It is a disbursement of 24.44 million special drawing rights (SDR) or 31.9 million dollars which is part of the Extended Credit Facility (ECF) agreement of the International Monetary Fund.
This financing “brings the total funds disbursed to approximately $159.7 million and will make it possible to “cover external and budgetary financing needs”. The IMF estimates that this year the country’s growth “should stagnate at 4.2% against 4.3% last year”.
“Average annual inflation is expected to accelerate to 9.8%, fueled by soaring international oil and food prices. The drop in growth and the rise in commodity prices will weigh on the budget, widening the budget deficit,” explains the Bretton Woods institution.
Climatic shocks, Covid-19, global inflation, among others, explain the current situation of areas of uncertainty in Madagascar. However, according to the IMF, “the implementation of the reform program envisaged in the Plan Emergence Madagascar as well as an increase in investments could stimulate productivity and growth”.
“Improving budget execution is crucial to increasing the effectiveness of fiscal policy and achieving program objectives,” said Antoinette Sayeh, Deputy Managing Director and Acting President of the IMF.
She recommends that in the current context of rising food and fuel prices, it is particularly important to improve the execution of social spending and put in place stronger safety nets to protect the most vulnerable.