- The IMF Executive Board completed the Combined Third and Fourth 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 SDR 114.052 million (about US$155 million).
- Madagascar is undergoing a political transition at a time of heightened vulnerability, following tropical cyclones earlier this year and amid spillovers from the war in the Middle East. Renewed commitment to broad-based reforms, particularly domestic revenue mobilization, is essential to preserve macroeconomic stability and bolster overall socioeconomic resilience.
- The full application of the automatic fuel pricing mechanism will help redirect scarce public resources toward education, health, and social protection; the swift implementation of the recovery plan for the public utilities company (JIRAMA) will improve the reliability of electricity and water supply.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the Combined Third and Fourth Reviews under the 36-month Extended Credit Facility (ECF) arrangement and under the 36-month Resilience and Sustainability Facility (RSF) arrangement. The ECF and RSF arrangements were approved by the IMF Executive Board in June 2024 (see PR24/232 ) The authorities have consented to the publication of the Staff Report prepared for this review. [1]
The completion of the reviews allows for the immediate disbursement of SDR 73.32 million (about US$100 million) under the ECF arrangement and of SDR 40.732 million (about US$55 million) under the RSF arrangement.
Madagascar is undergoing a political transition following protests linked to persistent electricity outages and water shortages. Vulnerabilities were compounded by tropical cyclones earlier this year and higher global oil prices amid the war in the Middle East.
Against this context, real GDP growth is estimated at 3.1 percent in 2025 (down from 4 percent at the Second Review) and projected at 3.8 percent in 2026, supported by post-cyclone reconstruction and the government's economic recovery plan. The current account deficit would widen to 8.3 percent of GDP in 2026 (from 6.0 percent in 2025), reflecting higher oil prices, cyclone-related imports, and damage to mining.
Program performance under the ECF has been broadly satisfactory. Following the missed end-June 2025 primary balance QPC, the authorities took strong corrective measures and met all end-December 2025 QPCs. M3 growth remained within the bands of the Monetary Policy Consultation Clause. However, tax collection has fallen well below expectations. In completing the combined reviews under the ECF arrangement, the Executive Board has completed the financing assurances review and has granted a waiver of nonobservance of the end-June 2025 performance criterion on the floor on primary balance on the basis of its temporary nature and corrective actions. On the RSF front, Madagascar's adopted its first "green budget" and a National Climate Finance Strategy. Some reform measures were delayed, partly due to exogenous factors.
At the conclusion of the Executive Board discussion, Mr. Nigel Clarke, Deputy Managing Director, and Acting Chair, made the following statement:
"The Republic of Madagascar is undergoing a political transition, at a time of heightened vulnerability, following tropical cyclones earlier this year and amid spillovers from the war in the Middle East. These developments have exacerbated policy trade-offs and further underscored the need for a long-term view in public policy.
"Renewed efforts in domestic revenue mobilization and strengthened public financial management are essential to safeguard fiscal sustainability and generate space for social and growth-enhancing spending. In this context, the tax measures included in the supplementary 2026 budget should be complemented by decisive efforts to rationalize tax exemptions and strengthen tax and customs administration.
"A swift implementation of the recovery plan for the public utilities company (JIRAMA) will help improve the reliability of electricity and water supply while limiting calls on the State budget.
"A full application of the automatic fuel pricing mechanism by January 2027, with targeted mitigating measures to the most vulnerable, will help redirect scarce public resources toward education, health, and social protection while helping contain fiscal risks in the face of highly volatile global oil prices. Moreover, it is of paramount importance to ensure a well-functioning fuel market.
"The central bank (BFM) should stand ready to tighten monetary policy further should inflationary pressures persist. Continued implementation of its modernization agenda will reinforce the effectiveness of the interest-based monetary policy framework. Maintaining exchange rate flexibility remains critical for absorbing external shocks while safeguarding reserves.
"The adoption and swift implementation of the homegrown action plan for implementing key recommendations from the IMF governance diagnostic assessment will help strengthen governance and transparency, complementing the national anti-corruption strategy.
Strengthened commitment to the reform agenda under the Resilience and Sustainability Facility (RSF) is also needed to enhance climate resilience and complement the ECF's broader objective of bolstering socioeconomic resilience."
