{
  "title": "IMF Staff Reviews Progress of Madagascar's Economic Program",
  "publication": "IMF News, February 15, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/02/15/pr1946-madagascar-imf-staff-reviews-progress-of-economic-program",
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  "summary": "[1] The ECF is a lending arrangement that provides sustained program engagement over the medium to long term in case of protracted balance of payments problems.",
  "publishDate": "2019-02-15",
  "sections": [
    {
      "heading": "Mission and context",
      "content": "- Mission led by Marshall Mills, Mission Chief for Madagascar, visited Antananarivo on February 11-15, 2019.\n- Visit covered the fourth review of Madagascar’s economic reform program supported by the IMF’s Extended Credit Facility (ECF).[1]\n- End-of-mission statement: discussions “made good progress and are continuing, with a view to bringing the review to the Executive Board of the IMF for consideration in the coming weeks, as anticipated.”"
    },
    {
      "heading": "Recent economic developments and outlook",
      "content": "- Economic growth is expected to exceed 5 percent in 2018 and 2019, reflecting in particular higher private sector activity.\n- Growth drivers in 2018:\n  - Rebound in agricultural production.\n  - Private sector activity notably in construction, telecommunication and transport services.\n- External sector:\n  - Strengthened external position thanks to strong vanilla and mining exports despite higher oil prices.\n- Inflation:\n  - After peaking in late 2017, inflation fell steadily to around 6 percent at end-December.\n- Prospects for 2019:\n  - Growth again expected to exceed 5 percent.\n  - Continued stability bolstered by improving political stability and the authorities’ commitment to economic reforms.\n- Policy emphasis: “Sustained and inclusive growth remains critical to raising living standards for the population.”"
    },
    {
      "heading": "Program implementation and fiscal developments",
      "content": "- Overall assessment: The implementation of the ECF-supported program remained generally satisfactory through end-year, except for some weakness in revenue collection later in the year.\n- Performance and reforms:\n  - The Malagasy authorities met all of the program’s performance criteria for the first half of the year.\n  - Progress on key structural reforms, such as opening the first anti-corruption court in Antananarivo.\n- Second-half developments:\n  - Budget execution complicated by a shortfall in domestic revenue related to the electoral period.\n  - The small revenue shortfall came after previous impressive progress on revenue under the program.\n  - As a result, the overall primary balance deteriorated slightly despite spending discipline.\n- Central bank: Successfully accumulated foreign exchange reserves over the year, reaching record levels.\n- Structural reform pace: Progress continued but at slower pace than anticipated.\n- Energy sector fiscal risks:\n  - Delays in adjusting fuel pump prices led to significant, unfunded liabilities to distributors in a context of social pressures and high world oil prices."
    },
    {
      "heading": "Policy recommendations and priorities",
      "content": "- Revenue mobilization:\n  - Plans to boost social and investment spending depend critically on continuing to raise tax revenue under the program.\n  - Key tax administration reforms recommended: stronger revenue accounting procedures and safeguarding revenue from losses due to tax expenditures and exemption regimes.\n- Spending and debt management:\n  - Strict prioritization of investment projects and maintaining robust debt sustainability are essential.\n  - Gradually reduce lower priority public spending—particularly subsidies in the fuel and electricity sectors—to boost pro-growth spending.\n- Fuel pricing and liabilities:\n  - Staff urged the authorities to adopt a fuel pricing mechanism that keeps prices in line with costs.\n  - Adopt a plan to eliminate the large existing liabilities to fuel distributors.\n  - Develop targeted social measures to protect the poor from the impact of future price adjustments.\n- Public utility JIRAMA:\n  - Continue bolstering the financial situation of JIRAMA by raising revenue, reducing costs, and improving governance.\n- Governance and anti-corruption:\n  - Continue strengthening governance and stepping up the fight against corruption.\n  - Adoption of the draft law on illicit asset recovery has become a priority to complete the legal framework to fight corruption."
    },
    {
      "heading": "Meetings and acknowledgements",
      "content": "- Mission met with President Andry Rajoelina; Minister of Economy and Finance Richard Randriamandrato; Ministry of Energy, Water and Hydrocarbons Vonjy Andriamanga; Central Bank of Madagascar Governor Alain Rasolofondraibe; senior officials; and development partners.\n- “The mission would like to thank the Malagasy authorities for their strong cooperation and the constructive discussions.”\n\n[1] The ECF is a lending arrangement that provides sustained program engagement over the medium to long term in case of protracted balance of payments problems.\n\nPress Release No. 19/46 — IMF Staff Reviews Progress of Madagascar's Economic Program (February 15, 2019).\n\n---\n\n\n References\n\n- Republic of Madagascar and the IMF\n- The IMF and Good Governance -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- ECF\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2019/02/15/pr1946-madagascar-imf-staff-reviews-progress-of-economic-program"
    }
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    "Published: February 15, 2019",
    "Mission led by Marshall Mills, Mission Chief for Madagascar, visited Antananarivo on February 11-15, 2019.",
    "Visit covered the fourth review of Madagascar’s economic reform program supported by the IMF’s Extended Credit Facility (ECF).[1]",
    "End-of-mission statement: discussions “made good progress and are continuing, with a view to bringing the review to the Executive Board of the IMF for consideration in the coming weeks, as anticipated.”",
    "Economic growth is expected to exceed 5 percent in 2018 and 2019, reflecting in particular higher private sector activity.",
    "Growth drivers in 2018:",
    "External sector:",
    "Inflation:",
    "Prospects for 2019:",
    "Policy emphasis: “Sustained and inclusive growth remains critical to raising living standards for the population.”",
    "Overall assessment: The implementation of the ECF-supported program remained generally satisfactory through end-year, except for some weakness in revenue collection later in the year.",
    "Performance and reforms:",
    "Second-half developments:",
    "Central bank: Successfully accumulated foreign exchange reserves over the year, reaching record levels.",
    "Structural reform pace: Progress continued but at slower pace than anticipated.",
    "Energy sector fiscal risks:",
    "Revenue mobilization:",
    "Spending and debt management:",
    "Fuel pricing and liabilities:",
    "Public utility JIRAMA:",
    "Governance and anti-corruption:",
    "Mission met with President Andry Rajoelina; Minister of Economy and Finance Richard Randriamandrato; Ministry of Energy, Water and Hydrocarbons Vonjy Andriamanga; Central Bank of Madagascar Governor Alain Rasolofondraibe; senior officials; and development partners.",
    "“The mission would like to thank the Malagasy authorities for their strong cooperation and the constructive discussions.”",
    "[Republic of Madagascar and the IMF](http://www.imf.org/external/country/MDG/index.htm)",
    "[The IMF and Good Governance -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/the-imf-and-good-governance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[ECF](https://www.imf.org/external/np/exr/facts/ecf.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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