The International Monetary Fund reported that its staff mission held discussions with Malagasy authorities on the combined third and fourth reviews of Madagascar’s economic programme under the Extended Credit Facility and Resilience and Sustainability Facility arrangements. Discussions resumed after an interruption linked to political developments and will continue in the coming weeks, with a potential total disbursement of SDR 134.4 million (about USD 183 million) contingent on agreement on the reviews and subsequent IMF Executive Board approval. The mission noted that domestic and external shocks, including Cyclone Gezani and the war in the Middle East, are weighing on activity and eroding policy buffers. It highlighted that the 2025 fiscal deficit was significantly lower than anticipated due to spending restraint amid cash pressures and a reorientation of investment projects, while tax revenue underperformed markedly; the authorities’ renewed focus on domestic revenue mobilisation is expected to be reflected in a 2026 supplementary budget. Policy priorities flagged by the mission included contingency planning to protect budget credibility, allowing the exchange rate to act as a shock absorber, maintaining a tight monetary policy stance to manage emerging inflationary pressures, resuming the automatic fuel pricing mechanism after the current pause, and deploying well-targeted compensatory measures to protect vulnerable households from pump-price increases and tax expenditure rationalisation. It also pointed to the need for structural reforms to address state capture and combat corruption to support the authorities’ recovery plan centred on job creation in priority sectors.

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