- The IMF Executive Board today completed the First Reviews under the Extended Credit Facility (ECF) arrangement and the Resilience and Sustainability Facility (RSF) arrangement for the Republic of Madagascar, allowing for an immediate disbursement of US$101 million.
- Madagascar's performance under the ECF and RSF programs has been adequate albeit uneven. The implementation of an automatic fuel price adjustment mechanism will create fiscal space for social spending and investment. The reform of JIRAMA remains a priority.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the First Reviews under the 36-month Extended Credit Facility (ECF) arrangement and under the Resilience and Sustainability Facility (RSF) arrangement. The ECF and RSF arrangements were approved by the IMF Executive Board in June 2024.
The completion of the reviews allows for the immediate disbursement of SDR 36.7 million (about US$48 million) under the ECF arrangement and of SDR 40.7 million (about US$53 million) under the RSF arrangement.
At the conclusion of the Executive Board discussion, Mr. Nigel Clarke, Deputy Managing Director, and Acting Chair, made the following statement:
"Madagascar continues to face important development needs amid its high poverty rate and vulnerability to climate shocks. A faster pace of reform is needed to spur growth, which remains well below its medium-term potential. Program performance at end-June 2024 was broadly assessed as mixed, stressing the need for continued strong political ownership to support program implementation.
"The continued implementation of the automatic fuel pricing mechanism will help contain fiscal risks and create space for more public investment and social spending. In addition, further efforts are needed to continue improving domestic revenue mobilization and firmly secure the financial recovery of JIRAMA.
"Reinforcing public financial and investment management processes is critical to improve budget execution and traceability. Better cash flow projections and management should facilitate spending and limit the accumulation of arrears. Continued improvements in governance, building on the ongoing Governance Diagnostic Assessment, and the implementation of the newly published Anti-Corruption Strategy for 2025-30 will support efforts to fight corruption and promote transparency.
"The central bank (BFM) should stand ready to raise its policy rates to keep inflation on a downward path. Further improvements in the liquidity management framework and better communication about monetary policy decisions would bolster BFM's credibility.
"Further building adaptation and resilience to climate shocks as well as mobilizing climate finance should continue to be a key priority. The new decree on environmental and social impact assessments provides a framework to evaluate and select investment projects, which should be applied to new investments, including road projects.
