Madagascar gets second IMF facilities of $171.9 mln in 3-month
The International Monetary Fund (IMF) on Thursday approved the disbursement of $171.9 million, representing 50 percent of quota to the Republic of Madagascar under the Rapid Credit Facility (RCF).
In a statement, the Fun said this is the second emergency disbursement since the onset of the pandemic and will help finance the country’s urgent balance of payments and fiscal needs.
The IMF board had in April approved the disbursement of $165.99 million on April 3, 2020, to the country which is currently experiencing widespread of the coronavirus after it had announced it found cure for the disease.
“This second disbursement was made possible by both the IMF Executive Board’s decision to double the annual access limit under the RCF to 100 percent of quota and its most recent decision on a temporary modification to the Fund’s annual PRGT access limits.
“This additional disbursement brings the total IMF COVID-19 support to Madagascar to $337.9 million,” the Fund said in the statement released on Thursday.
Madagascar’s economic outlook has worsened since the approval of the first RCF request, due to a further deterioration of the global environment and a deepening of the impact of the COVID-19 pandemic, with GDP now projected to contract by 1 percent in 2020.
As a result, urgent balance of payments needs arising from the pandemic have increased, with the financing gap now estimated at about $580 million, while the fiscal situation has been severely affected by additional revenue losses and redirecting budget resources to address critical spending, including increased social assistance to the most vulnerable.
The additional disbursement under the RCF will help finance health and economic relief spending under the government’s national contingency plan to fight the pandemic and continue to catalyze further support from donors. The authorities have committed to transparency and accountability to ensure that the RCF resources are used appropriately and for their intended purpose.
Antoinette Sayeh, Deputy Managing Director and Acting Chair, said COVID-19 pandemic continues to severely affect key sectors of Madagascar’s economy, including tourism and export-oriented manufacturing, further weakening the macroeconomic outlook.
“Growth is projected to be negative in 2020 and urgent balance of payments needs arising from the pandemic have increased. Additional emergency support under the Rapid Credit Facility, following a first disbursement approved on April 3, 2020, is expected to help finance health and economic relief spending, and continue to catalyze donor support.
“In the context of a high degree of uncertainty, more support may be needed to ease the adjustment burden. The authorities’ decision to apply for the Debt Service Suspension Initiative supported by the G-20 and Paris Club, and use of the released resources to finance spending on COVID-19 related health and economic relief, is welcome,” Sayeh said.
“To ensure that the financing provided is efficiently spent on addressing the crisis, the authorities have committed to enhancing transparency, including with the publication of procurement contracts related to the response to the pandemic, and post-crisis audits.
“Madagascar’s risk of public debt distress remains moderate, but risks to the outlook are substantial. This underscores the importance of preserving fiscal sustainability once the crisis abates. The authorities remain committed, beyond their immediate response to the crisis, to continue reforms needed toward higher, more inclusive, and sustainable growth,” she said.