Republic of Madagascar and the IMF
On December 21, 2000, the Executive Board of the International Monetary Fund (IMF) considered Madagascar's decision point under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative (see Press Release 00/81).
Following the Executive Board's discussion, Stanley Fischer, First Deputy Managing Director and Acting Chairman, made the following statement:
"The Executive Board today decided that, in view of its satisfactory track record of economic performance, Madagascar has reached the decision point under the Enhanced Initiative for Heavily Indebted Poor Countries (HIPC).
"The government's Interim Poverty Reduction Strategy Paper, prepared through a comprehensive participatory process, is welcome, and constitutes an appropriate base for the elaboration of a full PRSP. It is clear that improvement in the areas of health, education, basic social services delivery, water and sanitation, rural development, protection of the environment, and improved governance, are crucial for the fight against poverty.
"Despite improvements in the overall economic situation in recent years, continued efforts are needed to enhance growth prospects and reduce poverty. The challenge facing Madagascar is to consolidate the gains achieved thus far and make rapid progress in carrying out further needed reforms. The Malagasy authorities need to improve expenditure management and auditing, strengthen tax administration, improve the judicial system, and increase the efficiency of the delivery of public services. The Fund encourages the authorities to implement their strategies in the health and education sectors with determination, and improve basic infrastructure, in particular in the poorest areas of the country, as key elements to fight poverty. In line with the HIPC Initiative, the budgetary resources released by debt relief should be used for poverty reduction and social sector development.
"It is agreed that Madagascar could reach the floating completion point after adoption of a full Poverty Reduction Strategy Paper (PRSP) prepared through a participatory process of consultation with civil society and the donor community, satisfactory implementation of the PRSP for at least one year, and maintenance of a stable macroeconomic environment.
"The Fund welcomes the Malagasy authorities' decision to continue the adjustment effort and looks forward to a medium-term program that could be supported by a new three-year PRGF arrangement from the IMF," Mr. Fischer said.
IMF EXTERNAL RELATIONS DEPARTMENT