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Madagascar has successfully secured a $101 million loan from the International Monetary Fund (IMF) following the completion of the 2024 Article IV consultation. In a statement, the IMF confirmed that its Executive Board finalized the First Reviews under the 36-month Extended Credit Facility (ECF) and the Resilience and Sustainability Facility (RSF).
The ECF and RSF programs, initially approved in June 2024, are designed to support Madagascar’s economic reforms and resilience-building initiatives. As a result of the latest review, the country will receive an immediate disbursement of SDR 36.7 million (approximately $48 million) under the ECF and SDR 40.7 million (about $53 million) under the RSF.
According to the IMF, Madagascar’s economic growth stabilized in 2024, though inflationary pressures remain persistent. The nation’s fiscal position improved, aided by a resolution of fuel distributors’ tax arrears following an agreement reached in December, despite sustained high transfers to state-owned utility JIRAMA.
However, the country’s current account deficit widened, largely due to a decline in export earnings. Despite these challenges, Madagascar’s medium-term economic outlook remains positive, underpinned by key reforms supported by the IMF-backed programs. These reforms focus on enhancing agricultural productivity, expanding electricity access, and upgrading road infrastructure to drive sustainable economic growth.
Risks and Reform Imperatives
The IMF cautioned that risks to Madagascar’s economic outlook remain skewed to the downside, given the prevailing global and domestic uncertainties. Climate vulnerabilities continue to pose significant threats to economic stability.
The 2024 Article IV consultation discussions centered on strengthening fiscal sustainability through enhanced domestic revenue generation, reducing fiscal risks, and building financial buffers to withstand economic shocks. The review also emphasized improving governance, tackling corruption, strengthening monetary and financial stability, and fostering inclusive economic growth.
IMF Calls for Accelerated Reforms
Nigel Clarke, Deputy Managing Director and Acting Chair of the IMF Executive Board, acknowledged Madagascar’s pressing development challenges, particularly its high poverty rate and climate-related vulnerabilities. He underscored the need for an accelerated reform agenda to unlock the country’s full economic potential.
“While Madagascar has made progress, growth remains below its medium-term potential. A faster pace of reform is essential to drive economic expansion and enhance resilience,” Clarke stated.
Key recommendations from the IMF include:
- Fiscal Discipline & Revenue Mobilization: Strengthening tax collection and reducing fiscal risks, including continued implementation of the automatic fuel pricing mechanism to create fiscal space for infrastructure and social investments.
- Public Financial Management: Enhancing budget execution, cash flow projections, and transparency in public investment management to curb arrears accumulation.
- Governance & Anti-Corruption Measures: Implementing the recently published Anti-Corruption Strategy (2025-2030) and leveraging the ongoing Governance Diagnostic Assessment to improve transparency and institutional accountability.
- Monetary Policy & Inflation Control: The central bank (BFM) should remain vigilant, with readiness to adjust policy rates to curb inflation. Strengthening liquidity management and improving communication on monetary policy will further enhance BFM’s credibility.
- Climate Resilience & Sustainable Investment: Prioritizing climate adaptation strategies and mobilizing green finance. The newly introduced decree on environmental and social impact assessments will play a crucial role in evaluating investment projects, including infrastructure developments.
With IMF-backed programs providing financial and policy support, Madagascar aims to accelerate economic reforms, strengthen financial governance, and build resilience against climate and economic shocks.
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