IMF Executive Board Completes the Second Reviews Under the Extended Credit Facility and the Resilience and Sustainability Facility Arrangements with the Republic of Madagascar
IMF News, July 3, 2025
Source details
- Canonical URL
- IMF Executive Board Completes the Second Reviews Under the Extended Credit Facility and the Resilience and Sustainability Facility Arrangements with the Republic of Madagascar
Other formats
Bibliographic details
- Published: July 3, 2025
Review completion and disbursements
- The Executive Board completed the Second Reviews under the 36-month Extended Credit Facility (ECF) arrangement and the 36-month Resilience and Sustainability Facility (RSF) arrangement.
- The completion allows for an immediate disbursement of SDR 77.392 million (about US$107 million).
- Disbursements are specified as:
- SDR 36.66 million (about US$50 million) under the ECF arrangement.
- SDR 40.732 million (about US$56 million) under the RSF arrangement.
- The authorities have consented to the publication of the Staff Report prepared for this review.
Economic context, shocks, and near-term outlook
- Madagascar has been hit by multiple shocks in the review period, including weather-related events and a dual external shock:
- Reduction in official development assistance (ODA) by about 1 percent of GDP.
- U.S. tariff hike of 47 percent initially.
- These shocks risk setting Madagascar back and would take a toll on growth due to high dependence on external financial support and exposure of the vanilla sector and textile industry to the U.S. market.
- Growth projection:
- Growth in 2025 is expected to be 4 percent (noted as lower-than-previously expected).
- External position:
- The current account deficit widened to 5.4 percent of GDP in 2024.
- The current account deficit is expected to widen further to 6.1 percent of GDP in 2025, amid challenging prospects in the textile industry and the vanilla sector.
Program performance and structural actions
- Overall assessment: Madagascar’s performance under the ECF and RSF has been satisfactory.
- Program performance specifics:
- All end-December 2024 quantitative performance criteria were met.
- Three out of four indicative targets for end-December 2024 were met.
- M3 growth was within the bands of the Monetary Policy Consultation Clause.
- All but one structural benchmark for the review period were met.
- RSF-specific advances:
- A new forest carbon framework that promotes private sector participation in the reforestation was adopted.
- The National Contingency Fund for disaster risk management was operationalized.
- Sectoral and institutional measures:
- Recent adoption of a recovery plan for the public utilities company (JIRAMA).
- Continued implementation of the automatic fuel price adjustment mechanism.
Key policy recommendations and IMF statements
- Fiscal and budgetary guidance:
- Reprioritize spending and undertake deliberate contingency planning in budget execution in light of recent weather-related and external shocks.
- Early preparations for the 2026 budget to build stronger domestic stakeholder buy-in.
- Anchor the budget in a well-articulated medium-term fiscal strategy that accounts for JIRAMA’s recovery plan and creates space for critical development spending.
- Press ahead with domestic revenue mobilization efforts and enhance public financial management and the public investment process to support fiscal sustainability.
- Monetary and exchange rate policy:
- The central bank (BFM) should not loosen monetary policy until inflation is on a firm downward path.
- Further improvements in liquidity management, forecasting and communication to strengthen implementation of BFM’s interest-based monetary policy framework.
- Maintain a flexible exchange rate to help absorb external shocks and let the exchange rate act as a shock absorber.
- Governance and anti-corruption:
- Swift implementation of the authorities’ anti-corruption strategy (2025-2030).
- Develop a homegrown action plan for implementing key recommendations from the IMF Governance Diagnostic Assessment (GDA).
- These steps aim to improve transparency, the rule of law, support the fight against corruption and protect the public purse.
- Energy and social protection:
- Swift implementation of JIRAMA’s recovery plan to address electricity disruptions and limit fiscal pressures.
- Continued implementation of the automatic fuel pricing mechanism to contain fiscal risks, coupled with targeted measures to support the most vulnerable.
- RSF commitment:
- Continued commitment to the RSF reform agenda to support climate adaptation and complement the ECF in fostering overall socio-economic resilience.
