Madagascar’s economic growth forecast at 3% in 2014 - CNBC Africa

Madagascar’s economic growth forecast at 3% in 2014

Southern Africa

by Trust Matsilele 0

Madagascar’s economic growth forecasted at three per cent in 2014 largely due to activity in the mining sector.

The International Monetary Fund’s (IMF) managing director, Min Zhu noted that the country’s short term challenges were creating a solid foundation for faster growth.

(READ MORE: Madagascar oil sees crude sales as early as next year)

“Growth is expected to increase to three per cent in 2014 thanks mostly to mining, and should rise further in 2015 as more reforms are put in place to boost the economy,” noted Zhu.

“We agreed with the authorities that the main medium-term challenge for Madagascar is to create a solid foundation for faster growth and poverty reduction.”

The IMF official added that over the last five years, slow growth and underperforming revenue collections had led to a sharp compression of public investment and social outlays, and an accumulation of domestic budgetary arrears.

“The authorities reiterated the government’s commitment to preserve macroeconomic stability; improve fiscal performance, strengthen governance and the rule of law; attract investors; and promote the private sector, which has a critical role to play in economic growth,” explained Zhu.

“The country needs to move back to higher, sustainable, and inclusive growth, which will raise living standards, create more jobs, accelerate poverty reduction and improve the investment environment.”

The IMF noted that it was ready to work with the government in the implementation of its economic program.

“It is in this regard that in June 2014 the IMF Executive Board approved financial assistance under the Rapid Credit Facility in the amount equivalent to SDR about 47.1 million US dollars for Madagascar in support of the authorities’ economic recovery program.

(READ MORE: IMF approves 47.1 million dollar RCF for Madagascar)

“The financial assistance from the IMF will be used to implement a set of economic and structural policies and measures aimed at restoring macroeconomic stability and strengthening the capacity of the Malagasy government.”

Zhu said he was convinced that the government will carry on pushing for good governance and the rule of law, whilst also creating an enabling environment for business, investors and reforms that can be used to boost inclusive growth.