The International Monetary Fund said in Washington DC on Monday that despite a temporary slowdown in the first half of the year, mainly due to slow budget execution, the macroeconomic outlook of Madagascar has remained favorable.
“For 2019, growth is expected to improve to 4.8 percent, supported by dynamic credit conditions, and positive developments in mining, transportation, and services,” Charalambos Tsangarides, an IMF mission chief for Madagascar, who visited Antananarivo from November 11 to 25, said in a statement.
“For 2020, economic prospects remain positive, with real growth expected to reach 5.2 percent, supported by increased public spending on infrastructure, health and education, and increasing private sector activity especially in tourism, other services, and light manufacturing,” Tsangarides added.
After peaking in late 2017, inflation has continued to steadily decelerate and is expected to be contained to 6 percent by end-year, IMF said.
Tsangarides, the IMF mission chief for Madagascar, said implementation of the ECF-supported program that expires in early 2020 has remained satisfactory, adding that the authorities met all the June 2019 performance criteria, as well as the indicative target on tax revenue collection.
“However, the indicative target on domestically financed priority social spending was missed by a significant margin; despite recent improvements in execution, the year-end objective will not be met”.
Tsangarides added that the central bank has continued to successfully reduce exchange rate volatility and support gradual accumulation of reserves, and manage liquidity through timely interventions, thus contributing to macroeconomic stability.
“The authorities made some progress on the structural reform agenda, albeit at a slower pace than envisaged. Despite the successful renegotiation of distribution margins on fuel prices, a remaining gap between reference and pump prices led to continued accumulation of small liabilities to distributors”.