afrol News, 6 December - The International Monetary Fund (IMF) yesterday completed the first review of Madagascar's performance under the three-year Poverty Reduction and Growth Facility (PRGF)1 arrangement. As a result, Madagascar will be able to draw up to US$ 14 million, the IMF informs.
Madagascar's three-year program was approved by the IMF on 1 March 2001, for US$ 101 million. So far, Madagascar has drawn about US$ 14 million under the arrangement, according to an announcement made by the IMF yesterday.
After the IMF Executive Board's discussion on Madagascar, Anne Krueger, First Deputy Managing Director and Acting Chair, stated: "The Malagasy authorities are to be commended for the good overall economic and financial performance in 2001. Economic growth has picked up further, inflation has sharply abated, exports have accelerated, and international reserves have increased.
- In addition, nearly all program performance targets in the first half of the year were met. Only government revenue fell short of the program target, Ms. Krueger said. "Budgetary management was strengthened and further progress was achieved under the comprehensive privatization program."
- Tax administration needs to be further strengthened, by building on the efforts undertaken recently, such as the upgrade of the customs software in key offices and more rigorous crosschecks of tax returns by customs and the internal taxation directorate, said Ms. Krueger.
- The strong export performance in the last two years, especially by the manufacturing sector, has contributed to employment creation and income growth, she stated. "Continued expansion of the manufacturing export sector will require that the regulatory framework be further streamlined and the infrastructure improved. These measures are all the more necessary in light of the expected adverse impact of the global slowdown on manufactured exports and tourism in 2002."
Notwithstanding the improvement in overall economic performance in recent years, poverty remains pervasive in Madagascar. According to Ms. Krueger, "Lasting success in reducing poverty will hinge on the achievement of sustained high growth."
Director Krueger holds this requires "further progress in the implementation of structural reforms, prudent macroeconomic policies, and substantial foreign investment inflows. It is therefore essential that the privatization of the telecommunications, sugar, and cotton companies be completed rapidly, and that the ongoing reform of the regulatory framework and the judiciary system be vigorously pursued."
- The poverty reduction strategy paper, presently under preparation in close consultation with civil society and the donor community, will be a key instrument in guiding the government's poverty alleviation efforts, said Krueger. "It should include prioritization and costing of action plans in the social sectors and in rural development. The authorities should make every effort to ensure that the HIPC completion point is reached by end-2002 as envisaged."