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Madagascar’s Economic Risks on the Upside as Directors Emphasize Need for Continued Reform

Washington, D.C. - The International Monetary Fund (IMF) has concluded its annual review of Madagascar’s economic policies, highlighting the country’s progress in implementing reforms and promoting sustainable growth.

Positive Developments

Directors at the IMF praised Madagascar’s efforts to:

Strengthen public financial management systems
Improve transparency in budget execution
Enhance the legal framework for public procurement contracts
Settle cross-liabilities with oil distributors
Restore the financial position of loss-making state-owned enterprises

However, despite these positive developments, directors emphasized that Madagascar still faces significant economic risks.

Economic Risks and Challenges

The country’s high dependence on a single commodity, vanilla, makes it vulnerable to fluctuations in global prices. Additionally, the ongoing COVID-19 pandemic has had a disproportionate impact on Madagascar’s tourism sector, which is a key driver of its economy.

To mitigate these risks, directors recommended that the government prioritize structural reforms, including:

Increasing diversification
Improving the business environment
Enhancing financial sector regulation and supervision

The IMF review also highlighted the need for improved social protection programs to address rising poverty rates and income inequality in Madagascar. Directors encouraged the government to implement targeted policies to support vulnerable populations, particularly in rural areas.

Next Steps

Madagascar’s authorities have committed to continue implementing reforms aimed at promoting economic stability and reducing dependence on a single commodity. The country has made significant progress in recent years, but it remains essential to address lingering challenges and build resilience to external shocks.

Key Recommendations

Continue strengthening public financial management systems
Enhance transparency in budget execution
Improve legal framework for public procurement contracts
Diversify economy by promoting private sector growth
Implement targeted social protection programs to reduce poverty and income inequality

Contact Information

[Name] IMF Public Information Officer Phone: [Phone Number] Email: [Email Address]

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