Statement by the Staff Representative on Republic of Madagascar, July 27, 2016

Madagascar is a fragile country striving to recover from an extended political crisis and international isolation from 2009 to 2013, during which key social and developmental indicators deteriorated. Low revenue collection, substantial low-priority public spending, and governance problems are holding back recovery. Nevertheless, broadly satisfactory performance under the six-month staff monitored program that ended in March 2016 is a sign of improving implementation capacity.

Abstract

Madagascar is a fragile country striving to recover from an extended political crisis and international isolation from 2009 to 2013, during which key social and developmental indicators deteriorated. Low revenue collection, substantial low-priority public spending, and governance problems are holding back recovery. Nevertheless, broadly satisfactory performance under the six-month staff monitored program that ended in March 2016 is a sign of improving implementation capacity.

1. This statement reports on new developments since the staff report was issued. The additional information does not change the thrust of the staff appraisal:

  • The authorities have completed all prior actions: (i) the supplementary budget, with measures outlined in the MEFP, was submitted to the Parliament in June and adopted by the National Assembly on June 29 and the Senate on June 30; (ii) the weighted-average electricity tariffs have been increased by 15 percent following a 10 percent tariff increase announced in June and a 5 percent tariff increase announced in July; and (iii) the draft laws establishing anti-corruption centers and strengthening asset declarations and their use were submitted to the Parliament in June and adopted by the National Assembly on June 30 and the Senate on July 1.

  • Madagascar’s terms of trade have improved in recent months because of higher-than-expected world-market prices for vanilla, for which Madagascar is the world’s leading producer. As a result, the exchange rate has appreciated against the dollar in both nominal and real terms.