IMF Directors Warn of Risks to Madagascar’s Economy
Uncertain Economic Outlook
In a recent meeting, International Monetary Fund (IMF) directors expressed concerns about the risks facing Madagascar’s economy and encouraged the country to maintain its commitment to policies promoting sustainable and inclusive growth.
Key Concerns
- Implementing fiscal consolidation measures in a gradual manner to navigate the complex global and domestic environment.
- Mobilizing domestic revenue by removing costly and distortionary tax exemptions, and improving public financial management and budget execution.
- Improving governance and accountability to boost investor confidence and reduce corruption.
- Strengthening institutions and improving the business environment to promote private sector development.
Economic Challenges
Madagascar’s economic outlook is uncertain, with a fragile recovery from the COVID-19 pandemic and rising external vulnerabilities. The IMF has projected that Madagascar’s GDP growth will slow down in 2023 due to global economic headwinds and domestic challenges.
- High level of corruption
- Weak institutions
- Limited access to credit
Urgent Reforms Needed
“Madagascar faces significant challenges, including a high level of corruption, weak institutions, and limited access to credit,” said an IMF official. “It is crucial that the government implements reforms to improve governance, enhance transparency, and promote private sector development.”
Public Finances Under Pressure
The country’s public finances are also under pressure, with a growing budget deficit and rising debt levels. The IMF has called for stricter fiscal discipline and greater efforts to mobilize domestic revenue.
- Decline in foreign exchange reserves
- Widening current account deficit
International Community Monitoring the Situation
The country’s economic situation is closely monitored by the IMF and other international organizations, which are urging the government to take decisive action to address the risks facing the economy.