IMF approves US $16 million disbursement

The International Monetary Fund (IMF) has announced a US $16.6 million disbursement to Madagascar. On Monday the IMF completed the fifth review of Madagascar's performance under its Poverty Reduction and Growth Facility (PRGF) arrangement, the IMF's concessional facility for low-income countries. PRGF-supported programmes are based on the individual country's Poverty Reduction Strategy Paper (PRSP), which aims to foster economic growth and reduce poverty. The PRGF loans carry an annual interest rate of 0.5 percent, repayable over 10 years. The latest disbursement will bring the total amount loaned to Madagascar under the PRGF to US $118.4 million. "This decision will become effective following the World Bank's review of Madagascar's annual progress report on the PRSP, scheduled for 21 October," the IMF said in a statement. IMF Managing Director and Chairman, Rodrigo de Rato, was quoted as saying that "Madagascar's key challenges in the period ahead are to maintain macroeconomic stability, accelerate the implementation of structural reforms, and diversify the export base to boost exports and economic growth". "The government has made significant progress in implementing structural and social programmes. As a result, Madagascar has reached the completion point under the enhanced HIPC [Highly Indebted Poor Countries] Initiative. After the provision of enhanced HIPC assistance and additional bilateral assistance, Madagascar's debt is expected to fall to sustainable levels," De Rato added. "Prudent borrowing, sound macroeconomic and debt management, and progress on structural reforms will provide Madagascar with the basis to maintain debt sustainability following its exit from the HIPC Initiative," he noted. He noted that a final decision on Madagascar's debt relief under the enhanced HIPC Initiative was still pending, awaiting action this week by the World Bank's executive board. Madagascar's total external debt stands at just over US $4 billion. During a three-day visit to Madagascar last week, President Marc Ravalomanana and World Bank President James Wolfensohn announced at a joint press conference that the Bank and IMF would cancel $2 billion of the country's debt when their respective boards meet this week.