{
  "title": "IMF Executive Board Approves US$304.7 million Extended Credit Facility Arrangement for Madagascar",
  "publication": "IMF News, July 28, 2016",
  "sourceUrl": "https://www.imf.org/en/news/articles/2016/07/28/19/38/pr16370-madagascar-imf-executive-board-approves-us-304-7-million",
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  "summary": "Executive Board approved the equivalent of SDR 220 million (about US$304.7 million, or 180 percent of current quota) under a 40-month Extended Credit Facility (ECF) arrangement for Madagascar.",
  "publishDate": "2016-07-28",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Executive Board approved the equivalent of SDR 220 million (about US$304.7 million, or 180 percent of current quota) under a 40-month Extended Credit Facility (ECF) arrangement for Madagascar.\n- SDR 31.428 million (about US$43.5 million) is available for immediate disbursement; the remaining amount will be available in phases over the duration of the program, subject to semi-annual reviews.\n- The Executive Board was informed of the Managing Director’s approval of the first and final review under the six-month Staff-Monitored Program (SMP) covering September 2015–end-March 2016; the country built a satisfactory track record of sustained reforms, with progress in most areas."
    },
    {
      "heading": "Key messages from Mitsuhiro Furusawa (Deputy Managing Director and Acting Chair)",
      "content": "- Primary aim: reinforce macroeconomic stability and promote sustainable and inclusive growth.\n- Identified challenges:\n  - Weak revenue collections.\n  - Substantial low-priority spending.\n  - Need for strengthened economic governance.\n- Essential actions and priorities:\n  - Rigorous and sustained reform implementation.\n  - Increase tax revenue and contain then reduce lower-priority spending, including transfers to state-owned enterprises such as the utility company JIRAMA.\n  - Rely as much as possible on external grants and concessional financing while allowing appropriate external borrowing, to preserve debt sustainability.\n  - Strengthen governance: public financial management and procurement practices, increase budget transparency, carefully manage fiscal implications of Public Private Partnerships, reinforce institutions and legal framework for combatting corruption.\n  - Financial sector: more frequent and deeper supervision of banks and nonbanks, establish legal and operational framework for institutions in difficulty, promote modern payment methods.\n  - Central bank: maintain price stability, continue improving operational framework for monetary policy implementation, including establishing a well-functioning money market.\n  - Capacity building and technical assistance to support reform implementation."
    },
    {
      "heading": "Recent Economic Developments",
      "content": "- Context: recovery from extended political crisis and international isolation from 2009 to 2013; key social and developmental indicators deteriorated during that period.\n- Recovery since 2014 hampered by falling key commodity prices, weather-related shocks, and deep-rooted structural weaknesses.\n- GDP growth: estimated at 3.1 percent in 2015 (slightly lower than in 2014 and barely higher than population growth).\n- Inflation: fell to 6.3 percent at end-May 2016 from 7.6 percent at end-December 2015, led by lower food and fuel prices.\n- Fiscal: budget execution challenging in 2015; fiscal deficit increased to 3.3 percent of GDP due to underperforming revenue collections, financing difficulties, and unexpected transfers to state-owned enterprises and pensions.\n- Outlook: economic conditions expected to improve in 2016 supported by country-specific factors."
    },
    {
      "heading": "Performance Under the Staff-Monitored Program (SMP)",
      "content": "- SMP period: September 2015–end-March 2016.\n- Macroeconomic targets: broadly satisfactory and met through end-March 2016, except ceilings on net credit to government and new external payment arrears (due to technical difficulties in making payments).\n- Fiscal and external: tax revenue began to improve gradually; priority social spending targets were met; robust accumulation of foreign exchange reserves boosted external buffers.\n- Structural progress:\n  - Strengthened audits and controls for revenue collections.\n  - Automatic fuel pricing mechanism to avoid fuel subsidies.\n  - Submission to Cabinet of a revised Central Bank Act.\n  - Cabinet approval of a National Social Protection Policy.\n  - Better transparency and functioning of the foreign exchange market.\n  - New database to enhance debt management capacity and transparency."
    },
    {
      "heading": "Program Summary (ECF-supported program objectives)",
      "content": "- Boost prospects for inclusive growth through:\n  - Improved access to education, health care, and social protection.\n  - Enhanced infrastructure and private sector development.\n- Create fiscal space through improved revenue generation and spending prioritization.\n- Reinforce economic governance by strengthening public financial management and intensifying anti-corruption measures.\n- Strengthen macroeconomic stability by bolstering central bank operations and financial supervision.\n- Reform implementation to be supported by targeted capacity building and technical assistance."
