The IMF has approved the first reviews of Madagascar’s ECF and RSF arrangements, allowing for a US$101 million disbursement. Key reforms, particularly in fuel pricing and JIRAMA’s restructuring, are crucial for addressing high poverty rates and climate vulnerabilities. Enhanced governance and financial management are necessary to support sustainable economic growth.
The International Monetary Fund (IMF) Executive Board has successfully completed the First Reviews of both the Extended Credit Facility (ECF) and the Resilience and Sustainability Facility (RSF) arrangements for Madagascar. This decision permits an immediate disbursement of US$101 million to support the nation’s economic framework.
Madagascar’s overall implementation of the ECF and RSF programs has been satisfactory, though inconsistently applied. The introduction of an automatic fuel price adjustment mechanism is anticipated to improve fiscal space for necessary public investments and social expenditures, while the ongoing reform of JIRAMA remains critical moving forward.
In June 2024, the IMF Executive Board approved the ECF and RSF arrangements, allowing for the immediate disbursement of SDR 36.7 million under the ECF and SDR 40.7 million under the RSF arrangements. Mr. Nigel Clarke, Deputy Managing Director and Acting Chair, emphasized the pressing development challenges facing Madagascar, particularly its high poverty rate and climate vulnerability.
Mr. Clarke stated that “a faster pace of reform is needed to spur growth, which remains well below its medium-term potential.” He highlighted the importance of maintaining strong political support for the program’s successful implementation, noting the mixed results by the end of June 2024. Continued reliance on the automatic fuel pricing mechanism is expected to mitigate fiscal risks and allow for increased public investment.
He also noted that improvements in domestic revenue mobilization and the financial recovery of JIRAMA are necessary, alongside better public financial management processes. Enhanced communication regarding monetary policy by the central bank (BFM) is recommended to strengthen its credibility and manage inflation effectively.
In conclusion, it is imperative for Madagascar to prioritize climate resilience initiatives, including mobilizing climate finance. The newly issued decree regulating environmental and social impact assessments aims to streamline future investments, including crucial infrastructure projects.
In summary, the IMF’s review of Madagascar’s economic frameworks under the ECF and RSF highlights the nation’s challenges and aims to foster growth through necessary reforms. Immediate financial disbursements will address critical public investment and social spending needs. Continued effort towards enhancing governance and combating corruption, coupled with fiscal frameworks, is essential to stabilize the economy and prepare for climate impacts.
Original Source: www.miragenews.com
