The IMF completed its First Reviews for Madagascar under the ECF and RSF, allowing a US$101 million disbursement. Performance under these programs was adequate but inconsistent, with key priorities including the reform of JIRAMA and implementation of a fuel price adjustment mechanism. Mr. Nigel Clarke emphasized the need for accelerated reforms, improved governance, and effective financial management to strengthen economic resilience against climate shocks.
The Executive Board of the International Monetary Fund (IMF) has completed the First Reviews under both the Extended Credit Facility (ECF) and Resilience and Sustainability Facility (RSF) arrangements for Madagascar, resulting in an immediate disbursement of US$101 million. Madagascar’s performance in these programs has been regarded as adequate, albeit inconsistent. An automatic fuel price adjustment mechanism is being implemented, which is intended to free up fiscal resources for social initiatives and investment. Additionally, reform of the national power utility, JIRAMA, remains a key focus of these efforts.
During the Executive Board meeting, Mr. Nigel Clarke, the Deputy Managing Director and Acting Chair, emphasized the critical development needs faced by Madagascar, particularly in light of its high poverty levels and susceptibility to climate-related shocks. He stressed the necessity for accelerated reform to enhance economic growth, which presently lags behind its medium-term potential. The performance of the programs as of June 2024 was described as mixed, highlighting the importance of robust political support for successful implementation.
Mr. Clarke noted that the continuation of the automatic fuel pricing mechanism is vital for reducing fiscal risks and facilitating increased public investment and social expenditure. He called for enhanced efforts in domestic revenue mobilization and for measures to ensure the financial rehabilitation of JIRAMA. He also pointed out that strengthening public financial management processes is essential for improving budget execution and accountability, which can be further aided by better cash flow management.
The importance of governance improvements was highlighted, with references to the ongoing Governance Diagnostic Assessment and the newly established Anti-Corruption Strategy for 2025-30. These initiatives are expected to advance the fight against corruption and ensure transparency. Furthermore, the central bank of Madagascar (BFM) is tasked with being prepared to adjust its policy rates to ensure inflation remains manageable, with better communication about monetary policies being crucial for reinforcing the bank’s credibility.
The focus on climate adaptation and resilience, along with mobilizing funding for climate initiatives, continues to be a significant priority. An updated decree on environmental and social impact assessments will guide investment project evaluations, and this framework is to be applied to upcoming investments such as road projects, ensuring sustainability and adherence to environmental standards.
In summary, the IMF has confirmed the completion of its First Reviews for Madagascar under both the ECF and RSF arrangements, enabling a vital disbursement of funds. The discussion highlighted the mixed performance of the programs and emphasized the importance of reform, governance, and fiscal management to enhance Madagascar’s economic resilience, particularly in the context of climate challenges. The effective execution of these strategies will require continued political commitment.
Original Source: www.miragenews.com
