{
  "title": "Frequently Asked Questions on the Republic of Madagascar",
  "sourceUrl": "https://www.imf.org/en/countries/mdg/madagascar-qandas",
  "canonical": "https://www.imf.org/en/countries/mdg/madagascar-qandas",
  "overlayPath": "/en/countries/mdg/madagascar-qandas/index.md",
  "summary": "Read the key questions regarding the IMF arrangements with the Republic of Madagascar.",
  "sections": [
    {
      "heading": "Overview of IMF arrangements and recent engagement",
      "content": "- In June 2024, the IMF Executive Board approved two new arrangements with Madagascar supported by the Extended Credit Facility (ECF) and the Resilience and Sustainability Facility (RSF).\n- An IMF mission conducted discussions for the first reviews of both arrangements along with the 2024 Article IV consultation during September 30-October 11 in Antananarivo.\n- Last Updated: December 12, 2024."
    },
    {
      "heading": "Resilience and Sustainability Facility (RSF): objectives and measures",
      "content": "- Primary aims:\n  - Bolster climate governance and mainstream Madagascar's climate agenda into public financial and investment management processes.\n  - Enhance adaptation to climate change and resilience against natural disasters.\n  - Curb the increase of greenhouse gas emissions.\n  - Reinforce the protection of forests and biodiversity.\n  - Mobilize climate finance.\n- Operational focus and actions:\n  - Empower the Inter-Ministerial Committee for the Environment (CIME).\n  - Make public financial management more climate sensitive, including adopting a new decree on environmental impact assessments to better address climate adaptation and mitigation in public investment projects.\n  - Implement adaptation measures notably in water management and agriculture.\n  - Advance disaster risk management capabilities.\n  - Facilitate production of renewable energy and promote access to affordable electricity for all.\n  - Combat deforestation to support resilience.\n- Financing and catalyzation:\n  - RSF financing provides general budget support for climate policy reforms.\n  - Expected to catalyze more financing from other international partners and the private sector through adoption of a national climate finance strategy and creation of an enabling environment for green financial products.\n  - The RSF is not a project-financing facility."
    },
    {
      "heading": "Domestic revenue mobilization (DRM) and fiscal objectives",
      "content": "- Context:\n  - Madagascar has a very low tax revenue-to-GDP ratio compared to other Sub-Saharan African countries.\n  - Increasing domestic revenue mobilization is a key objective of Madagascar’s program with the IMF to create fiscal space for public investment, social spending, and to increase debt-carrying capacity.\n- IMF role and recommendations:\n  - The IMF and other partners provide technical assistance on tax policy and administration.\n  - Recommendations include broadening the tax base by limiting exemptions, increasing tax progressivity, and improving compliance and transparency.\n  - The IMF is supporting the Treasury to expedite VAT credit refunds.\n- Specific commitments:\n  - At the approval of the ECF arrangement in June 2024, the Malagasy authorities committed to reducing tax expenditures by MGA 280 billion annually from 2025 to 2027.\n  - The goal is to raise the tax revenue-to-GDP ratio by 2.4 percentage point over three years."
    },
    {
      "heading": "Automatic fuel price adjustment mechanism",
      "content": "- Design and intent:\n  - The mechanism specifies how pump prices are adjusted every month in response to changes in market prices.\n  - Provides for predictable and small monthly adjustments rather than large, unexpected changes.\n  - Does not call for immediate removal of the price subsidy or implementation of market prices; aims for monthly adjustments to pump prices in line with changes in the reference (or market) prices.\n- Parameters:\n  - Maximum monthly change set by the authorities in May 2024 at +/-200 ariary per liter.\n- Rationale and history:\n  - Implementation of an automatic fuel price adjustment mechanism has been a commitment by the Malagasy authorities since the 2016 ECF arrangement.\n  - Considered crucial to (i) reduce risks to the budget by capping the fuel price subsidy paid by the government; and (ii) make space in the budget for more investment in physical and human capital as envisaged by the General State Policy.\n  - Identified as a key component of the current program and a necessary first step to strengthen fiscal sustainability."
    },
    {
      "heading": "Public utilities, social protection, and food security measures",
      "content": "- JIRAMA (electricity and water utility):\n  - Financial difficulties have led to electricity outages and water shortages.\n  - With support from the IMF and the World Bank, JIRAMA's recovery aims to reduce fiscal risks and improve service delivery.\n  - Distributing solar kits to poor households is intended to increase electricity access and reduce vulnerability to kerosene price hikes.\n- Social protection and food security:\n  - IMF and World Bank support the extension of the single social registry to better target social transfers.\n  - With the World Food Program's help, the authorities are setting up 10 food reserves to combat food insecurity in the South.\n  - The program includes a social spending floor to protect social spending.\n  - The IMF is providing technical assistance to improve budget execution and achieve social spending targets."
    },
    {
      "heading": "Governance and public financial management reforms",
      "content": "- Three main initiatives supported by the program:\n  - National Anti-Corruption Strategy:\n    - Support for preparation and adoption of a new anti-corruption strategy.\n    - The IMF is conducting a Governance Diagnostic Assessment, expected to be finalized in 2025; the authorities have committed to publishing the report.\n  - Fiscal Transparency:\n    - Efforts include increasing transparency in public procurement contracts, including publishing information on the beneficial owners of these contracts.\n  - Public Financial Management Reforms:\n    - Aim to improve budget execution procedures.\n    - With IMF technical support, authorities are preparing annual spending commitment plans for all ministries.\n    - A new cash flow management law is being prepared for adoption by May 2025 to facilitate supplier payments and reduce government arrears, including those related to VAT refunds."
    }
  ],
  "bullets": [
    "In June 2024, the IMF Executive Board approved two new arrangements with Madagascar supported by the Extended Credit Facility (ECF) and the Resilience and Sustainability Facility (RSF).",
    "An IMF mission conducted discussions for the first reviews of both arrangements along with the 2024 Article IV consultation during September 30-October 11 in Antananarivo.",
    "Last Updated: December 12, 2024.",
    "Primary aims:",
    "Operational focus and actions:",
    "Financing and catalyzation:",
    "Context:",
    "IMF role and recommendations:",
    "Specific commitments:",
    "Design and intent:",
    "Parameters:",
    "Rationale and history:",
    "JIRAMA (electricity and water utility):",
    "Social protection and food security:",
    "Three main initiatives supported by the program:"
  ],
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  "generatedAtUtc": "2026-09-30T19:09:01.353Z"
}