Selected economic indicators (as reported)
- National Account and Prices
- GDP at constant prices: 4.2 (2022), 4.0 (2023)
- GDP deflator: 9.6 (2022), 7.5 (2023), 7.6 (2024), 8.3 (2025), 7.0 (2026)
- Consumer prices (end of period): 10.8 (2022), 8.6 (2023), 7.3 (2024)
- Money and Credit (Growth in percent of beginning-of-period money stock (M3))
- Broad money (M3): 13.8 (2022), 14.6 (2023), 13.7 (2024), 8.7 (2025)
- Net foreign assets: 0.8 (2022), 18.2 (2023), 9.8 (2024), 1.5 (2025), 1.4 (2026)
- Net domestic assets: 13.0 (2022), -9.7 (2023), 4.8 (2024), 12.2 (2025), 7.4 (2026)
- of which: Credit to the private sector: 0.7 (2022), 5.6 (2023), 6.0 (2024), 6.2 (2025)
- Public Finance (Percent of GDP)
- Total revenue (excluding grants): 9.5 (2022), 11.5 (2023), 11.4 (2024), 11.2 (2025), 12.0 (2026)
- of which: Tax revenue: 9.2 (2022), 10.9 (2023), 10.7 (2024), 11.7 (2025)
- Grants: 1.3 (2022), 2.3 (2023), 0.4 (2024)
- Total expenditures: 16.2 (2022), 17.9 (2023), 15.7 (2024), 16.5 (2025)
- Current expenditure: 9.7 (2022)
- Capital expenditure: 5.4 (2022), 6.6 (2023)
- Overall balance (commitment basis): -5.5 (2022), -4.2 (2023), -2.6 (2024), -3.9 (2025), -4.1 (2026)
- Domestic primary balance1: -1.8 (2022), -0.3 (2023), 0.3 (2024)
- Primary balance: -4.9 (2022), -3.5 (2023), -1.9 (2024), -2.9 (2025), -3.0 (2026)
- Total financing: 4.7 (2022), 2.7 (2023), 4.3 (2024)
- Foreign borrowing (net): 2.4 (2022), 3.0 (2023), 2.6 (2024), 3.5 (2025), 3.7 (2026)
- Domestic financing: 2.2 (2022), 1.2 (2023), 0.1 (2024), 0.5 (2025)
- Fiscal financing need2: 0.0 (2022)
- Savings and Investment
- Investment: 21.8 (2022), 19.9 (2023), 22.2 (2024), 23.1 (2025), 24.2 (2026)
- Gross national savings: 16.8 (2022), 15.9 (2023), 16.9 (2024), 17.0 (2025)
- External Sector (Percent of GDP)
- Exports of goods, f.o.b.: 23.0 (2022), 19.5 (2023), 14.8 (2024), 13.5 (2025), 13.2 (2026)
- Imports of goods, c.i.f.: 33.8 (2022), 28.0 (2023), 26.4 (2024), 25.7 (2025), 25.5 (2026)
- Current account balance (exc. grants): -6.6 (2022), -6.3 (2023), -8.1 (2024), -6.8 (2025), -6.4 (2026)
- Current account balance (inc. grants): -5.4 (2022), -6.1 (2023), -6.0 (2024)
- Public Debt (Percent of GDP)
- Public Debt: 50.0 (2022), 52.7 (2023), 50.3 (2024), 50.9 (2025), 52.2 (2026)
- External Public Debt (inc. BFM liabilities): 36.1 (2022), 37.8 (2023), 36.7 (2024), 38.5 (2025), 40.4 (2026)
- Domestic Public Debt: 13.9 (2022), 13.6 (2023), 12.4 (2024)
- Reserves and income
- Gross official reserves (millions of SDRs): 1,601 (2022), 1,972 (2023), 2,189 (2024), 2,297 (2025), 2,337 (2026)
- Months of imports of goods and services: 5.7 (2022)
- GDP per capita (U.S. dollars): 529 (2022), 533 (2023), 569 (2024), 596 (2025), 621 (2026)
IMF Press Release No. 25/239 — July 3, 2025