It is the disbursement of 24.44 million Special Drawing Right (SDR) or $31.9 million that is part of the IMF’s Extended Credit Facility (ECF) agreement.
This financing “brings the total disbursed to approximately $159.7 million and will enable it to ‘cover external and budgetary financing needs.’ The International Monetary Fund estimates that the country’s growth this year should slow at 4.2% versus 4.3% last year.”
The annual inflation rate is expected to accelerate to 9.8%, driven by rising global oil and food prices. The Bretton Woods Foundation explains that lower growth and higher commodity prices will affect the budget, leading to an increase in the budget deficit.
Climate shocks, COVID-19, global inflation, among others, explain the current state of Madagascar’s uncertainty areas. However, according to the International Monetary Fund, “the implementation of the reform program envisaged in the plan for the emergence of Madagascar in addition to increasing investments can stimulate productivity and growth.”
“Improving budget execution is critical to increasing the effectiveness of fiscal policy and achieving program objectives,” said Antoinette Sayeh, IMF Deputy Managing Director and Acting.
It recommends that in the current context of rising food and fuel prices, it is particularly important to improve the implementation of social spending and to establish stronger safety nets to protect the most vulnerable.
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