In March 2021, Madagascar secured a $312 million funding facility to support its economic reform program. In the framework of that agreement, an IMF team sojourned in the country from May 3 to 12, 2013, to review the progress of those reforms. 

The IMF has approved a staff-level agreement for the disbursement of $32 million to Madagascar. The approval, announced on Friday, May 19, follows a two-week mission to the country in the framework of the fourth review of the extended credit facility (ECF) arrangement between Madagascar and the IMF. 

The 40-month ECF arrangement was approved by the IMF board in March 2021. It aims to provide $312.4 million to support the Malagasy government in its efforts to strengthen economic stability and reduce poverty.

Although two of the program's five quantitative macroeconomic targets were not met in the second half of 2022, Malagasy authorities were determined to enhance fiscal transparency and strengthen governance. According to the IMF, the East African archipelago’s economy remains vulnerable to several shocks, including global inflationary pressures and climate change.  

“Following a 5.7 percent rebound in 2021, the growth momentum is expected to slow to 4.0 percent in 2022 and 2023, in part due to weather-related disruptions, difficulties in the vanilla sector, and an uncertain world economic outlook. Inflation pressures continue to build up and the depreciation of the ariary relative to the U.S. dollar accelerated in 2022, despite interventions by the central bank (BFM). The domestic primary deficit reached 2.8 percent of GDP in 2022 (compared to 1.4 percent in the revised 2022 budget), mostly due to the non-payment of oil customs duties and taxes by oil distributors and lower domestic tax collection.,” the IMF indicates in a release. 

According to the multilateral institution, to anchor economic stability and foster more sustainable and inclusive growth, Madagascar needs to make additional efforts to increase revenues, reduce fiscal risks, improve public financial management, and strengthen social safety nets.

In its release announcing the staff-level agreement, the IMF indicates that during the mission the team also discussed Madagascar’s request to access the new Resilience and Sustainability Facility.