The International Monetary Fund (IMF) on Thursday approved the disbursement of an additional $171.9 million to Madagascar to respond to COVID-19 economic fallout.
The IMF said the additional resources will “help address urgent financing needs to mitigate the impact of the pandemic, including spending on health, social protection, and to support the most vulnerable, and catalyze additional donor resources.”
“This is the second disbursement to Madagascar under the Rapid Credit Facility (RCF), which brings total IMF COVID-19 emergency support to the Republic of Madagascar to US$337.9 million,” the Fund said in a statement, adding that “Madagascar’s macroeconomic outlook has been affected by weaker external demand, the increased spread of the pandemic, and significant losses of revenue.”
The second disbursement to Madagascar was made possible by both the IMF Executive Board’s decision to double the annual access limit under the RCF to 100 percent of quota, and its most recent decision on a temporary modification to the Fund’s annual PRGT access limits.
Ms. Antoinette Sayeh, IMF Deputy Managing Director and Acting Chair, said “the COVID-19 pandemic continues to severely affect key sectors of Madagascar’s economy, including tourism and export-oriented manufacturing, further weakening the macroeconomic outlook.”
According to her, growth is projected to be negative in 2020 and urgent balance of payments needs arising from the pandemic have increased.
“Additional emergency support under the Rapid Credit Facility, following a first disbursement approved on April 3, 2020, is expected to help finance health and economic relief spending, and continue to catalyze donor support,” she said.
Ms. Sayeh noted that to ensure that the financing provided is efficiently spent on addressing the crisis, authorities in Madagascar have committed to enhancing transparency, including with the publication of procurement contracts related to the response to the pandemic, and post-crisis audits.
“Madagascar’s risk of public debt distress remains moderate, but risks to the outlook are substantial. This underscores the importance of preserving fiscal sustainability once the crisis abates. The authorities remain committed, beyond their immediate response to the crisis, to continue reforms needed toward higher, more inclusive, and sustainable growth,” she added.