2022: 11.6; 2023: 12.2; 2024: 12.6
- Grants: 2019: 3.1; 2020: 2.5; 2021: 1.7; 2022: 2.0; 2023: 1.2
- Budget grants: 2019: 0.7; 2020: 0.9; 2021: 0.0; 2022: 0.3
- Total expenditures: 2019: 15.4; 2020: 16.3; 2021: 18.7; 2022: 19.7; 2023: 18.2; 2024: 17.9
- Current expenditure: 2019: 9.6; 2020: 11.4; 2021: 10.5; 2022: 10.1
- Capital expenditure: 2019: 5.8; 2020: 6.8; 2021: 7.4; 2022: 9.2; 2023: 8.2
- Overall balance (commitment basis): 2019: -1.4; 2020: -4.0; 2021: -6.3; 2022: -5.8; 2023: -3.8
- Domestic primary balance1: 2019: -1.9; 2020: -2.5; 2021: -0.9; 2022: 0.4
- Total financing: 2019: 1.3; 2020: 6.4; 2021: 4.1
- Foreign borrowing (net): 2019: 1.8; 2020: 3.6; 2021: 3.3; 2022: 2.6; 2023: 3.0
- Domestic financing: 2019: 2.9; 2020: 1.5; 2021: 1.0
- Savings and investment
- Investment: 2019: 18.3; 2020: 15.0; 2021: 16.6; 2022: 19.3; 2023: 19.1; 2024: 19.4
- Gross national savings: 2019: 17.5; 2020: 11.2; 2021: 14.3; 2022: 14.5; 2023: 15.3
- External sector (percent of GDP)
- Exports of goods, f.o.b.: 2019: 18.5; 2020: 18.9; 2021: 18.0
- Imports of goods, c.i.f.: 2019: 26.9; 2020: 24.3; 2021: 29.2; 2022: 27.3; 2023: 27.6
- Current account balance (exc. grants): 2019: -5.4; 2020: -7.9; 2021: -6.6; 2022: -5.3
- Current account balance (inc. grants): 2019: -2.3; 2020: -5.5; 2021: -5.0; 2022: -4.6; 2023: -4.1
- Public debt (percent of GDP)
- Public debt: 2019: 38.5; 2020: 49.0; 2021: 53.1; 2022: 52.9; 2023: 52.0; 2024: 51.9
- External Public Debt: 2019: 27.0; 2020: 36.7; 2021: 41.4; 2022: 41.9; 2023: 41.2; 2024: 41.3
- Domestic Public Debt: 2019: 11.5; 2020: 12.3; 2021: 11.0
- Reserves and welfare
- Gross official reserves (millions of SDRs): 2019: 1196; 2020: 1338; 2021: 1633; 2022: 1723; 2023: 1665; 2024: 1754
- Months of imports of goods and services: 2019: 4.2; 2020: 6.0; 2021: 5.7
- GDP per capita (U.S. dollars): 2019: 512; 2020: 457; 2021: 502; 2022: 525; 2023: 565; 2024: 592
Source: IMF Press Release No. 22/66 (March 7, 2022).