Table 1. Madagascar: Selected Economic Indicators |
||||||
| 2023 | 2024 | 2025 | 2026 | 2027 | ||
| Est. | Proj. | |||||
| (Percent change; unless otherwise indicated) | ||||||
| National Account and Prices | ||||||
| GDP at constant prices | 4.2 | 4.3 | 3.1 | 3.8 | 4.5 | |
| GDP deflator | 8.4 | 7.4 | 7.5 | 8.0 | 7.7 | |
| Consumer prices (end of period) | 7.5 | 8.6 | 7.2 | 9.3 | 7.1 | |
| Money and Credit | ||||||
| Broad money (M3) | 8.6 | 14.6 | 8.7 | 10.9 | 9.2 | |
| (Growth in percent of beginning-of-period money stock (M3)) | ||||||
| Net foreign assets | 18.2 | 9.9 | 8.8 | -2.9 | 4.3 | |
| Net domestic assets | -9.7 | 4.8 | -0.1 | 13.7 | 4.9 | |
| of which: Credit to the private sector | 0.7 | 5.6 | 5.9 | 8.1 | 7.7 | |
| (Percent of GDP) | ||||||
| Public Finance | ||||||
| Total revenue (excluding grants) | 11.3 | 11.4 | 10.1 | 11.2 | 11.5 | |
| of which: Tax revenue | 11.1 | 10.9 | 9.8 | 11.0 | 11.3 | |
| Grants | 2.2 | 2.2 | 1.3 | 1.4 | 0.6 | |
| Total expenditures | 17.7 | 16.1 | 13.5 | 17.1 | 15.9 | |
| Current expenditure | 10.8 | 9.6 | 8.7 | 10.4 | 9.2 | |
| Capital expenditure | 6.9 | 6.5 | 4.9 | 6.6 | 6.7 | |
| Overall balance (commitment basis) | -4.2 | -2.5 | -2.1 | -4.5 | -3.8 | |
| Domestic primary balance1 | -0.3 | 1.4 | 1.2 | 0.3 | 1.7 | |
| Primary balance | -3.5 | -1.9 | -1.4 | -3.5 | 0.0 | |
| Total financing | 4.1 | 2.7 | 2.0 | 4.8 | 3.9 | |
| Foreign borrowing (net) | 2.9 | 2.5 | 2.3 | 3.4 | 4.2 | |
| Domestic financing | 1.2 | 0.2 | -0.3 | 1.3 | -0.3 | |
| Fiscal financing need2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Savings and Investment | ||||||
| Investment | 20.5 | 20.4 | 22.3 | 25.3 | 24.5 | |
| Gross national savings | 17.4 | 18.3 | 16.3 | 17.0 | 18.2 | |
| External Sector | ||||||
| Exports of goods, f.o.b. | 19.3 | 14.6 | 12.7 | 12.1 | 12.5 | |
| Imports of goods, c.i.f. | 27.7 | 26.2 | 25.7 | 26.4 | 24.9 | |
| Current account balance (exc. grants) | -6.2 | -8.0 | -7.4 | -9.7 | -6.9 | |
| Current account balance (inc. grants) | -4.0 | -5.3 | -6.0 | -8.3 | -6.3 | |
| Public Debt | 52.1 | 49.8 | 47.7 | 49.3 | 49.5 | |
| External Public Debt (inc. BFM liabilities) | 37.4 | 36.4 | 36.3 | 39.1 | 40.0 | |
| Domestic Public Debt | 14.7 | 13.4 | 11.4 | 10.2 | 9.5 | |
| (Units as indicated) | ||||||
| Gross official reserves (millions of SDRs) | 1,972 | 2,160 | 2,601 | 2,527 | 2,619 | |
| Months of imports of goods and services | 5.7 | 6.1 | 6.9 | 6.1 | 6.2 | |
| GDP per capita (U.S. dollars) | 539 | 575 | 619 | 651 | 687 | |
| Sources: Malagasy authorities; and IMF staff estimates and projections. | ||||||
| 1 Primary balance excl. foreign-financed investment and grants. | ||||||
| 2 A negative value indicates a financing gap to be filled by budget support or other financing still to be committed or identified. | ||||||
[1] Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/MDG page.
