- The Malagasy economy has been hit by a myriad 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.
- The authorities are crafting a supplementary 2026 budget—reaffirming their commitment to domestic revenue mobilization and supporting economic recovery—for submission to Parliament in early May.
- Heightened uncertainty puts a premium on contingency planning to preserve budget credibility on the one hand and allowing the exchange rate to play its shock absorber role for external sustainability on the other hand.
Washington, DC: An International Monetary Fund (IMF) staff, led by Constant Lonkeng, visited Antananarivo during March 26–April 8, 2026 to hold discussions on the combined Third and Fourth Reviews of Madagascar’s economic program under the Extended Credit Facility (ECF) and the Resilience and Sustainability Facility (RSF) arrangements, approved by the IMF Executive Board in June 2024.
At the end of the mission, Mr. Lonkeng issued the following statement:
“Following an interruption amid political developments last year, IMF staff and Malagasy authorities held productive discussions on the combined Third and Fourth Reviews of Madagascar’s 3-year ECF and RSF over the past few weeks. Discussions will continue in the coming weeks. Pending agreement with the authorities on the reviews and subsequent approval by the IMF Executive Board, Madagascar could receive a total disbursement of SDR 134.4 million (about $183 million) under the ECF and RSF arrangements.
“Madagascar 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. The fiscal deficit in 2025 was significantly lower than anticipated, as heightened cash pressures prompted significant spending restraint and the new administration began reorienting investment projects to better align with its strategic priorities. At the same time, tax revenue underperformed markedly. In response, the authorities are reaffirming their commitment to domestic revenue mobilization, which is expected to be reflected in the forthcoming 2026 supplementary budget.
“Heightened uncertainty puts a premium on contingency planning to preserve budget credibility on the one hand and allowing the exchange rate to play its shock absorber role for external sustainability on the other hand. The central bank should maintain a tight monetary policy stance to hedge against emerging inflationary pressures.
“The mission highlighted the importance of maintaining the application of an automatic fuel pricing mechanism after the current pause, to help mitigate the impact of significantly higher global oil prices on the budget and free up resources to address Madagascar’s large development needs. Additionally, the IMF team welcomes the authorities’ ambition to expand renewable energy to reduce dependence on fossil fuels.
“The mission underscored the urgent need to deploy well-targeted compensatory measures to protect vulnerable households from pump price hikes and tax expenditure rationalization.
“The IMF team noted that the success of the authorities’ economic recovery plan—centered on job creation in their identified priority sectors (energy, agroindustry, textile, tourism and ICT)—hinges on advancing foundational structural reforms to address state capture and combat corruption. Such reforms will level the playing field among economic agents and foster private sector development.
“The team met with his Excellency President of the Refoundation Michael Randriarinirina, Prime Minister Mamitiana Rajaonarison, Minister of Economy and Finance Herinjatovo Ramiarison, Minister of Energy Lucas Rabearimanga, Minister of Environment and Sustainable Development Luck Andriatsihala, Central Bank Governor Aivo Andrianarivelo, other senior government officials, the donor community, and private sector representatives.
“The IMF team would like to thank the Malagasy authorities and various stakeholders for their cooperation and candid discussions during the mission.”
READ MORE: https://www.imf.org/en/news/articles/2026/04/07/pr26111-madagascar-imf-concludes-mission-the-combined-3rd-and-4th-rev-of-ecf-and-rsf-arr