    },
    {
      "heading": "Selected Economic and Financial Indicators, 2013–19 (Actuals, Prel., Est., Projections — percent change unless otherwise indicated)",
      "content": "- National account and prices:\n  - GDP at constant prices: 2013: 2.3; 2014: 3.3; 2015: 3.1; 2016: 4.1; 2017: 4.5; 2018: 4.8; 2019: 5.0\n  - GDP deflator: 2013: 5.1; 2014: 6.6; 2015: 7.6; 2016: 6.7; 2017: 6.9; 2018: 6.4; 2019: 6.1\n  - Consumer prices (end of period): 2013: 6.3; 2014: 6.0; 2015: 7.1; 2016: 5.9\n- Money and credit:\n  - Reserve money: 2013: -6.1; 2014: 14.1; 2015: 9.6; 2016: 16.0; 2017: 12.7; 2018: 11.9\n  - Broad money (M3): 2013: 5.3; 2014: 11.1; 2015: 14.6; 2016: 17.9; 2017: 12.5; 2018: 12.3\n  - Net foreign assets: 2013: -13.5; 2014: 5.4; 2015: 7.5; 2016: 2.6; 2017: 2.5\n  - Net domestic assets: 2013: 18.7; 2014: 5.7; 2015: 7.7; 2016: 10.4; 2017: 9.4; 2018: 9.9; 2019: 9.8\n  - Credit to the private sector (of which): 2013: 8.6; 2014: 8.2; 2015: 4.6; 2016: 7.8\n- Public finance (percent of GDP):\n  - Total revenue (excluding grants): 2013: 10.1; 2014: 11.0; 2015: 11.2; 2016: 11.7; 2017: 12.2\n  - Tax revenue: 2013: 9.3; 2014: 10.8; 2015: 11.5; 2016: 12.0\n  - Grants: 2013: 1.3; 2014: 1.5; 2015: 2.0; 2016: 2.7\n  - Total expenditures: 2013: 14.9; 2014: 14.7; 2015: 15.1; 2016: 16.2; 2017: 18.3; 2018: 17.6; 2019: 18.0\n  - Current expenditure: 2013: 11.8; 2014: 10.3; 2015: 10.0; 2016: (not listed in source)\n  - Capital expenditure: 2013: 3.9; 2014: 3.5; 2015: 8.0; 2016: 8.1\n  - Overall balance (commitment basis): 2013: -4.0; 2014: -2.3; 2015: -3.3; 2016: -3.2; 2017: -4.4\n  - Float (variation of accounts payable, + = increase): 2013: -0.2; 2014: 0.6; 2015: 0.1; 2016: 0.0\n  - Variation of domestic arrears ( + = increase): 2013: 2.2; 2014: -0.7; 2015: -0.5; 2016: -1.2; 2017: -0.3\n  - Overall balance (cash basis): 2013: -2.0; 2014: -2.4; 2015: -3.7; 2016: -4.5; 2017: -5.1; 2018: -5.0; 2019: -4.7\n  - Primary balance excl. foreign-financed investment²: 2014: -1.3; 2015: -0.6; 2016: 0.2; 2017: 0.3\n- Savings and investment:\n  - Investment: 2013: 15.9; 2014: 15.6; 2015: 13.1; 2016: 15.3; 2017: 18.2; 2018: 18.6\n  - Gross national savings: 2013: 13.0; 2014: 14.5; 2015: 14.0; 2016: 14.4\n- External sector:\n  - Exports of goods, f.o.b.: 2013: 18.1; 2014: 20.6; 2015: 21.0; 2016: 21.5; 2017: 20.8; 2018: 20.7; 2019: 20.9\n  - Imports of goods, c.i.f.: 2013: 30.7; 2014: 30.2; 2015: 28.7; 2016: 31.2; 2017: 31.5; 2018: 31.6\n  - Current account balance (exc. grants): 2013: -6.5; 2014: -1.5; 2015: -3.4; 2016: -4.3; 2017: -6.4; 2018: -5.6; 2019: -5.5\n  - Current account balance (inc. grants): 2013: -5.9; 2014: -1.9; 2015: -4.2\n- Public debt (percent of GDP):\n  - Total public debt: 2013: 33.9; 2014: 35.8; 2015: 41.0; 2016: 41.7; 2017: 42.8; 2018: 43.6; 2019: 44.5\n  - External: 2013: 22.8; 2014: 24.4; 2015: 28.4; 2016: 30.4; 2017: 32.6; 2018: 34.5\n  - Domestic: 2013: 11.4; 2014: 12.6; 2015: 11.3; 2016: 10.2; 2017: 9.1\n- Other indicators:\n  - Gross official reserves (millions of SDRs): 2013: 502; 2014: 535; 2015: 600; 2016: 701; 2017: 782; 2018: 859; 2019: 945\n  - Months of imports of goods and services: 2013: 2.9; 2014: 3.4; 2015: 3.6\n  - Terms of trade (percent change, deterioration -): 2013: 0.8; 2014: -4.6; 2015: -2.1\n  - GDP per capita (U.S. dollars): 2013: 462; 2014: 453; 2015: 402; 2016: 391; 2017: 405; 2018: 419; 2019: 437\n  - Nominal GDP at market prices (billions of ariary): 2013: 23,397; 2014: 25,775; 2015: 28,585; 2016: 31,773; 2017: 35,507; 2018: 39,609; 2019: 44,103\n\nPress Release No. 16/370, July 28, 2016 — IMF Communications Department.\n\n---\n\n\n References\n\n- Mitsuhiro Furusawa\n- Republic of Madagascar and the IMF\n- Special Drawing Rights (SDRs) -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- www.imf.org/Madagascar\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2016/07/28/19/38/pr16370-madagascar-imf-executive-board-approves-us-304-7-million"
