November 25, 2019
PRESS OFFICER: Lucie Mboto Fouda
Phone: +1 202 623-7100Email: MEDIA@IMF.org
An International Monetary Fund (IMF) mission led by Charalambos Tsangarides, mission chief for Madagascar, visited Antananarivo from November 11 to 25 to conduct discussions for the 2019 Article IV consultation and the sixth and final review of Madagascar’s economic reform program supported by the ECF arrangement.
At the end of the mission, Mr. Tsangarides issued the following statement:
“The discussions have allowed the authorities and the IMF staff to reach staff-level agreement for the sixth program review, subject to approval by IMF management and the Executive Board. Consideration by the IMF’s Executive Board is expected in January 2020.
“Despite a temporary slowdown in the first half of the year, mainly due to slow budget execution, the macroeconomic outlook has remained favorable. For 2019, growth is expected to improve to 4.8 percent, supported by dynamic credit conditions, and positive developments in mining, transportation, and services. In a context of decreasing vanilla prices, the current account is expected to record a small deficit. After peaking in late 2017, inflation has continued to steadily decelerate and is expected to be contained to 6 percent by end-year. For 2020, economic prospects remain positive, with real growth expected to reach 5.2 percent, supported by increased public spending on infrastructure, health and education, and increasing private sector activity especially in tourism, other services, and light manufacturing.
“The implementation of the ECF-supported program that expires in early 2020 has remained satisfactory. The authorities met all the June 2019 performance criteria, as well as the indicative target on tax revenue collection. However, the indicative target on domestically financed priority social spending was missed by a significant margin; despite recent improvements in execution, the year-end objective will not be met. The central bank has continued to successfully reduce exchange rate volatility and support gradual accumulation of reserves, and manage liquidity through timely interventions, thus contributing to macroeconomic stability. The authorities made some progress on the structural reform agenda, albeit at a slower pace than envisaged. Despite the successful renegotiation of distribution margins on fuel prices, a remaining gap between reference and pump prices led to continued accumulation of small liabilities to distributors.
“Staff welcomed the authorities’ commitment to strengthen growth, enhance revenue collection, and foster social inclusion. Supporting economic activity will require the strict prioritization and timely implementation of growth-enhancing investment projects. Meeting the authorities’ ambitious tax revenue targets will critically depend on stepping up collection efforts, cross-checking information between customs and domestic tax administrations, and revising tax expenditures and exemption regimes. Reducing poverty will necessitate strong public spending execution in the health and education sectors, as well as containing lower priority public spending such as subsidies to fuel and electricity operators.
“Staff underscored the need to adopt a pricing mechanism that aligns pump prices with world price developments and to settle existing liabilities with distributors to avoid budget costs. Staff emphasized that such a mechanism would need to be implemented along with targeted social measures to protect the poor from the impact of potential future price adjustments. To improve the operational and financial situation of the public utility JIRAMA and ensure it does not weigh on the budget, an encompassing strategy to raise revenues and improve governance is needed. Staff also support ongoing cost-cutting measures, including through the renegotiation of contracts with electricity and fuel suppliers, and the audit of the company’s arrears.
“Staff encouraged the authorities to continue improving governance, including by stepping up the fight against corruption, a key element to strengthen the business climate and attract private investment. In this respect, staff commended the authorities for adopting an ordinance on illicit asset recovery and urged its operationalization through the speedy adoption of the implementation decree. To consolidate and deepen significant structural reforms undertaken at the central bank to strengthen the monetary policy framework and boost financial inclusion, staff welcomed the authorities’ plans to submit the new banking law and the financial stability law to Parliament.
“The mission met with President Andry Rajoelina, Prime Minister Christian Ntsay, Minister of Economy and Finance Richard Randriamandrato, Interim Minister of Energy, Water, and Hydrocarbons Christian Ramarolahy, outgoing Central Bank of Madagascar Governor Alain Rasolofondraibe and new Governor Henri Rabarijohn, senior officials, development partners, as well as representatives of the private sector and civil society.
“The mission would like to thank the Malagasy authorities for their strong cooperation and the constructive discussions.”
© 2026 International Monetary Fund. All rights reserved.
