## IMF Executive Board Completes Second Review Under the Extended Credit Facility Arrangement for Madagascar and Approves US$44.5 Million Disbursement

_IMF News, December 6, 2017_

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## Bibliographic details
- Published: December 6, 2017

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### Review outcome and disbursement
- On December 6, 2017, the Executive Board of the International Monetary Fund (IMF) completed the second review of Madagascar’s program supported by the Extended Credit Facility (ECF).
- Decision taken without a Board meeting under lapse-of-time procedure.
- Approved disbursement: SDR 31.428 million (about US$44.5 million).
- Total disbursements under the ECF arrangement approved on July 27, 2016: SDR 124.834 million (approximately US$174.1 million).

### Program implementation and macroeconomic performance
- Madagascar’s implementation of its economic program supported by the ECF has remained strong.
- All quantitative performance criteria and indicative targets were met at end-June 2017.
- Structural agenda is advancing.
- Economic recovery has continued with solid growth and continued macroeconomic stability despite the drought and cyclone in early 2017.
- Fiscal performance in 2017: roughly as planned, with strong revenue performance offsetting some unexpected spending pressures.
- Monetary and exchange rate policy: successfully managed external challenges; inflation was stable despite weather-related shocks.
- External sector:
  - Current account weakened in 2017 relative to 2016, driven by the trade deficit.
  - Overall external account remained strong as transfers and financial inflows largely offset the current account deficit.
  - Malagasy Ariary has appreciated slightly in real effective terms.
  - Central Bank of Madagascar has boosted international reserves significantly, well beyond program targets.

### 2018 budget and fiscal outlook
- The 2018 budget supports the program’s core objective of strong and inclusive growth.
- Financing pressures arose from a higher than expected wage bill and the strong Ariary.
- Authorities’ response measures:
  - Contain lower priority spending.
  - Boost revenue, including increases in fuel taxes.
- Investment spending: both domestically and externally-financed investment spending is expected to grow significantly, although less than targeted earlier due to capacity constraints.

### Medium-term fiscal policy objectives
- Steadily raise revenue mobilization.
- Gradually reduce transfers to the public utility company JIRAMA.
- Scale up public investment while containing risks to macroeconomic stability and debt sustainability.
- Caution that planned tax incentives should be cost-effective and should not jeopardize program goals for revenue and public investment.

### Governance, anti-corruption, and public financial management
- Continued efforts to enhance governance and the fight against corruption are vitally important.
- Priorities:
  - Completion of the new legal framework (in line with international standards).
  - Strengthening of enforcement.
  - Continued improvement in public financial management.

### Financial sector development and supervision
- Work underway to develop the financial sector is important and well-prioritized.
- Authorities’ strategy aims to enhance the sector’s contribution to economic development, especially financial inclusion.
- Mobile money services are growing rapidly and will be further supported by a new, modernized legal and regulatory framework.
- To keep financial risks under control, initiatives are underway to strengthen supervision as well as the broader legal framework for the financial sector.

*Source: IMF Press Release No. 17/467, December 6, 2017.*

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## References

- [https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)
- [The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)
- [Republic of Madagascar and the IMF](http://www.imf.org/external/country/MDG/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2017/12/06/pr17467-imf-board-completes-second-review-under-ecf-for-madagascar_