    }
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    "Published: July 28, 2016",
    "Executive Board approved the equivalent of SDR 220 million (about US$304.7 million, or 180 percent of current quota) under a 40-month Extended Credit Facility (ECF) arrangement for Madagascar.",
    "SDR 31.428 million (about US$43.5 million) is available for immediate disbursement; the remaining amount will be available in phases over the duration of the program, subject to semi-annual reviews.",
    "The Executive Board was informed of the Managing Director’s approval of the first and final review under the six-month Staff-Monitored Program (SMP) covering September 2015–end-March 2016; the country built a satisfactory track record of sustained reforms, with progress in most areas.",
    "Primary aim: reinforce macroeconomic stability and promote sustainable and inclusive growth.",
    "Identified challenges:",
    "Essential actions and priorities:",
    "Context: recovery from extended political crisis and international isolation from 2009 to 2013; key social and developmental indicators deteriorated during that period.",
    "Recovery since 2014 hampered by falling key commodity prices, weather-related shocks, and deep-rooted structural weaknesses.",
    "GDP growth: estimated at 3.1 percent in 2015 (slightly lower than in 2014 and barely higher than population growth).",
    "Inflation: fell to 6.3 percent at end-May 2016 from 7.6 percent at end-December 2015, led by lower food and fuel prices.",
    "Fiscal: budget execution challenging in 2015; fiscal deficit increased to 3.3 percent of GDP due to underperforming revenue collections, financing difficulties, and unexpected transfers to state-owned enterprises and pensions.",
    "Outlook: economic conditions expected to improve in 2016 supported by country-specific factors.",
    "SMP period: September 2015–end-March 2016.",
    "Macroeconomic targets: broadly satisfactory and met through end-March 2016, except ceilings on net credit to government and new external payment arrears (due to technical difficulties in making payments).",
    "Fiscal and external: tax revenue began to improve gradually; priority social spending targets were met; robust accumulation of foreign exchange reserves boosted external buffers.",
    "Structural progress:",
    "Boost prospects for inclusive growth through:",
    "Create fiscal space through improved revenue generation and spending prioritization.",
    "Reinforce economic governance by strengthening public financial management and intensifying anti-corruption measures.",
    "Strengthen macroeconomic stability by bolstering central bank operations and financial supervision.",
    "Reform implementation to be supported by targeted capacity building and technical assistance.",
    "National account and prices:",
    "Money and credit:",
    "Public finance (percent of GDP):",
    "Savings and investment:",
    "External sector:",
    "Public debt (percent of GDP):",
    "Other indicators:",
    "[Mitsuhiro Furusawa](http://www.imf.org/external/np/omd/bios/mf.htm)",
    "[Republic of Madagascar and the IMF](http://www.imf.org/external/country/MDG/index.htm)",
    "[Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[www.imf.org/Madagascar](http://www.imf.org/Madagascar)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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