The International Monetary Fund (IMF) concluded a mission in Madagascar on Thursday, assessing the island nation’s economic program under the Extended Credit Facility (ECF) and the Resilience and Sustainability Facility (RSF). The mission, led by IMF official Constant Lonkeng, reviewed the combined Third and Fourth Reviews of Madagascar’s three-year arrangement, originally approved by the IMF Executive Board in June 2024.
The IMF team visited Antananarivo between March 26 and April 8, holding discussions with President Michael Randriarinirina, Prime Minister Mamitiana Rajaonarison, and key economic officials, including the Minister of Economy and Finance Herinjatovo Ramiarison, Minister of Energy Lucas Rabearimanga, and Minister of Environment.
At the end of the mission, Lonkeng said discussions were productive but ongoing, noting that pending agreement with the authorities and subsequent IMF Board approval, Madagascar could receive a total disbursement of approximately SDR 134.4 million (around 183 million dollars) under the ECF and RSF arrangements.
“The Malagasy economy has been affected by a series of domestic and external shocks—including cyclone Gezani and the war in the Middle East—which are weighing on economic activity and eroding policy buffers,” Lonkeng said.
He highlighted that Madagascar’s fiscal deficit in 2025 was significantly lower than initially projected due to heightened cash pressures, spending restraint, and a reorientation of investment projects under the new administration. At the same time, tax revenue underperformed, underscoring the government’s need to strengthen domestic revenue mobilization. Authorities are preparing a supplementary 2026 budget, to be submitted to Parliament in early May, to support economic recovery and align spending with strategic priorities.
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The IMF mission stressed that heightened uncertainty makes contingency planning crucial to preserve budget credibility, while allowing the exchange rate to function as a shock absorber for external sustainability. It recommended that the central bank maintain a tight monetary policy to mitigate emerging inflationary pressures.
Lonkeng’s team also emphasized the importance of resuming an automatic fuel pricing mechanism to cushion the budget from rising global oil prices, freeing resources for Madagascar’s development needs. The IMF welcomed the government’s efforts to expand renewable energy, aiming to reduce dependence on fossil fuels and enhance long-term energy security.
To protect vulnerable households from price shocks and ensure fiscal discipline, the mission underlined the need for targeted compensatory measures and rationalization of tax expenditures.
The IMF highlighted that the success of Madagascar’s economic recovery plan depends on structural reforms to address state capture and combat corruption. Advancing governance reforms is seen as essential to creating a level playing field for businesses and fostering private sector growth.
The economic recovery strategy focuses on job creation in priority sectors including energy, agroindustry, textiles, tourism, and information and communications technology (ICT). These sectors are expected to drive sustainable growth while increasing resilience to external shocks.
Lonkeng concluded that while Madagascar faces significant challenges, the authorities’ commitment to fiscal discipline, domestic revenue mobilization, structural reforms, and renewable energy expansion provides a foundation for medium-term recovery. Discussions will continue in the coming weeks to finalise the combined Third and Fourth Reviews, with an IMF Board decision expected thereafter.
The IMF’s statement cautioned that its findings reflect preliminary staff assessments and do not necessarily represent the views of the IMF Executive Board. A formal report will be prepared for Board consideration following agreement with Malagasy authorities.
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